TRADE LIBERALIZATION AND MANUFACTURING SECTOR OUTPUT IN NIGERIA: EVIDENCE FROM 1981–2023
Keywords:
Trade liberalization, Output growth, Manufacturing sector, Dynamic OLS, Foreign direct investmentAbstract
The manufacturing sector is widely regarded as a key driver of economic activities, yet its growth in Nigeria has remained sluggish despite various trade reforms and strategies. This study investigated the impact of trade liberalization on manufacturing sector output in Nigeria from 1981 to 2023. Employing annual time series data and the Dynamic Ordinary Least Squares (DOLS) estimation technique, the study analysed the relationship between trade liberalization and output growth, incorporating variables such as average tariff rate, exchange rate, inflation rate, interest rate, and foreign direct investment. The result revealed that the coefficient of Trade Liberalization Dummy (TLD) was found to be -17.14423 with a p-value of 0.8535 indicating that, on average, the period of trade liberalization in Nigeria was associated a 17.14 unit decline in manufacturing output growth. Besides, although individual explanatory variables were found to be statistically insignificant, the overall model was statistically significant, indicating that the joint effect of these variables plays a significant role in explaining variations in manufacturing sector output. The findings suggested that trade liberalization alone may not significantly influence the sector unless complemented by broader macroeconomic and structural policies. The study recommended a holistic and integrated policy approach rather than isolated trade reforms to enhance the performance and competitiveness of Nigeria’s manufacturing sector.References
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