Trade openness and output growth in nigeria

Project Abstract

<p> <em>This research work studies the international competitiveness of the Nigerian economy in the global market by analyzing the relationship between trade openness and output growth in Nigeria. Using time-series data over the period 1970-2007, we show that output growth of the Nigeria economy is a function of two sets of shocks; (i) external shocks (openness and real exchange rate) and (ii) internal shocks (real interest rate and unemployment rate). A non-monotonic and an ANCOVA econometric models are postulated in order to capture the structural pattern of the relationship between openness and output growth as well as the policy effect of structural Adjustment program (SAP). The result shows that there is an inverted U-shape (no-monotonic) relationship between openness and output growth in Nigeria and the optimum degree of openness for the economy is estimated to be about 67%. Also, the liberalization policy of the SAP has positive economic effect on the output growth. The ECM reveals that 79% of the equilibrium error is being corrected in the next period. We concluded that unbridled openness may have deleterious effect on the real growth of output of the Nigerian economy.</em> <br></p>

Project Overview

<p> </p><p><strong>&nbsp;INTRODUCTION</strong></p><p>1.1 &nbsp; &nbsp; &nbsp; Background of study</p><p>1.2 Trade openness and output growth</p><p>Historical Experience of the Nigeria economy</p><p>1.2 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Statement of the research problem</p><p>1.3 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Objectives of the study</p><p>1.4 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Statement of the research hypothesis</p><p>1.5 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Justification of the study</p><p>1.6 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Significance of the study</p><p>1.7 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Scope and limitation of the study</p><p><strong>CHAPTER TWO: LITERATURE REVIEW</strong></p><p>2.1 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Theoretical literature</p><p>2.1.2 Theory of customs union and free trade areas &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; 2.1.3Models of export-led growth</p><p>2.2 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Empirical literature</p><p>2.3 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Limitation of previous studies</p><p><strong>CHAPTER THREE: METHODOLOGY </strong></p><p>3.1 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Analytical framework</p><p>3.2 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Model specification</p><p>3.2.1 Test of stationarity</p><p>3.2.2 Test of co integration</p><p>3.2.3 Error correction model</p><p>3.3 &nbsp; &nbsp; &nbsp; Justification of the model</p><p>3.4 &nbsp; &nbsp; &nbsp; Estimation techniques</p><p>3.5 &nbsp; &nbsp; &nbsp; Evaluation Procedure &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; 3.5.1 Economic test (a priori expectation)</p><p>3.5.2 Statistical (first order) test</p><p>3.5.3 Econometric (second order) test</p><p>3.6 &nbsp; &nbsp; &nbsp; Sources of data and software for estimation</p><p><strong>CHAPTER FOUR: PRESENTATION AND ANALYSIS OF RESULTS</strong></p><p>4.1 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Introduction</p><p>4.2 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Presentations of regression results</p><p>4.2.1Test of stationarity</p><p>4.2.2 Test of co integration</p><p>4.2.3 The Error correction model (ECM)</p><p>4.3 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Interpretation and Evaluation of result</p><p>4.3.1Evaluation based on economic criteria</p><p>4.3.2Evaluation based on statistical criteria</p><p>4.3.3 Evaluation based on econometric criteria</p><p>4.4 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Evaluation of the working Hypotheses</p><p><strong>CHAPTER FIVE: SUMMARY, POLICY PRESCRIPTION</strong></p><p><strong>AND CONCLUSION </strong></p><p>5.1 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Summary</p><p>5.2 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Policy Recommendations</p><p><strong>LIST OF TABLES AND FIGURES</strong></p><p>Figure 1: &nbsp; &nbsp; &nbsp; &nbsp; Growth Rate of Real GDP</p><p>Figure 2: Trend of Real GDP</p><p>Figure 3: Growth of Export and Import</p><p>Figure 4: The Degree of Openness</p><p>Table 1: Openness Indicators</p><p>Table 2: A Priori Expectation</p><p>Table 3: Results of Model 1</p><p>Table 4: Results of Model 2</p><p>Table 5: Results of Stationarity test</p><p>Table 6: Results of Co integration test</p><p>Table 7: Results of the Error Correction Model</p><p>Figure 5: Non- Monotonic Relationship between TPN and &nbsp;RGDP</p><p>Table 8: Summary of the T-Test</p><p>Table 9: Pair-Wise Correlation Matrix</p> <br><p></p>