External Sector and Nigeria’s Economic Growth (1990-2022)

Abstract

This study examined the impact of external sectors on Nigeria’s Economic growth from 1990 to 2022. The paper utilised aggregate annual time series data of the Nigerian Economy. The data were analysed using the unit root test, the bound co-integration test, and the short-run error correction model test. The test for stationarity using the Augmented Dickey-Fuller (ADF) showed that all the variables were stationary after first differencing, i.e., integrated of order (1). The analysis revealed that imports, exchange rate, and foreign direct investment are negatively related to real gross domestic product. Exports are positively related to economic growth in Nigeria within the study period. Also, except for exports, all the other explanatory variables – imports, exchange rate, and foreign direct investment did not impact significantly on real gross domestic product in Nigeria within the research period. Based on these findings, it recommends, among others, that the government should encourage export diversification of non-oil sector exports, promoting agriculture and manufacturing sub-sectors of the economy. The Nigerian government should encourage private investors to import more capital goods to boost production in the local economy.