Trade liberalization and trade inflows: A study of Nigeria’s economy using ARDL model approach
1 Lecturer, Department of Economics, College of Management Sciences (COLMAS), Michael Okpara University of Agriculture, Umudike, Abia State, Nigeria.
2 Professor, Department of Banking and Finance, College of Management Sciences (COLMAS), Michael Okpara University of Agriculture, Umudike, Abia State, Nigeria.
Research Article
GSC Advanced Research and Reviews, 2020, 04(01), 031-045.
Article DOI: 10.30574/gscarr.2020.4.1.0057
Publication history:
Received on 02 July 2020; revised on 10 July 2020; accepted on 12 July 2020
Abstract:
In Nigeria, despite the success of implementation of trade liberalization measures, and the persistent signs of economic recovery as seen from reduction in external debt and debt service payments, some macroeconomic pointers still showed poor performance of the overall economy and it is against this backdrop, that this study investigated effect of trade liberalization and trade inflows in Nigeria covering the period 1981-2018 with the help of the ARDL model of estimation. Based on the issues covered in the literature review, empirical investigations were carried out on the effect of trade liberalization and trade inflows in the Nigeria. Results showed that trade openness (TOP) had a negative relationship with economic growth in both the current year and in the long run. Similarly, import volume index (IMPVID) had a negative relationship with real gross domestic product (RGDP) for the current year and in the long run, while export volume index (EXPVID) had a positive impact on RGDP but was insignificant in the previous year’s lags. The result from the ARDL Bounds Test for co-integration test indicated evidence of long run relationship among the variables of interest while trade openness and RGDP had a non-directional causality between them. Based on these findings, the study recommended that government should encourage import liberalization through reduction in tariff rates, gradual removal of non-tariff barriers (NTB), outright banning of certain goods which will ensure that domestic imports, following trade liberalization, are directed mainly on intermediate and capital goods.
Keywords:
Trade Liberalization; Trade Inflows; Trade Openness; Economics Growth
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