TRADE OPENNESS AND ECONOMIC GROWTH IN NIGERIA

Abstract

This study looked at the connection between trade openness and economic growth in Nigeria. The nature of relationship that exist between these variables has been a major topic of economic debates in countries of the world. The study empirically investigates the nature and causal links between these two variables in Nigeria during the years 1986-2021 with the use of ARDL method and Granger Causality test. The study includes exchange rate, investment, and government expenditure as control variables. Results emanating from the study revealed that openness to trade in the short run, produce a significant negative influence on economic growth in Nigeria. It shows that trade openness or trade liberalization policies negatively influence economic growth in Nigeria. This influence becomes positive an insignificant in the long run. In addition, the overall results of causality test indicate unidirectional positive causality between economic growth and trade openness in the long-run. This implies that openness to trade possess the capacity that may promote long run economic growth in Nigeria. The short-run results suggest that the joint lagged value of the wald test result is not significant meaning that openness to trade may not be beneficial to economic growth in Nigeria.