This paper examined the relationship between trade liberalization and
poverty reduction in Nigeria using quarterly data from 2000 to 2022. The
Augmented Dickey-Fuller test and Johansen co-integration test were used to
determine the stationarity of the time series data. The research used the Error
Correction Model (ECM) due to the stationarity status of the data. The findings
show that important variables (capital importation, trade openness, foreign
portfolio investment, foreign direct investment and poverty index) converge
over the long term, demonstrating the presence of a long-term link between
them. ECM is within the acceptable range of less than unity and has the anticipated negative sign. Specifically, trade
openness, capital importation and foreign
portfolio investment have positive impact on poverty level. The impact is
significant for capital importation and foreign portfolio investment while trade openness has insignificant impact on poverty level. Foreign direct
investment has negative and insignificant
impact on poverty level while exchange rate has positive and significant
impact on poverty level. It is therefore recommended that government should
enact trade policies that will make international trade favourable to Nigeria
and beneficial to the citizenry. The Government should ensure that values are
added to primary products being exported in order to gain more from trade
liberalization. The Government should
improve on the ease of doing business to attract and sustain more foreign
investors in critical sectors of the economy that have capacity to
increase output, income and reduce poverty.
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