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THE IMPACT OF TRADE PROTECTIONIST POLICY ON THE ECONOMIC GROWTH OF NIGERIA
Abstract This study examines the indirect impact of trade protectionist policy on economic growth in Nigeria by applying the bounds testing (ARDL) approach to cointegration over the period 1990 to 2013. Three measures of trade protectionist are used including real exchange rate, subsidy, trade openness and the indirect effect on economic growth was captured through unemployment and industrial production. The bound tests suggest that the variables of interest are bound together in the long run when unemployment and industrial production are the dependent variables. The associated equilibrium correction are also corrected and significant, confirming the existence of a long-run relationship. There is no evidence of long-run causal relationship between real GDP per capita, unemployment, labour and industrial production. There is evidence of short-run unidirectional causal relationship running from unemployment, industrial production to GDP per capita. There is unidirectional causal relationship running from GDP per capita and industrial to labour. Even though there is a general belief that trade protectionist policy is detrimental to growth, our empirical result fail to confirm this. However, we our finding reveals an indirect link between protectionist policy and economic growth through industrial production and the unemployment rate. The results found for Nigeria can be generalized and compared to other developing countries which share a common experience in managing the international exchanges of goods and services between national and regional economies.
Keywords Trade protectionism, Unemployment, Industrial production, ARDL, Economic growth, VECM