AUTHOR(S) GUIDELINES
ONLINE SUBMISSIONS
STATISTICS
FOCUS AND SCOPE
ISSN
ARTICLE TEMPLATE
Empirical Analysis of Trade Liberalization and Economic Growth in Nigeria, 1980-2013
Abstract
ABSTRACT: The trade liberalization is necessary and has positive effects for development, and on the growth performance of the industrial sector, constituted an increasingly controversial issue. The origin of trade liberalization and market-oriented economic reform in many developing countries began in the early 1980s and intensified in the 1990s. The reform takes various forms in terms of ownership and contents in different countries. The paper accesses the impact of trade liberalization on economic growth in Nigeria for the period 1980-2013. Two equations were estimated: firstly, made index of industrial production as a function of trade openness, terms of trade, and real exports; and, secondly, equation made real gross domestic product as a function of trade openness, terms of trade, real export, and trade liberalization dummy. The study employs a vector error correction model, quantitative method, and economics approaches. The results show that openness of the foreign sector and trade liberalization dummy have positive significant impact on both industrial performance and economic growth in Nigeria. It is recommended the removal of impediments to trade, such as excessive import levies and arbitrary tariffs.
KEY WORD: Trade Liberalization; Index of Industrial Production; Real Gross Domestic Product; Co-Integration; Vector Error Correction Model.
IKHTISAR: “Analisis Empiris Liberalisasi Perdagangan dan Pertumbuhan Ekonomi di Nigeria, 1980-2013”. Liberalisasi perdagangan diperlukan dan memiliki efek positif untuk pembangunan, dan tentang kinerja pertumbuhan sektor industri, merupakan isu yang semakin kontroversial. Asal-usul liberalisasi perdagangan dan reformasi ekonomi berorientasi pasar di banyak negara berkembang dimulai pada awal 1980-an dan diintensifkan pada 1990-an. Reformasi mengambil berbagai bentuk dalam hal kepemilikan dan konten di berbagai negara. Makalah ini menguji dampak liberalisasi perdagangan pada pertumbuhan ekonomi di Nigeria untuk periode 1980-2013. Dua persamaan diestimasi: pertama, membuat indeks produksi industri sebagai fungsi keterbukaan, syarat perdagangan, dan ekspor riil; serta, kedua, membuat persamaan produk domestik bruto riil sebagai fungsi keterbukaan, syarat perdagangan, ekspor riil, dan dummy liberalisasi perdagangan. Penelitian ini menggunakan model koreksi kesalahan vektor, metode kuantitatif, dan pendekatan ekonomi. Hasilnya menunjukan bahwa keterbukaan sektor asing dan dummy liberalisasi perdagangan memiliki dampak positif yang signifikan terhadap kinerja industri dan pertumbuhan ekonomi di Nigeria. Direkomendasikan untuk menghapus semua hambatan perdagangan, seperti pungutan impor berlebihan dan tarif sewenang-wenang.
KATA KUNCI: Liberalisasi Perdagangan; Indeks Produksi Industri; Produk Domestik Bruto Nyata; Ko-Integrasi; Model Koreksi Kesalahan Vektor.
About the Authors: John Aiyedogbon, Ph.D. is a Lecturer at the Department of Economics, Birgham University, Karu, Nassarawa State, Nigeria. Helen A. Andow, Ph.D. is a Lecturer at the Department of Business Administration, Kaduna State University, Kaduna, Nigeria. Bright O. Ohwofasa is a Lecturer at the Delta State Polytechnic, Department of Arts and Social Sciences (Economics Unit), Otefe-Oghara, Nigeria. Corresponding authors: johnomolara2007@yahoo.com and haandow@yahoo.com
Suggested Citation: Aiyedogbon, John, Helen A. Andow & Bright O. Ohwofasa. (2018). “Empirical Analysis of Trade Liberalization and Economic Growth in Nigeria, 1980-2013” in SUSURGALUR: Jurnal Kajian Sejarah & Pendidikan Sejarah, Volume 6(1), March, pp.61-72. Bandung, Indonesia: Minda Masagi Press and UBD Bandar Seri Begawan, Brunei Darussalam, ISSN 2302-5808.
