TRADE LIBERALIZATION AND ECONOMIC GROWTH: THE NIGERIAN EXPERIENCE (1971-2012)

Abstract

Trade liberalization is an essential component of international trade and finance. It entails the removal of the various barriers to trade that countries around the world have erected and has been recognized by many studies as an important factor accounting for the economic growth and development of many Nations. Trade liberalization has been a burning issue in Nigeria – ascertaining whether Nigeria’s involvement in international trade boosts or hinders economic growth. This motivated the desire to embark on this study with the principal objective of exploring the relationship between trade liberalization and economic growth. Data for the period, 1971-2012, was analyzed with the help of the Ordinary Least Squares (OLS) regression technique. The results provided clear indication that imports and exports significantly and positively affect economic growth in Nigeria. Thus, the study concluded that trade liberalization is good for the Nigerian economy; although it has to be handled carefully as it also has some negative effects. In line with the findings of the study, some policy options were recommended in order to ensure that trade liberalization is beneficial to the Nigerian economy and to improve the international trading position of Nigeria.

Key words: trade liberalization, international trade, economic growth