Impact of International Trade on Nigeria Economic Growth: Evidence on Trade Cost
This study investigated the impact of international trade on Nigerian economic growth, empirical evidence on trade cost. The ordinary least square technique was used to analyse data from 1960 to 2021. The study specifically focused on the impact of trade cost on economic growth in Nigeria, by grounding it on the Ricardian theory of comparative advantage. The econometric analyses of augmented dickey-fuller unit root test, error correction model, pair-wise granger causality test, and fully modified ordinary least square test were conducted. The FMOLS results showed that the consumer price index (CPI) and inflation consumer prices (ICP) have a significant negative effect on GDP. Thus, trade cost has adverse impact on Nigeria economic growth on the long run. On the short run, only consumer prices index (CPI) has positive impact on gross domestic product (GDP) while inflation consumer prices (ICP) has negative impact on gross domestic product (GDP), but the relationship is not statistically significant. It is recommended that there is need for the government to strengthen the monetary policy as to maintain price stability.
Arvis, J-F., Duval, Y., Shepherd, B., & Utoktham, C. (2013). Trade Costs in the Developing World: 1995-2010. Policy Research Working Paper 6309, Washington DC: World Bank
Azeez, B.A., Dada, S.O. & Aluko, O.A. (2014). Effect of international trade on Nigerian economic growth: The 21st century experience. International Journal of Economics, Commerce and Management, II(10), 1 – 8.
Ben Hammouda, H., Karingi, S. N., Njuguna, A. E., & Sadni Jallab M. (2010). Growth, productivity and diversification in Africa. Journal of Productivity Analysis, 33(2): 125-146.
Beverelli, C., Neumueller, S. & Teh, R. (2015). Export diversification effects of the WTO trade facilitation agreement. World Development, 76(C): 293–310.
Busse, M. & Königer, J. (2012). Trade and economic growth: A re-examination of the empirical evidence. Hamburg: Hamburg Institute of International Economics (HWWI), Research Paper No. 123.
Daniel, S. (August 30, 2021). How non-oil sector spurred Nigeria’s highest growth in 7years – Finance Minister. https://www.vanguardngr.com/2021/08/how-non-oil-sector-spurred-nigerias-highest-growth-in-7-years-%E2%80%95-finance-minister/
Dennis, A. & Shepherd, B. (2011). Trade facilitation and export diversification. The World Economy 34(1), 101-122.
Elias, I.A., Agu, R.E., & Eze, L.O. (2018). Impact of international trade on the economic growth of Nigeria. European Journal of Business and Management, 10(18), 22 – 30.
Emehelu, C.I. (2021). Effects of international trade on economic growth of Nigeria. International Journal of Innovative Finance and Economics Research, 9(1), 144 – 157.
George-Anokwuru, C.C. (2017). Empirical analysis of international trade and economic growth in Nigeria. International Journal of Current Research, 9(09), 57864 – 57869.
Gujarati, D. N. (2004). Basic Econometrics, 4th ed. New York: McGraw-Hill
Hufbauer, G. & Schott, J. (2013). Payoff from the World Trade Agenda 2013: Report to the ICC research foundation. Washington DC: Peterson Institute for International Economics.
Moïsé, E. & Sorescu, S. (2013). Trade facilitation indicators: the potential impact of trade facilitation on developing countries’ trade. Paris: Organisation for Economic Co-operation and Development (OECD), Trade Policy Papers No. 144
Obinna, O. (2020). Effect of inflation on household final consumption expenditure in Nigeria. Journal of Economics and Development Studies, 8(1), 104 – 111.
Obisike, N.E., Onwuka, I.N., Okoli, U.V. & Udeze, R.C. (2020). Impact of international trade on Nigerian economic growth: Evidence from oil terms of trade. International Journal of Economic and Financial Management, 5(2), 31 – 47
Onuorah, A.C. (2018). Trade liberalization and economic growth in Nigeria. International Journal of Advanced Research, 6(9), 389 – 400.
Organisation for Economic Co-operation and Development (OECD) (2015). Implementation of the WTO trade facilitation agreement: The potential impact on trade costs. Paris: OECD, Policy Brief.
Organization of Exporting Countries and Development & World Trade Organization [OECD-WTO] (2015). Aids for trade at a glance 2015: Reducing trade costs for inclusive, sustainable growth. World Bank
Ricardo, D. (2004). The Principles of Political Economy and Taxation, (first published 1817) UK: Dover Publications.
Robinson, J. (1974). Reflections on the Theory of International Trade, Manchester University Press: UK.
Robinson, J. (1979). Aspects of Development and Underdevelopment, London: Cambridge University Press
Teh, R., Smeets, M., Jallab, M.S. & Chaudhri, F. (2016). Trade cost and inclusive growth. World Trade Organization Publication, Switzerland.
Usigbe, L. (October 13, 2021). Nigeria’s trade costs are too high to attract investments – Okonjo Iweala. https://tribuneonlineng.com/nigerias-trade-costs-are-too-high-to-attract-investments-%E2%80%95-okonjo-iweala/
World Bank (June 15, 2021). Nigeria economic update: Resilience through reforms. https://www.worldbank.org/en/country/nigeria/publication/nigeria-economic-update-resilience-through-reforms
World Bank (October 11, 2021). Overview. https://www.worldbank.org/en/country/nigeria/overview#1
World Trade Organization (WTO) (2015a). World Trade Report 2015 – speeding up trade: Benefits and challenges of implementing the WTO trade facilitation agreement, Geneva: WTO.
Yusuf, L.O., Nchom, H., Osuji, P. & Udeorah, S.A.F. (2020). Impact of international trade on the growth of the Nigerian economy. International Journal of Research and Innovation in Social Science, IV(VIII), 573 – 576
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.