The Relationship between Institutional Framework and International Trade: An Application of the Gravity Model

Jude Omokugbo Obasanmi and Festus Osasere Imasuen
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Jude Omokugbo Obasanmi: Department of Economics, Faculty of Social Sciences, Ambrose Alli University, Ekpoma, Nigeria
Festus Osasere Imasuen: Dept. of Business Administration and Management, Sch. Of Business, Edo State Polytechnic, Usen, Edo State, Nigeria.

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 6, 2254-2263

Abstract: This study empirical investigated the relationship between institutional framework and Nigerian Trade spanning from 1998 to 2023 through the application of gravity model. The study considered rule of law (RoL), government effectiveness (GE), control of corruption (CoC), regulatory quality (RQ) and political and operational stability (POS) as tenets of institutional framework. The gravity regression model was used to determine the direction and magnitude of the independent variables on the dependent variable. The matrix correlation was used to check for multicollinearity among the independent variables, while the descriptive statistics was used to test for the normality of the variables. The results revealed that Nigeria has weak institutional framework. Also, the result revealed that POS, RoL and CoC had significant impact on Nigerian trade while RQ and GE had insignificant impact on Nigerian trade. The researcher recommended that Nigeria government should improve on its current institutional framework statue in-order to improve its trade.

Date: 2024
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