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Export - led growth or growth – driven exports? Evidence from Nigeria

  • Alimi, Santos R.
  • Muse, Bernard O.

This paper examined the role of export in the economic growth process in Nigeria. Time series data ranging from 1970 to 2009 was used and the study employs unit root testing, co-integration analysis and VAR Granger Causality/Exogeneity Wald Tests to analyze annual time series data from Nigeria. The study uses three measures of export namely, Total export, Oil export and Non-Oil export. This enhances the stability and robustness of results. The unit root test showed that both economic growth and export are integrated of order one, i.e. 1(1). The cointegration test confirmed for model 1 and model 2 (where total exports and oil exports are used respectively as proxy for Nigeria exports) that economic growth and export are cointegrated, indicating an existence of long run equilibrium relationship between the two as confirmed by the Johansen cointegration test results. However, there is no evidence of cointegration between export and economic growth for model 3. Granger causality was applied to test the causal relationship between GDP and economic growth. The results show that there is evidence of uni-directional causality between export and economic growth in Nigeria in three measures of exports and the direction of causality runs strictly from economic growth to exports. This study provided support for growth-led export in case of Nigeria. Thus effort should be direct towards policies that will enhance economic growth such as import substitution industrialization (ISI) strategy, in order to impact more on exports.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 53468.

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Date of creation: Oct 2012
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Publication status: Published in British Journal of Economics, Management & Trade 2.3(2013): pp. 89-100
Handle: RePEc:pra:mprapa:53468
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  1. Chow, Peter C. Y., 1987. "Causality between export growth and industrial development : Empirial evidence from the NICs," Journal of Development Economics, Elsevier, vol. 26(1), pages 55-63, June.
  2. Titus O. Awokuse, 2003. "Is the export-led growth hypothesis valid for Canada?," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 126-136, February.
  3. Fajana, Olufemi, 1979. "Trade and growth: The Nigerian experience," World Development, Elsevier, vol. 7(1), pages 73-78, January.
  4. Yao, S. & Zhang, Z., 2000. "Openness and Economic Performance: a Comparative Study of China and the Asian NIEs," Papers 131, Portsmouth University - Department of Economics.
  5. Ahmad, Jaleel & Kwan, Andy C. C., 1991. "Causality between exports and economic growth : Empirical evidence from Africa," Economics Letters, Elsevier, vol. 37(3), pages 243-248, November.
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  8. Thomas I. Palley, 2011. "The Rise and Fall of Export-led Growth," Economics Working Paper Archive wp_675, Levy Economics Institute.
  9. Aamer Abu-Qarn & Suleiman Abu-Bader, 2001. "The Validity of the ELG Hypothesis in the MENA Region: Cointegration and Error Correction Model Analysis," Working Papers 134, Ben-Gurion University of the Negev, Department of Economics.
  10. Jong Park & Penelope Prime, 1997. "Export performance and growth in China: a cross-provincial analysis," Applied Economics, Taylor & Francis Journals, vol. 29(10), pages 1353-1363.
  11. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
  12. Voxi Heinrich Amavilah, 2003. "Exports and Economic Growth in Namibia, 1968-1992," Development and Comp Systems 0307004, EconWPA.
  13. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
  14. Cheung, Yin-Wong & Lai, Kon S, 1993. "A Fractional Cointegration Analysis of Purchasing Power Parity," Journal of Business & Economic Statistics, American Statistical Association, vol. 11(1), pages 103-12, January.
  15. Andre c Jordaan & Joel hinaunye Eita, 2007. "Export And Economic Growth In Namibia: A Granger Causality Analysis," South African Journal of Economics, Economic Society of South Africa, vol. 75(3), pages 540-547, 09.
  16. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
  17. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501, March.
  18. Ahmad, Jaleel & Harnhirun, Somchai, 1995. "Unit roots and cointegration in estimating causality between exports and economic growth: Empirical evidence from the ASEAN countries," Economics Letters, Elsevier, vol. 49(3), pages 329-334, September.
  19. Yousif Khalifa Al-Yousif, 1997. "Exports and economic growth:some empirical evidence from the Arab Gulf countries," Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 693-697.
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