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Determinants of International Trade in Nigeria
American Journal of Economics and Business Management,
Vol. 6 No. 8 (2023): American Journal of Economics and Business Management
Abstract
Nigeria has consistently contended with an increasingly volatile and trade flow imbalance for the past one decade which was partly exacerbate by the succession of crises buffeting the global economy, with the COVID-19 pandemic that gave way to the war in Ukraine, inflation, monetary tightening, and widespread debt distress. This study examines the determinants of international trade in Nigeria from 1999-2022 using econometric regression technique of the Ordinary Least Square (OLS) to model the extent to which cost of doing business, import tariff, inflation rate, infrastructure and exchange rate has influenced international trade proxied by trade openness in Nigeria. All data used are secondary data obtained from the Statistical Bulletin of Central Bank of Nigeria (CBN) and National Bureau of Statistics (NBS) annual publications and World Bank DataBank. Results of the OLS revealed that infrastructure and exchange rate have a positive impact on international trade in Nigeria. On the other hand, import tariff, cost of doing business and inflation has a negative impact on international trade in Nigeria. Thus, increase in import tariff, cost of doing business and inflation will bring about a decline in foreign trade in Nigeria. The study revealed that cost of doing business, import tariffs, inflation rate, infrastructure and exchange rate are good and are the major determinants of international trade in Nigeria because the coefficient of determination (R2) is given as 53%, which shows that the explanatory power of the variables is moderately strong. The study recommends that the government should create an environment that fosters business growth by investing in energy-efficient technologies and advocating for improvements in the energy sector to reduce costs and ensure a stable power supply. The government should simplify import and export procedures to facilitate international trade by aassessing the economic impact of existing tariffs on both domestic industries and consumers. This will help to consider the potential benefits of reducing tariffs, such as increased competition, lower prices for consumers, and improved market access for exporters among others.
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- Abinabo, P. & Abubakar, A. (2023). Trade Openness and Economic Growth in Nigeria. Nigerian Journal of Management Sciences, 24(2), 217-288.
- Adebayo, K., Adeola, T., & Ezeh, M. (2022). Exchange rate stability and its impact on Nigerian trade performance. International Journal of Economics and Finance, 14(4), 56-78.
- Adegbite, A., & Adeniyi, O. (2021). Trade policies and economic growth: Evidence from Nigeria’s non-oil exports. Journal of Economic Policy Analysis, 15(3), 45-62.
- Adepoju, J., Akinlabi, S., & Bello, T. (2019). Infrastructure development and export performance in Nigeria. African Development Review, 31(2), 210-223.
- Ajayi, R., Bakare, J., & Olumide, A. (2019). The impact of tariff liberalization on Nigeria's manufacturing sector. Journal of International Trade and Policy Studies, 11(3), 100-118.
- Alabi, F., Edeh, P., & Yusuf, R. (2021). The cost of doing business in Nigeria: Challenges and prospects. African Business Review, 20(1), 34-50.
- Bello, R., & Akinola, O. (2021). Bridging the infrastructure gap in Nigeria through public-private partnerships. Economic Infrastructure Quarterly, 17(2), 77-89.
- Bulut, E., & Yasar, Z.R. (2023). Determinants of export performance in emerging market economies: new evidence from a panel quantile regression model. İstanbul İktisat Dergisi - Istanbul Journal of Economics, 73(1), 453-472. https://doi.org/10.26650/ISTJECON2022-1213878
- Ezeaku, C., Obi, T., & Uzo, K. (2022). Diversification and trade performance: Lessons from Nigeria’s non-oil sector. Nigerian Journal of Development Studies, 8(1), 50-68.
- https://invoice.ng/blog/challenges-of-doing-business-in-nigeria
- Ighodaro, C., Ume, N., & Amadi, P. (2020). Institutional quality and trade performance in sub-Saharan Africa: A focus on Nigeria. Journal of African Economic Studies, 12(4), 230-245.
- National Bureau of Statistics [NBS], (2023). Foreign Trade in Goods Statistics.
- Nwosu, E., Okeke, S., & Onu, J. (2021). Import tariffs and industrial competitiveness in Nigeria. Economic Policy Analysis Quarterly, 19(2), 88-102.
- Ojo, Y., Adigun, L., & Bello, A. (2019). Non-tariff barriers and export competitiveness: Evidence from Nigeria. Global Trade Journal, 10(1), 31-48.
- Okafor, J., Eze, U., & Obi, F. (2020). Inflation dynamics and trade competitiveness in Nigeria. Nigerian Economic Review, 25(3), 44-60.
- Okeke, R., Anene, A., & Yusuf, B. (2019). Trade openness and economic diversification in Nigeria: Policy implications. West African Economic Journal, 9(2), 66-82.
- Okenna, N. P. & Adesanya, B. M. (2020). International Trade and the Economies of Developing Countries. American International Journal of Multidisciplinary Scientific Research, 6(2), 31-39.
