A Re-Examination of Trade Policy and Industrial Sector Performance in Nigeria

Abstract

In this paper, the purpose was to investigate the extent to which trade policy impact on industrial sector performance in Nigeria within the period of 1970 to 2014. Particularly, the study was carried out using ARDL bounds testing approach. It was observed that the trade policy variables of exchange rate, trade openness and tariff significantly impact on industrial sector performance. Specifically, exchange rate and tariff have negative and significant impact on manufacturing sub-sector and industrial sector performance in Nigeria. On the other hand, trade openness has a significantly positive effect on industrial sector growth. On the basis of these findings, the study suggested the implementation of appropriate exchange rate and tariff policies that will promote industrial activities as well as protect domestic firms from external competition. Emphatically, moderate tariff on importation of raw materials and machineries should be adopted and enforced.