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International Competitiveness and Growth of the Nigerian Economy: A Structural VAR-Based Perspective

Philip O. Alege and Henry Okodua
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Philip O. Alege: Department of Economics and Development Studies, College of Development Studies, Covenant University, Ota, Nigeria

Research in Applied Economics, 2014, vol. 6, issue 4, 53-74

Abstract: The empirical relationship between international competitiveness of the Nigerian economy and its consequences on economic growth dynamics was investigated in this study. Using export performance and real effective exchange rate as proxies for international competitiveness of the Nigerian economy, the relationship between international competitiveness of the Nigerian economy and its growth dynamics have been analytically explored in this study using the structural VAR framework. The study found that growth of real output contemporaneously responds positively to a positive shock to real effective exchange rate but responded contrary to theoretical expectation in the opposite direction to a positive shock to export performance. The structural/orthogonalized impulse response analysis and the forecast error variance decomposition results were largely consistent with theoretical expectations as well as the short-run SVAR results. These results suggest that there are no serious misalignment issues with the Nigerian currency but cast doubt on the ability of the current export structure of the Nigerian economy to be growth inducing.

Keywords: International competitiveness; growth dynamics; Nigerian economy; SVAR (search for similar items in EconPapers)
Date: 2014
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