International Trade and Economic Growth in an Oil-Dependent Country: Case of Nigeria

Abstract

This paper examines the effect of disaggregated international trade on the economic growth of Nigeria. The data and specified model were analysed with Autoregressive Distributed Lag and Toda-Yamamoto techniques. It was found that both non-oil and oil exports enhance economic growth. However, non-oil and oil imports impede economic growth. Furthermore, overall causality results revealed that while non-oil and oil exports and non-oil imports had bi-directional causality with economic growth, nonoil imports did not have causality with economic growth. Consequently, the government should prioritise export-led policy to facilitate economic performance in Nigeria. Findings emphasised the need for the diversification of the economy for higher economic growth and sustainability in
the long run. The paper enriches the literature on the relationship between international trade and economic growth in Nigeria by adequately disaggregating trade components to reflect the economic structure of the Nigerian economy. Also, it brings new empirical findings on the trade-growth relationship in an oil-dependent developing country. This study can provide a theoretical framework for research in countries that oil dependent.