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The Linkages between Trade Openness, Financial Openness and Economic Growth in Nigeria

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  • Sani Ibrahim, Saifullahi
  • Tanimu, Nuruddeen

Abstract

This study examined the nexus between economic growth and economic openness in Nigeria. Financial openness and trade openness were used to measure the extent to which Nigerian economy is open international competitiveness that could pave way for the actualisation of development agenda. The study used time series data covering a period of 32 years (1980 – 2012). In the analysis, the study used Johansen cointegration model, Vector Error Correction model (VECM) and Granger causality test. The result of cointegration reveals that there exists a long run relationship among the variables used in the model. The result further indicated a positive relationship between real GDP and trade openness and revealed a negative relationship between real GDP and financial openness. Also, the paper shows that population growth is undermining the growth of Nigerian economy. Moreover, the study documented a positive relationship between real GDP and government expenditure, while evidence of causal relation seems to run between trade openness and economic without feedback. The study concluded that outward-looking policies should be pursued with a pinch of salt as the chemistry of Nigerian economy is not suited to benefit freely from openness in the midst of laisse-faire doctrine.

Suggested Citation

  • Sani Ibrahim, Saifullahi & Tanimu, Nuruddeen, 2015. "The Linkages between Trade Openness, Financial Openness and Economic Growth in Nigeria," MPRA Paper 87494, University Library of Munich, Germany, revised 06 Aug 2016.
    • Handle: RePEc:pra:mprapa:87494
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    References listed on IDEAS

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    Cited by:

    1. Saifullahi Sani Ibrahim & Shuaibu Mukhtar & Ibrahim Musa Gani, 2017. "Relationship Between Electricity Consumption, Manufacturing Output and Financial Development: A New Evidence from Nigeria," Energy Economics Letters, Asian Economic and Social Society, vol. 4(3), pages 28-35, September.
    2. Abdullahi Shagali, Aminu & Sani Ibrahim, Saifullahi & Mukhtar, Shuaibu, 2020. "Contemporary issues on the sustainable rural development in Sub-Saharan Africa: A survey of salient literature," MPRA Paper 101443, University Library of Munich, Germany.
    3. Lethiwe Nzama & Thanda Sithole & Sezer Bozkus Kahyaoglu, 2022. "The Impact of Government Effectiveness on Trade and Financial Openness: The Generalized Quantile Panel Regression Approach," JRFM, MDPI, vol. 16(1), pages 1-20, December.

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    More about this item

    Keywords

    Growth; Openness;

    JEL classification:

    • G0 - Financial Economics - - General
    • G1 - Financial Economics - - General Financial Markets
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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