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Is “Trade” Openness Valid for Nigeria’s Long-Run Growth: A Cointegration Approach?

Author

Listed:
  • Ogujiuba Kanayo

    (African Institute for Applied Economics)

  • Oji Okechukwu

    (African Institute for Applied Economics)

  • Adeniyi Adenuga

    (Central Bank of Nigeria)

Abstract

As a prelude to tariff reduction, the government is currently assessing the implications of significantly reducing tariffs due, in part, to its 2001 agreement with Ghana to quickly implement the ECOWAS Trade Liberalization Scheme. The obvious questions are: Should Nigeria liberalize to all countries on all products or opt for a discriminatory approach through unilateral trade agreements? Where do we think Nigeria should be open, and on what issues should they be closed? What should Nigeria’s trade policy be in the face of globalization’s negative effects and increasing protectionism of developed countries? The paper reviews key issues regarding an appropriate design of trade policy reforms in Nigeria and its validity for Nigeria’s long-run growth using the cointegration approach. The VAR approach was preferred because it overcomes the limitation and ambiguity associated with the regression results (Enders, 1995). Moreover, recent Monte Carlo evidence strongly favors the Johansen Maximum Likelihood method (JML) approach over the Engle-Granger’s (Dejong, 1992) in this regard. Econometric results show that there is no significant relationship between openness and economic growth, and that unbridled openness could have deleterious implications for growth of local industries, the real sector and government revenue.

Suggested Citation

  • Ogujiuba Kanayo & Oji Okechukwu & Adeniyi Adenuga, 2004. "Is “Trade” Openness Valid for Nigeria’s Long-Run Growth: A Cointegration Approach?," International Trade 0412009, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpit:0412009
    Note: Type of Document - doc; pages: 21. Comments are welcome
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    References listed on IDEAS

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    Cited by:

    1. Marius Ikpe & Richard Okey Ojike & Kenneth Onyeanuna Ahamba, 2020. "Does Trade Liberalisation Policy Enhance Performance of Non-Oil Export Trade in Nigeria?," Foreign Trade Review, , vol. 55(2), pages 248-260, May.
    2. Mete FERIDUN & Janet O. OLUSI & Benjamin Ayodele FOLORUNSO, 2006. "Analyzing The Impact Of Globalization On Economic Development In Developing Economies: An Application Of Error Correction Modelling (Ecm)To Nigeria," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(3).
    3. Anthony Ilegbinosa Imoisi, 2018. "Is Trade Openness Suitable for Growth of the Nigerian Manufacturing Sector? An Autoregressive Distributed Lag Approach," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(2), pages 71-82, June.
    4. Walkenhorst, Peter & Cattaneo, Olivier, 2006. "Trade, Diversification and Growth in Nigeria," MPRA Paper 23735, University Library of Munich, Germany.

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    More about this item

    Keywords

    Trade Liberalization; Trade openness; Tariff reforms and Economic growth.;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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