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Intensive and Extensive Margins of Export Diversification as Strategies for Sustainable Economic Growth: Evidence from the Nigerian Economy

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  • Ademola Obafemi Young

Abstract

Two opposite strands of literature analysing export diversification’s role in promoting sustainable growth have evolved in international economics and development, namely, the intensive and extensive margins of exports. This study empirically investigates which of the margin is more useful towards promoting sustainable growth using annual time series data of Nigeria for the period 1960–2021. Autoregressive distributed lag (ARDL) and innovative accounting procedure were employed. The ARDL results reveal that both margins significantly enhance growth in short and long run. However, importance of the extensive margin, in aggregate, dominates that of the intensive margin. Likewise, the results from innovative accounting procedures reveal that although both margins contribute positively to growth, the contribution to growth of extensive margin dominates over that of the intensive margin. These results, thus, lend credence to the extensive-margin exposition, which postulates that the export of extant commodities to new market destinations or export of new commodities to new and/or old market destinations plays a relatively more important role in export growth/diversification and, ultimately, sustainable growth. The study recommends that governments should develop and implement economic policies aimed at enhancing exports of value-added commodities—due to their relatively high income and price elasticities over primary commodities—to maximise the benefits in the extensive margin. JEL Codes: F10, F14, O10, O12, O50, O55

Suggested Citation

  • Ademola Obafemi Young, 2024. "Intensive and Extensive Margins of Export Diversification as Strategies for Sustainable Economic Growth: Evidence from the Nigerian Economy," Foreign Trade Review, , vol. 59(2), pages 187-224, May.
    • Handle: RePEc:sae:fortra:v:59:y:2024:i:2:p:187-224
    DOI: 10.1177/00157325221145397
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    More about this item

    Keywords

    ARDL; extensive margin; intensive margin; export diversification; dualistic growth model; VAR;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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