Title: Export Diversification and Economic Growth in Nigeria: An Empirical Test of Relationship Using a Granger Casualty Test
Abstract: AbstractThis study used a thirty (30) years dataset of Oil, manufacturing and agricultural share of total exports of Nigeria as independent variables and per capita income as the dependent variable which is used to capture economic development and welfare, which is important at a time the government of Nigeria is focusing on diversifying the economy. Thus, this study is an inevitable tool for policy makers and sector actors to properly optimize the benefits in their attempts at expanding the export basket of the country. This paper also analyzes theories and several attempts by the government at export diversification, some still ongoing and others not effective due to the changing need of the economy. The result estimation shows that all the variables used in the study are stationary at first differenced and also the Johansen co-integration test confirm the existence of a long-run relationship between the variables. It is of high importance to note that the granger casualty test indicated that there is a uni-directional relationship between Per Capita income and all the variables except Agricultural share of export which exhibits a bi-directional causal effects. This confirm the need for the country to look into diversifying the economy with a view to deepen the impacts of other sector on socio-economic development of the people. The study actually confirmed the assertion of relationship between export diversification and economic growth in Nigeria, using the Granger Casualty test which is the first time this method is adopted in the study of the impact of export diversification of the economy of the country, which has added to the empirical evidence.Keywords: export diversification, per capita income, oil export, agricultural export, manufacturing export.(ProQuest: ... denotes formulae omitted.)INTRODUCTIONThe need for most countries in the world to diversify their economy, as well as, expanding their source of foreign earning has been the call of most trade exports and economist since the start of this millennium, this which may be adduced to the fact that facts have shown that there exist a favourable relationship between trade and economic growth. Theoretically, it has been argued that a change in export rates could change output, therefore, increase in export is often considered to be a main determinant of the production and employment growth of an economy which is shown in Gross Domestic Product (GDP) growth (Ramos, 2001).Therefore, since economic growth and development have been the core target of most developing and developed world macroeconomic policies, this then make the process of economic development to be a change in the social and economic structure as countries move from producing poor-country goods to rich-country goods. In most developing countries including Nigeria, exports (mostly primary goods) remained one of the few channels which significantly sustain and contribute to higher income per capita growth rates of a country. This is as result of high dependence on a product or narrow export basket which often make the countries' economy to be affected by unstable global demand trends. So export basket mix is, thus, becoming the only way to alleviate these particular constraints. By doing this, the issue of global competitiveness of a country's exports will be accelerated as cross-border trade exposes country's exports to global competition.The last decade of the 20th century saw the transformation of international trade and agreements. Particularly, the establishment of the World Trade Organization (WTO) in 1995; the establishment and reforms of various unilateral, bilateral and regional agreements has brought about changes in terms of trade. The African regional was not left out in this recent development considering the fact that 56% of African exports are mainly primary commodities. Thus, this transformation has created the need for African countries opportunity to diversify their export basket in order for them to maximize the gains of international trade, which can be through introduction of new product to old markets; new products to new markets; and old products to new markets (Kamuganga, 2012). …
Publication Year: 2013
Publication Date: 2013-01-01
Language: en
Type: article
Access and Citation
Cited By Count: 11
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot