Impact of Trade Reform on Nigeria's Trade Flows

Abstract

This study examines the impact of trade liberalization on Nigeria's trade flow. It covers the period from 1973 to 2006 and employs the Ordinary Least Squares (OLS) and Generalized Method of Moment (GMM) techniques. Results reveal among other findings that all categories of export except oil perform better during the trade liberalization period than before the trade liberalization period. Further analysis suggests that while the impact is significant enough to produce positive growth of manufactured exports, it is not so in the case of agricultural and aggregate non-oil exports. The results indicate that all categories of import experience improved performance during trade liberalization compared to the pre-liberalization period. However, the result suggests that in most cases the impact is not strong enough to turn the mean growth of imports positive. The study concludes that trade liberalization has not produced an impact that is significant enough to boost Nigeria's trade flows.

Keywords:

• trade liberalization
• trade flows
• exports
• imports
• Nigeria

Notes

¹There is a dearth of studies in this area since 2004.

²These results can be provided when requested. The results may be attributed to the fact that the variables were used in growth terms.

³In very few cases where it exists initially, AR terms have been used to correct the problem.

⁴Significant at a little above the 10.0% level (10.7%).

⁵(For manufactured export: 0.112 + 0.229 = +0.341); (for agricultural export: −0.814+ 0.629 = −0.285) and (for non-oil export: −0.876 + 0.400 = −476). The negative sign of the intercepts or constant terms implies that the mean growth is negative.

⁶When the coefficients of the dummy variables are added to the constant terms, the results are negative.