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COINTEGRATING REGRESSION AND CAUSALITY ANALYSIS OF THE LINKAGE BETWEEN INTERNATIONAL TRADE AND ECONOMIC GROWTH IN NIGERIAN
Abstract
This study empirically analyzed the effects of international trade on the economic growth of Nigeria from1981-2020 using the under Fully Modified Least Squares (FMOLS), Dynamic Least Squares (DOLS) and Canonical Cointegrating Regression (CCR) technique. Independent variables used such as, export trade (EXP), import trade (IMP), foreign exchange rate (EXH) and trade openness (TOP) were regressed on Real Gross Domestic Product (GDP) of Nigeria based on secondary data fetched from Central Bank of Nigeria’s Statistical Bulletin 2020. The econometric diagnostics for existence of unit roots in the series was conducted using the Augmented Dickey-Fuller technique and the tests indicate that the variables were integrated in order of 1(1). The Johansen co-integration test was conducted in determining the cointegration among the variables in the various equations which affirmed the presence of long-run existence. The study revealed that export trade, import trade and exchange rates in the country had positive and insignificant relationship with economic growth, while trade openness has negative and significant effect on economic growth in Nigeria. The study recommends that the federal government should design the programmes and policies to promote local production and encourage importation of convinced necessary products for trade to have the anticipated impact on the growth of Nigeria’s economy.
Keywords: International Trade, Export trade Foreign Trade, Trade Openness Economic Growth.