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Trade openness and economic growth nexus: Exploring the role of institutional quality in Nigeria

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  • Philip C. Omoke
  • Silva Opuala–Charles
  • Mariam Camarero

Abstract

This study attempts to fill the prior knowledge gap in the nexus between trade openness and economic growth in Nigeria by incorporating the role of institutional quality. The study covers the period from 1984 to 2017 and employs three indicators of trade openness including total trade, import trade, and export trade. Cointegration among the variables is examined using the ARDL bounds testing approach. The results provide evidence of a long-run relationship among the variables. The estimates suggest that export trade has a significant positive impact on economic growth while the impact of import trade on economic growth is negative and significant. The results also show that the negative long-run effects of import trade on economic growth in Nigeria decreases as institutional quality (quality of governance) improves. These empirical results have important policy implications for Nigeria. Among others, this study highlights the needs to improve the quality of governance in the country. Good governance and quality institutions can help channel the dividends of trade openness into growth-enhancing activities.

Suggested Citation

  • Philip C. Omoke & Silva Opuala–Charles & Mariam Camarero, 2021. "Trade openness and economic growth nexus: Exploring the role of institutional quality in Nigeria," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1868686-186, January.
    • Handle: RePEc:taf:oaefxx:v:9:y:2021:i:1:p:1868686
    DOI: 10.1080/23322039.2020.1868686
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    Cited by:

    1. Preethu Rahman & Zhihe Zhang & Mohammad Musa, 2023. "Do technological innovation, foreign investment, trade and human capital have a symmetric effect on economic growth? Novel dynamic ARDL simulation study on Bangladesh," Economic Change and Restructuring, Springer, vol. 56(2), pages 1327-1366, April.
    2. Abiodun Moses Adetokunbo & Iddey Josephine Yusuf, 2024. "Economic openness, institutional quality and economic growth in Nigeria," SN Business & Economics, Springer, vol. 4(7), pages 1-21, July.
    3. Bakari, Sayef, 2024. "The Role of Digitalization, Natural Resources, and Trade Openness in Driving Economic Growth: Fresh Insights from East Asia-Pacific Countries," MPRA Paper 121643, University Library of Munich, Germany.
    4. Aliyu, Shehu Usman Rano, 2024. "Intra-African Trade and Macroeconomic Performance of Africa: Implications for the African Continental Free Trade Area," MPRA Paper 121436, University Library of Munich, Germany, revised 22 Jun 2024.
    5. Ashiru Ibrahim & Michael Rabiu Abdulmalik, 2023. "Do trade openness and governance matter for economic growth in Africa? A case of EAC and WAEMU countries," International Economics and Economic Policy, Springer, vol. 20(3), pages 389-412, July.
    6. Megha Chhabra & Arun Kumar Giri & Arya Kumar, 2023. "What Shapes Economic Growth in BRICS? Exploring the Role of Institutional Quality and Trade Openness," Economic Papers, The Economic Society of Australia, vol. 42(4), pages 347-365, December.
    7. Kingsley Ikechukwu Okere & Obumneke Bob Muoneke & Favour Chidinma Onuoha & Philip C. Omoke, 2022. "Tripartite relationship between FDI, trade openness and economic growth amidst global economic crisis in Nigeria: application of combined cointegration and augmented ARDL analysis," Future Business Journal, Springer, vol. 8(1), pages 1-23, December.
    8. Augustine Adebayo Kutu & Abieyuwa Ohonba, 2024. "The Impact of Trade Liberalization on Economic Growth in South Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 14(6), pages 55-63, October.
    9. Mehmet Balcilar & Ojonugwa Usman & George N. Ike, 2023. "Investing green for sustainable development without ditching economic growth," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(2), pages 728-743, April.
    10. Li, Rongnan & Liu, Zhuang & Li, Shun & Geng, Jiao & Shi, Guanqun & Gu, Xiao, 2023. "Geopolitical risk, green finance and natural resources: A novel analysis of China's national level data," Resources Policy, Elsevier, vol. 86(PB).
    11. Ma, Yubo & Wang, Fei, 2023. "Dutch disease via remittances and natural resources: A perspective of global economy," Resources Policy, Elsevier, vol. 80(C).
    12. Mohd Arshad Ansari & Muhammed Ashiq Villanthenkodath & Vaseem Akram & Badri Narayan Rath, 2023. "The nexus between ecological footprint, economic growth, and energy poverty in sub-Saharan Africa: a technological threshold approach," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(8), pages 7823-7850, August.

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