Is “Trade” Openness Valid for Nigeria’s Long-Run Growth: A Cointegration Approach?

Kanayo Ogujiuba, George Oji () and Adeniyi Adenuga

International Trade from University Library of Munich, Germany

Abstract: As a prelude to tariff reduction, the government is currently assessing the implications of significantly reducing tariffs due, in part, to its 2001 agreement with Ghana to quickly implement the ECOWAS Trade Liberalization Scheme. The obvious questions are: Should Nigeria liberalize to all countries on all products or opt for a discriminatory approach through unilateral trade agreements? Where do we think Nigeria should be open, and on what issues should they be closed? What should Nigeria’s trade policy be in the face of globalization’s negative effects and increasing protectionism of developed countries? The paper reviews key issues regarding an appropriate design of trade policy reforms in Nigeria and its validity for Nigeria’s long-run growth using the cointegration approach. The VAR approach was preferred because it overcomes the limitation and ambiguity associated with the regression results (Enders, 1995). Moreover, recent Monte Carlo evidence strongly favors the Johansen Maximum Likelihood method (JML) approach over the Engle-Granger’s (Dejong, 1992) in this regard. Econometric results show that there is no significant relationship between openness and economic growth, and that unbridled openness could have deleterious implications for growth of local industries, the real sector and government revenue.

Keywords: Trade Liberalization; Trade openness; Tariff reforms and Economic growth. (search for similar items in EconPapers)
JEL-codes: F14 F43 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2004-12-10
New Economics Papers: this item is included in nep-afr and nep-dev
Note: Type of Document - doc; pages: 21. Comments are welcome
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Citations: View citations in EconPapers (4)

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