Export Instability and Economic Growth in Nigeria: A Time Series Analysis

Primary products and commodities are sources of raw material, and provide food and livelihood for many families and communities. They also provide export earnings and income for many governments in developing countries. In Nigeria, and other sub-Saharan Africa countries, primary products and commodities are at the heart of local economies and sometimes national economies. However, over the years, prices of primary products and commodities have been very volatile, with serious implications for economic growth. As a response, this study investigates the impact of export instability on economic growth in Nigeria using time series data from 1970q1 to 2011q4 and an econometric approach that addresses the problem of non-stationarity. As a departure from previous studies, the paper uses an instability measure that varies over time and a relatively large data sample size. Our results show that export instability has negative effects on economic growth and investment. The policy recommendation is that to smoothen Nigeria's financial standing in the short run, the government should ensure the national sovereign wealth fund (NSWF) is properly managed given the unpredictability of the global export market. A long term strategy is the continuation and intensification of government efforts to diversify the export base of the country. The export sub-sector should be diversified by increasing the share of non-traditional exports.