Trade Openness and Economic Growth in Nigeria

Student: Emmanuel Saturday Okon (Project, 2025)
Department of Banking and Finance
University of Benin, Benin City, Edo State

Abstract

This study examines the relationship between trade openness and economic growth of Nigeria from 1982 to 2023. Using the Fully Modified Least Squares (FMOLS) econometric technique, the findings of the study reveal that trade openness has a positive and significant impact on economic growth, underscoring the importance of liberal trade policies in driving sustainable development. However, the relationships between exchange rate, foreign direct investment, and inflation rate with economic growth are statistically insignificant, suggesting their limited direct influence on Nigeria's economic performance during the study period. The study concludes that trade openness is a critical determinant of Economic growth, while the insignificant effects of other variables point to structural and macroeconomic challenges. The study recommendations include fostering trade liberalization, improving exchange rate stability, enhancing the quality of foreign direct investment, controlling inflation, and implementing structural reforms to unlock Nigeria economy's full potential. This study highlights the need for a diversified and holistic policy approach to achieving long-term economic growth in Nigeria

Keywords
trade openness economic growth nigeria
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