African countries have experienced low performances because of colonization. Ajide1 this paper investigates the role of frazer economic freedom index on fdi growth relationship over the period spanning 1980 through 2010 using annual time series data. Trade openness and economic growth in nigeria afolabi. Ejike, anah, and onwuchekwa 2015 conducted a study which was premised on the effect of trade liberalization on the economic growth of nigeria covering a period between 19802015. The nature of the relationship between trade openness and growth has long been a subject of controversy among economists. This study investigates how trade openness affects economic growth in developing countries, with a focus on subsaharan africa ssa.
Trade openness and economic growth in the developing. For comparison, the world average in 2018 based on 161. Conceptual framework trade openness is the liberalization that has generated new markets. Dynamic impact of trade openness on the economic growth in. Facilitates global integration into global markets iyoha and oviakhi, 2002. Trade openness allows countries to obtain competitive prices for their resources in the international market and access advanced technologies to extract resources more. Impact of trade openness on nigerian economic growth. Nigerias policies on trade openness to complement economic growth and provide more opportunities for uk exporters. The impact of trade openness on nigeria economic growth within the sample period of 19812016 pdf. As rhythmic as the tide, every four years politicians rekindle the debate over trade policy.
The theoretical propositions reveal that while trade openness leads to a greater economic efficiency, market imperfections, differences in technology and endowments may lead to adverse effect of trade liberalisation on individual countries. What is trade openness and what is the effect of trade. Studies on the liberalization growth nexus have produced mixed results. Further evidence on the causality issue article pdf available in south african journal of economic and management sciences sajems 72 january. Determinants of economic growth in nigeria kazeem b. The causal linkage between trade openness and economic. Openness, government size and economic growth in nigeria. The causal linkage between trade openness and economic growth. People trade and governments open markets because it is in their interest to do so. Download the complete economics project topic and material chapter 15 titled impact of trade openness on the economic growth of nigeria here on projects.
The purpose of this study was to examine the causal relationship among financial development, trade openness and economic growth in nigeria for the period 19702005. The study empirically examined the impact of trade openness on economic growth in nigeria. Ordinary least squares ols was used to estimate the effect of openness of trade on economic growth in nigeria. Trade openness and nigerias economic growth 1990 2015 dr. Trade openness and tax revenue performance in nigeria. The static panel regression techniques were employed to assess the causal link of our regressors, namely, fdi, trade. Furthermore, it also intend to investigate whether a longrun equilibrium exist between trade openness and economic growth in nigeria. Our result suggest that the positive sign of the coefficient of non oil. Our results show that a twoway cointegration exists between economic growth and financial development, on the.
This might be attributed to the omission of the role of capital stock and labor in the trade growth nexus. Trade openness and economic growth in nigeria iiard. With this, it could be said that trade openness is. Get an answer for what is trade openness and what is the effect of trade openness on economicfinancial development. Economic growth, capital flows, foreign exchange rate, export.
The average value for nigeria during that period was 31. Financial openness and trade openness were used to measure the extent to which nigerian economy is open international competitiveness that could pave way for the. Trade openness raises economic growth more open countries. Results show that trade openness has a significant impact on economic growth. New evidence romain wacziarg and karen horn welch a new data set of on openness indicators and trade liberalization dates allows the 1995 sachs and warner study on the relationship between trade openness and economic growth to be extended to the 1990s. This study examines empirically the relationship between trade openness and economic growth in nigeria.
The results provide evidence that there exists a positive longrun equilibrium relationship between trade openness and economic growth, which is an indication that trade openness is beneficial to economic growth in bangladesh. This study purposed to determine the long run relationship between trade openness and economic growth in ghana and nigeria covering the period between 1980 and 2016. Chimobi 2010 investigated the causal relationship among financial development, trade openness and economic growth in nigeria and. Abstract this study examined the impact of international trade on economic growth in nigeria, with the objective of identifying the major factors influencing economic growth through international trade and make policy. Pdf the paper empirically investigates the relationship between trade openness and economic growth in nigeria from 1970 to 2008 using the. Egbulonu kelechukwu godslove and ezeocha joyce adaku 1department of economics, imo state university, owerri 2phd student, dept of economics, imo state university, owerri abstract.
Trade openness and economic growth in nigeria south african. Trade openness on nigeria economic growth was tested using vecm and granger causality test to estimate the relationship. The paper examined the effect of trade openness on economic growth of nigeria using data from 1970 to 2016. We intend to know what policy instruments need to be manipulated so as to achieve economic growth and financial stability.
Click the download now button to get the complete project work instantly. The link between openness and longrun economic growth. Trade and market openness has historically gone handinhand with better economic performance in countries at all levels of development, creating new opportunities for workers, consumers and firms around the globe. The aim of this study is to analyse the relationship between trade openness and economic growth in nigeria from 19812014. We use a dynamic growth model with data from 42 ssa countries covering 1980 to 2012. According to major international trade theories and under certain assumptions, more trade liberalization is pro growth and hence expected to reduce unemployment rate. With so many countries of the world now open to global capital and trade, this study identifies whether financial and trade openness contribute to the development of nigerias financial system by considering both financial depth and access to finance indicators. This study purposed to determine the long run relationship between trade openness and economic growth in ghana and nigeria covering the. The study employed ordinary least square regression to find out the relationship between trade openness and economic growth. Other factors influencing the growth of gdp could be.
The study specifically investigated the causality between the openness variable and economic growth, using data from the nigerian economy. The causal relationship among financial development, trade. In spite of the wave of liberalisation studied during the past decades, the debate still remains open on the issue of the trade openness and economic growth nexus. Impact of trade openness on economic growth of nigeria.