Article Timeline: Accepted (January 17, 2018); Revised (February 19, 2018); and Published (March 30, 2018).
Keywords
Full Text:
PDFReferences
Adebiyi, M.A. (2006). “Trade Liberalization Policy and Industrial Growth Performance in Nigeria: An Error Correction Mechanism (ECM) Technique”. Available online at: www.google.com.ng [accessed in Kaduna, Nigeria: September 19, 2017].
Adenikinju, A.F. & L. Chete. (1995). “Productivity, Market Structure, and Trade Policy Reforms in Nigeria”. A Research Report presented at a workshop by AERC [African Economic Research Consortium], on June.
Adenikinju, A.F. & M. Olofin. (2000). “Economic Policy and Manufacturing Sector Performance in Africa” in The Nigerian Journal of Economic and Social Studies, Volume 42(1), pp.1-22.
Afzal, Muhammad et al. (2009). “A Dynamic Analysis of the Relationship among Human Development, Exports, and Economic Growth in Pakistan” in The Pakistan Development Review, Volume 48(4), Part II [Winter], pp.885-920. Available online also at: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.857.8928&rep=rep1&type=pdf [accessed in Karu, Nigeria: November 25, 2017].
Ahmed, N. (1999). Trade Liberalisation in Bangladesh. Dhaka: University Press Limited.
Aiyedogbon, John O. & Bright O. Ohwofasa. (2016). “Effect of Trade Liberalization on Economic Development in Nigeria, 1980-2013” in International Journal of Developing and Emerging Economies, Vol.4, No.2 [February], pp.15-27. Available online also at: http://www.eajournals.org/wp-content/uploads/Effect-of-Trade-Liberalization-on-Economic-Development-in-Nigeria-1980-2013.pdf [accessed in Karu, Nigeria: November 25, 2017].
Akyuz, Yilmaz. (2005). “The WTO Negotiations on Industrial Tariffs: What is at Stake for Developing Countries?” in Discussion Paper for Turkish Economic Association, No.8. Available online also at: https://www.econstor.eu/bitstream/10419/83228/1/dp_2005-08.pdf [accessed in Karu, Nigeria: November 25, 2017].
Anderson, R.G., D.L. Hoffman & R.H. Rasche. (2002). “A Vector-Error Correction Forecasting Model of the US Economy” in Journal of Macroeconomics, 23, pp.569-598.
Birdsall, Nancy & Amar Hamoudi. (2002). “Commodity Dependence, Trade, and Growth: When ‘Openness’ is Not Enough” in Center for Global Development: Working Paper Number 7. Available online also at: https://www.cgdev.org/sites/default/files/2783_file_cgd_wp007.pdf [accessed in Karu, Nigeria: December 22, 2017].
Capolupo, Rosa. (2008). “The New Growth Theories and Their Empirics after Twenty Years” in Economics Discussion Papers: The Open-Access, Open-Assessment E-Journal, 27 [September]. Available online also at: http://www.economics-ejournal.org/economics/journalarticles/2009-1 [accessed in Karu, Nigeria: November 25, 2017].
Dornbusch, Rudiger & Yung Chul Park. (1987). “Korean Growth Policy” in Brookings Papers on Economic Activity, Volume 2. Available online also at: https://www.brookings.edu/wp-content/uploads/1987/06/1987b_bpea_dornbusch_park_collins_corbo.pdf [accessed in Karu, Nigeria: December 22, 2017].
Duncan, R. & D. Quang. (2005). Trade Liberalization, Economic Growth, and Poverty Reduction Strategies. Australia: Commonwealth of Australian, AusAID.
Dutta, D. & N. Ahmed. (2000). “Trade Liberalization and Industrial Growth in Pakistan: A Co-Integration Analysis”. Working Paper. Sydney, Australia: Center for South Asian Studies.