- Okonjo-Iweala, N. (2023). World Trade Statistical Review. 2023. World Trade Organization
- Schneider-Petsinger, M. (2023). Global trade in 2023: What’s driving reglobalization? Briefing Paper. Global Economy and Finance Programme, January 2023
- Silva Opuala-Charles & Oshilike Ijeoma Victoria (2023) Impact of Ease of Doing Business on Foreign Direct Investment in Nigeria. Journal of Economics & Management Research. SRC/JESMR-211. DOI: doi.org/10.47363/JESMR/2023(4)174
- Sule Magaji & Mansur Mohammed Abubakar (2023). Impact of International Trade on Economic Growth: The Granger Causality Test Approach. Journal of Development Economics and Finance, Vol. 4, No. 1, pp. 97-119. https://DOI: 10.47509/JDEF.2023.v04i01.06.
- Umeh, B., & Igwe, K. (2022). Inflation control measures and their implications for Nigeria’s trade sector. Central Bank Economic Journal, 10(1), 22-35.
- United Nations Conference on Trade and Development (UNCTAD) (2018). World Economic Situation and Prospects. New York: United Nations.
References
Abinabo, P. & Abubakar, A. (2023). Trade Openness and Economic Growth in Nigeria. Nigerian Journal of Management Sciences, 24(2), 217-288.
Adebayo, K., Adeola, T., & Ezeh, M. (2022). Exchange rate stability and its impact on Nigerian trade performance. International Journal of Economics and Finance, 14(4), 56-78.
Adegbite, A., & Adeniyi, O. (2021). Trade policies and economic growth: Evidence from Nigeria’s non-oil exports. Journal of Economic Policy Analysis, 15(3), 45-62.
Adepoju, J., Akinlabi, S., & Bello, T. (2019). Infrastructure development and export performance in Nigeria. African Development Review, 31(2), 210-223.
Ajayi, R., Bakare, J., & Olumide, A. (2019). The impact of tariff liberalization on Nigeria's manufacturing sector. Journal of International Trade and Policy Studies, 11(3), 100-118.
Alabi, F., Edeh, P., & Yusuf, R. (2021). The cost of doing business in Nigeria: Challenges and prospects. African Business Review, 20(1), 34-50.
Bello, R., & Akinola, O. (2021). Bridging the infrastructure gap in Nigeria through public-private partnerships. Economic Infrastructure Quarterly, 17(2), 77-89.
Bulut, E., & Yasar, Z.R. (2023). Determinants of export performance in emerging market economies: new evidence from a panel quantile regression model. İstanbul İktisat Dergisi - Istanbul Journal of Economics, 73(1), 453-472. https://doi.org/10.26650/ISTJECON2022-1213878
Ezeaku, C., Obi, T., & Uzo, K. (2022). Diversification and trade performance: Lessons from Nigeria’s non-oil sector. Nigerian Journal of Development Studies, 8(1), 50-68.
https://invoice.ng/blog/challenges-of-doing-business-in-nigeria
Ighodaro, C., Ume, N., & Amadi, P. (2020). Institutional quality and trade performance in sub-Saharan Africa: A focus on Nigeria. Journal of African Economic Studies, 12(4), 230-245.
National Bureau of Statistics [NBS], (2023). Foreign Trade in Goods Statistics.
Nwosu, E., Okeke, S., & Onu, J. (2021). Import tariffs and industrial competitiveness in Nigeria. Economic Policy Analysis Quarterly, 19(2), 88-102.
Ojo, Y., Adigun, L., & Bello, A. (2019). Non-tariff barriers and export competitiveness: Evidence from Nigeria. Global Trade Journal, 10(1), 31-48.
Okafor, J., Eze, U., & Obi, F. (2020). Inflation dynamics and trade competitiveness in Nigeria. Nigerian Economic Review, 25(3), 44-60.
Okeke, R., Anene, A., & Yusuf, B. (2019). Trade openness and economic diversification in Nigeria: Policy implications. West African Economic Journal, 9(2), 66-82.
Okenna, N. P. & Adesanya, B. M. (2020). International Trade and the Economies of Developing Countries. American International Journal of Multidisciplinary Scientific Research, 6(2), 31-39.
Okonjo-Iweala, N. (2023). World Trade Statistical Review. 2023. World Trade Organization
Schneider-Petsinger, M. (2023). Global trade in 2023: What’s driving reglobalization? Briefing Paper. Global Economy and Finance Programme, January 2023
Silva Opuala-Charles & Oshilike Ijeoma Victoria (2023) Impact of Ease of Doing Business on Foreign Direct Investment in Nigeria. Journal of Economics & Management Research. SRC/JESMR-211. DOI: doi.org/10.47363/JESMR/2023(4)174
Sule Magaji & Mansur Mohammed Abubakar (2023). Impact of International Trade on Economic Growth: The Granger Causality Test Approach. Journal of Development Economics and Finance, Vol. 4, No. 1, pp. 97-119. https://DOI: 10.47509/JDEF.2023.v04i01.06.
Umeh, B., & Igwe, K. (2022). Inflation control measures and their implications for Nigeria’s trade sector. Central Bank Economic Journal, 10(1), 22-35.
United Nations Conference on Trade and Development (UNCTAD) (2018). World Economic Situation and Prospects. New York: United Nations.