Trade openness, economic growth and unemployment reduction in. Financial development, trade openness and economic growth. Do financial and trade openness lead to financial sector. Economic growth, capital flows, foreign exchange rate. However, only limited studies explicitly recognize the fact that before there can be. Studies on the liberalizationgrowth nexus have produced mixed results.
For that indicator, the world bank provides data for nigeria from 1960 to 2018. The study finds that trade openness is a possible avenue to reduce the resource curse. Trade openness, tax revenue performance, economic growth, free trade introduction trade within and crossborder ability to promote economic growth has stimulated a growing body of economic studies since the studies of grossman and helpman 1990, romer 1990 and young 1991. That is because no nation in the world can survive without one form of trade with other sovereign. Thus, for nigeria to benefit more from globalization we needs to integrate further into international trade by diversifying our exports. The relationship between trade openness and economic growth has been extensively investigated yielding to mixed and inconclusive results. Therefore, not all growth in gdp is explained by the extent of trade. It incorporated investment, exchange rates and inflation as the additional variables. This study has empirically examined the impact of trade openness on economic growth in. See below for the abstract, table of contents, list of figures, list of tables, list of appendices, list of abbreviations and chapter one. The result shows that there is positive relationship between trade openness and output growth in nigeria. Nwadike, ani kelechi johnmary, chukwuma samuel alamba. Trade openness, economic growth and unemployment reduction.
Impact of trade liberalization on economic growth of nigeria. Examine causal linkages between financial development, trade openness and economic growth develop the financial development index based on four different financial development indicators test for causality using a systematic modeling approach within the framework of panel data analysis. Investments, labour and inflation are incorporated in the model to form a. The study explores the relationship between trade liberalization and economic growth in nigeria. Download the full materials from chapter one to five with reference and abstract. Introduction the relationship between openness to international trade and economic growth, and financial development and economic growth are the subject of a vast number of both theoretical and empirical literatures, roubini and salaimartin, 1991. Economic growth, financial development, trade, nigeria jel index. Trade openness has been hailed for its beneficial effects on productivity, the adoption and use of better technology and investment promotion which are channels for stimulating economic growth. Secondary data were used spanning from the year 1981 to 2018. A multivariate regression approach was employed to. Nigeria identified deeper trade integration as a means to foster economic growth and alleviate poverty. The relationship between trade openness and economic growth. Munich personal repec archive the relationship between trade openness and economic growth.
The link between openness and longrun economic growth web version. This paper investigates the dynamic impact of trade openness on the economic growth in nigerian economy between. One of the policy measures of the structural adjustment programme sap introduced in 1986 is trade openness. The survey of the literature reveals that the extant literature is replete with studies that only accounted for one dimension of openness, namely, trade openness. Past studies of trade openness on economic growth have found various results, there is however evidence that there is both positive impact and negative impact of trade openness on economic growth. The relationship between trade openness and economic growth is ambiguous from both theoretical and empirical point of view.
For instance, ghana inherited industrial sector was underdeveloped mainly. The methodology used in this paper are unit root, cointegration and. The study examined the effect of trade openness on the economic growth of nigeria, using the gross domestic product gdp as the dependent variable. The implication is that the nigerian economy will grow more rapidly when she is opened to international competition. This might be attributed to the omission of the role of capital stock and labor in the tradegrowth nexus. Trade openness and economic growth in sadc countries. From the empirical results, it is concluded that trade openness improves economic growth. The impact of trade liberalization on economic growth of nigeria, download the full project work with reference and abstract. This implies that trade openness make sense in nigeria given that most of the. Two equations were estimated in which index of industrial production proxied as yearly average capacity utilization as a function of degree of openness, terms of trade and real export. Nigerias policies on trade openness to complement economic growth. International trade and economic growth in nigeria.
Trade openness refers to the degrees to which a country or economy permits or have trade with other countries or economies. To test for stationarity of the data, the augments dickeyfuller adf dickey and fuller, 1981, the phillips and perron 1988. This study examined the nexus between economic growth and economic openness in nigeria. Impact of trade openness on the output growth in the. Moyo, clement and kolisi, nwabisa and khobai, hlalefang nelson mandela university 12 september 2017 online at mpra paper no. This study provides answer to these specific questions answered are. Financial development, trade openness, economic growth, nigeria 1. Impact of trade openness on economic growth of nigeria mensch. Trade openess and economic growth in nigeria 1981 2009. The econometric methodology employed was the cointegration and granger causality test. In nigeria, there are also works on trade openness and economic growth with researchers taking different stance and sides in the discourse.
Financial development, trade openness and economic growth in. The relationship between trade openness, foreign direct. The relationship between trade openness and economic. A multivariate regression approach was employed to estimate augmented growth models. Kalu and agodi2015 examined whether trade openness makes sense, using nigeria trade policy as yardstick. Since nigeria has opened up to international trade and foreign investment it has achieved a better economic growth. Does trade openness engineer economic growth in nigeria. In the standard neoclassical model of exogenous growth, changes in trade openness can only affect the pattern of product specialisation but not the longterm rate of economic growth. However, trade openness level of impact on growth in the long run has. Trade openess and economic growth in nigeria 1981 2009 an. Pdf divthe study specifically investigated the causality between the openness variable and economic growth, using data from the nigerian economy find. This study investigates empirically the relationship between trade openness open and foreign direct investment fdi on the economic growth for a panel of four 4 west african countries cote divoire, ghana, nigeria, and senegal during the period of 1998 to 2017.
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