Eaton, Jonathan & Samuel Kortum. (2012). “Putting Ricardo to Work” in Journal of Economic Perspectives, Volume 26(2), pp.65-90.
Ebong, Friday, Elijah Udoh & Frances Obafemi. (2014). “Globalization and the Industrial Development of Nigeria: Evidence from Time Series Analysis” in International Review of Social Sciences and Humanities, Vol.6, No.2, pp.12-24. Available online also at: https://pdfs.semanticscholar.org/424d/5397ca3770a739aa47ad937d4f22bfdfb093.pdf [accessed in Karu, Nigeria: November 25, 2017].
Engle, R.F. & C.W.J. Granger. (1987). “Cointegration, Error Correction: Representation, Estimation, and Testing” in Econometrica, 55, pp.251-76.
Grossman, G.M. & E. Helpman. (1991). “Trade, Knowledge Spillovers, and Growth” in European Economic Review, Volume 35(3), pp.123-145.
Haberler, G. (1988). International Trade and Economic Development. USA [United States of America]: International Center for Economic Growth.
Helpman, Elhanan & Paul R. Krugman. (1985). Market Structure and Foreign Trade. Cambridge, MA: MIT Press.
Johansen, S. (1988). “Statistical Analysis of Co-Integrating Vectors” in Journal of Economic Dynamics and Control, Volume 12, pp.231-54.
Johansen, S. & K. Juselius. (1990). “Maximum Likelihood Estimation and Inference on Co-Integration with Applications to the Demand for Money” in Oxford Bulletin of Economics and Statistics, Volume 52, pp.169-210.
Kilic, Rehim. (2002). “Absolute and Comparative Advantage: Ricardian Mode”. Available online at: https://msu.edu/course/ec/340/Kilic/lecture3.pdf [accessed in Karu, Nigeria: November 25, 2017].
Kurz, Heinz D. (1997). “What Could the 'New' Growth Theory Teach Smith or Ricardo?” in Economic Issues, Volume 2, Part 2 [September]. Available online also at: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.655.1348&rep=rep1&type=pdf [accessed in Karu, Nigeria: December 22, 2017].
Lucas, R.E. (1988). “On the Mechanics of Economic Development” in Journal of Monetary Economics, Volume 22(2), pp.211-224.
MacKinnon, J.G. (1991). “Critical Values of Cointegration Tests” in R.F. Engle & C.W.J. Granger [eds]. Long-Run Economic Relationships. New York: Oxford University Press.
Matin, K.M. (1992). “Openness and Economic Performance in Sub-Saharan Africa: Evidence from Time Series Cross-Country Analysis” in Working Paper, 1025. Washington D.C.: World Bank.
Mododou, T.A. (2007). “The Impact of Trade Liberalisation on Economic Growth in the Gambia” in IDEP: African Institute for Economic Development and Planning. Available online also at: www.unidep.org [accessed in Kaduna, Nigeria: September 19, 2017].
Monisola, Oluwaleye Janet. (2014). “Public Policy and Trade Liberalisation in Nigerian Economic Development” in Research on Humanities and Social Sciences, Vol.4, No.15. Available online also at: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.875.8428&rep=rep1&type=pdf [accessed in Karu, Nigeria: November 25, 2017].
Mputu, Christelle Luengu. (2016). “Terms of Trade, Trade Openness, and Economic Growth in Sub-Saharan Africa” in Culminating Projects in Economics, Paper 3. Available online also at: http://repository.stcloudstate.edu/cgi/viewcontent.cgi?article=1001&context=econ_etds [accessed in Karu, Nigeria: November 25, 2017].
Mullineux, Andy W. & David G. Dickinson. (1992). “Equilibrium Business Cycles: Theory and Evidence” in Journal of Economic Surveys, Volume 6, Issue 4 [December]. Available online also at: https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1467-6419.1992.tb00156.x [accessed in Karu, Nigeria: December 22, 2017].
