EFFECT OF TRADE OPENNESS AND FOREIGN DIRECT INVESTMENT ON NIGERIA’S ECONOMIC GROWTH
Keywords:
Trade Openness, Foreign Direct Investment, JEL Classification: F18, Q17Abstract
Over time, Nigeria’s foreign investment has not yielded the desired result that would drive stable inflation, exchange rate, and enhance economic growth in Nigeria. This is as a result of the bottleneck that hinder foreign trade and encourage mono export drive (crude oil) in the country. The study examined the effect of trade openness and foreign direct investment on economic growth, using the Auto-regressive Distributed Lag (ARDL) model from 1986 to 2023. The result revealed direct relationship between trade openness (TOP), foreign direct investment (FDI), and economic growth in the long run. Specifically, trade openness had a direct and significant relationship with economic growth at 5% level in the long run. In the same vein, foreign direct investment (FDI) had an inverse and significant relationship with economic growth at 5% level in the long. Inflation (INF) exhibited an inverse and insignificant relationship with economic growth, while exchange rate revealed a direct and insignificant relationship with economic growth in the long run. The paper recommended that government needs to do more by ensuring stable inflationary rate, attract foreign direct investment (FDI) through production diversification that would enhance foreign exchange earnings, stabilize inflation and boost economic growth in Nigeria.References
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