Trade Openness and Economic Growth in Nigeria

Abstract

This study examined trade openness and economic growth in Nigeria for the period 1981- 2019. The study adopted time series econometrics analysis to examine the relationship between trade openness and economic growth in Nigeria. The empirical analysis that was carried out to achieve the objectives mentioned above were; Unit root test, ARDL Test and ordinary least square (OLS), in which changes in GDP were regressed on trade openness (TOP), exchange (EXR), inflation (INF) using annual time series data from CBN statistical bulletin 2019. The result of unit root test showed that, there is mixed order of integration. This implies that some variables were stationary at level whereas others were stationary at first difference. The ECT of 40% showed speed of adjustment both in the short and long run annually. The study showed that, there is a significant relationship between trade openness and economic growth of Nigeria. The Durbin Watson result showed absence of autocorrelation.  Based on the findings above, the study recommended among other things that: government should to maintain a stable exchange rate in relation with other countries’ currencies in order to boost economic growth in the country. Monetary authorities should try as much as possible to maintain a low and stable inflation rate in order to increase the economic growth in Nigeria.