Nwinee, Barisua Fortune & Omiete Victoria Olulu-Briggs. (2016). “Trade Openness, Financial Development, and the Nigerian Economy” in American International Journal of Contemporary Research, Vol.6, No.3 [June]. Available online also at: http://www.aijcrnet.com/journals/Vol_6_No_3_June_2016/17.pdf [accessed in Karu, Nigeria: December 22, 2017].
Odili, Okwuchukwu. (2015). “Real Exchange Rate Volatility, Economic Growth and International Trade in an Emerging Market Economy: Evidence from Nigeria” in International Journal of Academic Research in Business and Social Sciences, 2015, Vol.5, No.7 [July]. Available online also at: http://hrmars.com/hrmars_papers/Real_Exchange_Rate_Volatility,_Economic_Growth [accessed in Karu, Nigeria: December 22, 2017].
Pack, H. & L.E. Westphal. (1986). “Industrial Strategy and Technological Change: Theory versus Reality” in Journal of Development Economic, Volume 22, pp.87-128.
Razmi, Arslan. (2013). “Correctly Analyzing the Balance of Payments Constraint on Growth” in Economics Department Working Paper Series, No.166. Available online also at: https://scholarworks.umass.edu/econ_workingpaper/166 [accessed in Karu, Nigeria: December 22, 2017].
Ricardo, David. (1817). “Principles of Political Economy and Taxation” in Thirlwall [ed]. Trade, Trade Liberalization, and Economic Growth: Theory and Evidence. Nigeria: African Development Bank, Economic Research Paper, No.63.
Ricardo, David. (1973). The Principle of Political Economy and Taxation. London: J.M. Dent and Sons Ltd.
Romer, P.M. (1990). “Endogenous Technological Change” in Journal of Political Economy, Volume 98.
Saxonhouse, Gary R. (1993). “What Does Japanese Trade Structure Tell Us about Japanese Trade Policy?” in Journal of Economic Perspectives, Vol.7, No.3 [Summer], pp.21-43. Available online also at: https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.7.3.21 [accessed in Karu, Nigeria: November 25, 2017].
Shafaeddin, S.M. (2005). “Trade Liberalization and Economic Reform in Developing Countries: Structural Change or De-Industrialization?” in UNCTAD Discussion Papers, 179. Available online also at: http://www.networkideas.org/featart/aug2005/De_Industrialization.pdf [accessed in Karu, Nigeria: November 25, 2017].
Smith, Adam. (1776). “An Inquiry into the Nature and Causes of the Wealth of Nations” in Thirlwall [ed]. Trade, Trade Liberalization, and Economic Growth: Theory and Evidence. Nigeria: African Development Bank, Economic Research Paper, No.63.
Smith, Adam. (1976). An Inquiry into the Nature and Causes of the Wealth of Nations. Chicago: University of Chicago Press.
Soo, Kwok Tong. (2012). “Intra-Industry Trade: A Krugman-Ricardo Model and Data”. Available online at: http://www.lancaster.ac.uk/staff/sook/papers/KrugmanRicardo7.pdf [accessed in Karu, Nigeria: December 22, 2017].
Thirlwall, A.P. (2000). “Trade, Trade Liberalization, and Economic Growth: Theory and Evidence” in African Development Bank: Economic Research Paper, 63.
Ucak, Ayhan. (2015). “Adam Smith: The Inspirer of Modern Growth Theories” in PROCEDIA: Social and Behavioral Sciences, 195, pp.663-672. Available onlile also at: https://ac.els-cdn.com/S1877042815037374 [accessed in Karu, Nigeria: November 25, 2017].
WB [World Bank]. (1987). World Development Report. New York: Oxford University Press.
DOI: https://doi.org/10.2121/susurgalur.v6i1.985
DOI (PDF): https://doi.org/10.2121/susurgalur.v6i1.985.g883
Refbacks
- There are currently no refbacks.
SUSURGALUR: Jurnal Kajian Sejarah & Pendidikan Sejarah. This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License