The Impact of Trade Openness on Economic Growth and Development (1980 – 2021): The Nigerian Experience

Abstract The study examines the impact of trade openness on economic growth and development in Nigeria from 1980 to 2021. The variables used in the study include the proxy of capital and labour, trade openness, exchange rate, and import and foreign reserves. A different diagnostic test was carried out which included correlation, unit root test and Autoregressive Distributed Lag. Descriptive statistics was used to examine if the explanatory variables and the dependent variable exhibit time-varying volatility and leptokurtosis characteristics. The Augmented Dickey-Fuller (ADF) unit root test was also carried out to check the long-run and short-run relationship of the variables while Аutоrеgrеssіvе dіstrіbutеd lаg (АRDL) bоunds tеstіng рrосеdurе and standardised beta was used to achieve the two specific objectives that were set. The АRDL bоunds tеstіng рrосеdurе revealed that the proxy of capital and labour is the only variables that determine economic growth and development in Nigeria, but trade openness has a positive insignificant effect on economic growth and development in Nigeria. Also, in the short run, the variables that significantly determine economic growth and development are the proxy of capital and labour, exchange rate and import.