Is Trade Openness Suitable for Growth of the Nigerian Manufacturing Sector? An Autoregressive Distributed Lag Approach
Journal Title: Academic Journal of Economic Studies - Year 2018, Vol 4, Issue 2
Abstract
The paper investigates the relationship between trade openness and manufacturing sector output in Nigeria from 1980–2016 using secondary data collected from the Central Bank of Nigeria (CBN) statistical bulletin (2016) and the National Bureau of Statistics (various issues). Trend analysis, descriptive statistics and unit root test were carried out for the study. For estimation analysis, we employed the Bounds (ARDL) test, Pairwise Granger Causality test, ECM test and stability test. The result conformed to economic theory and suggests that trade openness and foreign direct investments have positive and significant relationship with manufacturing sector output for the period under review. However, exchange rate did not conform to economic theory by appearing with a negative sign and it was not statistically significant for the period under review. The independent variables explained 86% of the total variation in manufacturing sector output in Nigeria. The Bounds test indicates that a long run relationship exist between trade openness, foreign direct investment, exchange rate and manufacturing sector output. Pairwise Causality test shows a bi-directional causation between trade openness and manufacturing sector output with the causation effect running from trade openness to manufacturing sector output and from manufacturing sector output to trade openness. Thus, the paper recommends that Nigeria’s manufactured products should be of top notch quality so that they can compete favourably with other manufactured goods produced by other countries in the international market. In addition, effort should be made in formulating policies that will improve both domestic and foreign trade as the economy strives to achieve growth through trade. Thus, there should be macroeconomic stability through the use of suitable trade, fiscal and monetary policies which if properly harmonized would be jointly reinforcing in achieving common macroeconomic objective of favourable balance of trade, price stability and economic growth. Finally, government should consider a set of reliable economic policies that will strengthen bilateral and multilateral trade agreements; this will go a long way in restoring the confidence of trade partners, thus increasing the rate of multilateral trade partners to Nigeria.
Authors and Affiliations
Anthony Ilegbinosa Imoisi
Keywords
Related Articles
- EP ID EP302745
- DOI -
- Views 102
- Downloads 0
Factors Affecting the Financing of Profitability Using Non Performing Financing as Moderating Variable in Sharia Business Unit of Bank Sumut (Bank of North Sumatera) in North Sumatera
Shariah financing has also various kinds of agreement. Its fund has be distributed to low risky sector in order to produce the optimal income in the preparation of Bank Sumut UUS for spin off in 2018. The objective of th...
Impact of Corruption on Banking Sector Stability: Evidence from Middle East and North African Countries
This paper focuses on the effect of corruption on the stability of conventional interest and Islamic free interest banks in MENA states using post crisis age (2008-2016). Adopting system Generalized Method of Moments (GM...
The Analysis of Factors Affecting Price Earnings Ratio on the Company Shares Registered in Jakarta Islamic Index
The purpose of this research is to find out and analyze the effect of factors affecting price earning ratio on the shares registered in Jakarta Islamic Index. It is a causal research, a causality research which is based...
Managerial Culture - Factor of Influence of Performance
Managerial culture directly influences the performance of an entity in both positive and negative ways. A strong managerial culture determines the performance of the entity, the credibility of managers by promoting their...
Effects of Capital Structure and Profitability on Corporate Value with Company Size as the Moderating Variable of Manufacturing Companies Listed on Indonesia Stock Exchange
This study aims to determine the effect of capital structure and profitability on the corporate value by company size as the moderating variable on manufacturing companies listed on Indonesia Stock Exchange from 2012 to...