INTERNATIONAL TRADE AND INCLUSIVE ECONOMIC GROWTH: A CASE FOR NIGERIA
Authors:
Amieyeofori, V, Felix, Augustus Gbosi, Clever Gbanador
Abstract:
Though theoretical literature strongly supports the positive linkage between trade openness and economic growth, empirical findings, however, are inconclusive with some supporting the positive mantra while others observed insignificant and in some cases the negative relationship between the two variables. Our paper therefore as a contribution to this body of knowledge, was to investigate how international trade can create an inclusive economic growth that will impact the population of Nigeria. To do that we formulated econometric models with GDP per capita growth rate as proxy for economic growth as the dependent variable, while the Independent variable is international trade peroxide as export, import, export plus import, exchange rate premium, net capital flow (FDI), trade openness, tariff, time to clear goods, ease of doing business indicator. We utilized panel data for our variables within two time periods of 1980- 2005, and 2006-2016, and tested their long-run empirical relationships using Autoregressive distributed lag (ARDL) cointegration and Granger causality test. Our results showed no significant and positive linkage between international trade and economic growth for Nigeria during the study period of 1980-2016. The negative relationship is due to unchecked population growth rate in the country without the government transforming its teeming labour force into human capital for economic activities. This has caused the country not to take advantage of knowledge, technological and skill transfer through trade openness, as was the case with South East Asian economies, and therefore relied solely on primary product exports which are subject to price and market shocks and volatilities, rather than manufacturing industrialization. Besides this, the country also exhibited a high taste for foreign imported consumer goods, including petroleum products, with high subsidy costs. The economy is solely dependent on public sector patronage as it lacked active and inclusive participation of the private sectors in the mainstream economy. The reliance on the public sector also fueled gross institutional corruption and governance abuses. The solution, therefore, is for Nigeria to focus on transforming its teeming population into human capital necessary to adopt innovative technologies that will transform its primary product export into manufacturing industrialization.