THE CONSEQUENCES OF TRADE LIBERALIZATION FOR ECONOMIC GROWTH IN NIGERIA: A STOCHASTIC INVESTIGATION

This paper investigated the growth implications of trade liberalization arising from tariff reductions on final goods and on intermediate inputs, using Nigeria data. The ordinary least square multiple regression analytical method was used to examine the relationship between trade liberalization and economic growth. Some statistical tools were employed to explore the relationship between these variables. The analysis started with the test of stationarity and co-integration of Nigeria’s time series data. Thereafter an error correction mechanism was used to determine the long-run relationship among the variables examined. The empirical study found that the data were stationary and co integrated and showed that there is a long run significant relationship between trade liberalization and economic growth in Nigeria. The multiple regression results showed a significant and positive relationship between trade liberalization and economic growth in Nigeria. These results were robust to a number of econometric specifications. The econometric results and conclusion support the need for the government to develop the trade sector towards greater effectiveness and efficiency. In complement of the above, it is important for the government to consolidate and maintain the credibility of the trade policies for sustainable growth and development.