Impact Of Trade Openness On Economic Growth:Evidence From Nigeria 1986-2016

This research focused on the impact on the Nigerian economy from 1986 to 2016 of the adoption of trade liberalization policy.The liberalization of trade is about breaking down barriers and integrating the world market into a global economy.The Nigeria economy’s inability to grow beyond its present state despite the positive effects of globalization across the world economy is a very serious case for study.The research made use of National and International database secondary data.In a multi-linear regression model,Ordinary Least Square(OLS)method was used for analysis of data..To assess the impact of the 3 economic sectors as a result of trade reform policies,the first model was formulated with GDP as the proxy for dependent variable economic growth,while the explanatory variables are the value-added of agriculture,industry,service sectors with a dummy variable representing the SAP Trade Reform of 1986.To further investigate how several key macroeconomic indicators supporting the 3economic sectors affected growth,a second model was also formulated using GDP as the dependent variable while the independent variables were FDI,Trade Openness,Capital Formation,Exports,Imports,Service Sector Value Added % GDP and Dummy Variable for the 1986 SAP Trade Reform.The findings from the OLS analyses of the Model 1 showed that the 3 sectors of the economy all had positive and significant impacts on economic growth although Agriculture and Industry performed below expectations.Model 2 findings showed that FDI,trade openness,capital formation,and SAP Trade reforms have negative economic growth relationships while exports,imports,and service sector value added exercises positive economic output relationships with only FDI being insignificant.The implications of these findings are that the growth of Nigerian economy has not been significantly affected by trade liberalization.It is recommended to further deregulate and encourage policies that promote local production,enhance exports and further open the economy of Nigeria to foreign trade.