Impact of Export Earnings on the Economic Growth of Nigeria (1981-2013)
CHAPTER ONE
OBJECTIVES OF THE STUDY
The objectives of this study are to:
- Examine the impact of export earning on the economic growth of Nigeria.
- Investigate the relationship between export earning and economic growth in Nigeria.
- Investigate the long run relationship between export earning and economic growth of Nigeria.
CHAPTER TWO
REVIEW OF RELATED LITERATURES
THEORETICAL REVIEW
The literature on international trade which suggests that exports have a positive impact on economic growth is known as the Export-led-growth (Giles & Williams, 2000). Different reasons have been proposed for explaining the evidence found in previous studies dealing with this issue on export-led growth. The simplest explanation is that, as
the contribution to growth made by domestic consumption is limited to the size of regional (or national) markets, sales to foreign markets represents an additional consumption demand which increases the amount of real output produced in the economy (Giles & Williams, 2000). Another more elaborated explanation is that exporting is associated with more productive firms (Bernard & Jensen, 1999; Bernard & Wagner, 1997), and thus export-led growth at aggregate level may be the result of both the accumulation of within-firm productivity gains from export participation, or the reallocation of resources from comparatively less productive non-exporters to more productive exporters (Bernard & Jensen, 2004; Roberts & Tybout, 1991).
According to Uche (2009), the relevance of exports in boosting economic growth and prosperity is captured in the theoretical justification for international trade. In the mercantilist economic thought, for instance, foreign trade is seen as an indispensable engine of economic growth and prosperity (Roll, 1953; Bhatia, 1978). Indeed, foreign trade under mercantilism is considered to be profitable only when there is positive balance of trade thus implying that exports are the most crucial aspect of international trade. But as pointed out by Ozughalu and Ajayi (2004), if every country ensures that it gets a surplus in international trade, there will be high degree of protectionism and many barriers to the flow of foreign trade; and these are incompatible with the essence of globalization. A highly robust theoretical underpinning for international trade lies in the classical economic theory of comparative cost advantage. The theory of comparative cost advantage states that global output will reach its optimum level if every country specializes in the production of the commodity (or commodities) in which it has comparative cost advantage over others; this is seen as the basis for profitable trade (Ozughalu and Ajayi, 2004). In contemporary economics, the dominant model of comparative cost advantage is known as Heckscher – Ohlin model.
As pointed out by Sodersten and Reed(1994), this is a theory of long-term general equilibrium in which two factors of production – labour and capital – are both mobile between sectors. The Heckscher – Ohlin theory postulates that international trade – of which exports are expected to constitute the major component – will significantly reduce the gap between the rich and poor countries. The theory contends that inter-country differences in factor endowments are the basis for foreign trade. Comparative cost advantage comes as a result of different factor intensities in the production of various commodities (Sodersten and Reed, 1994).
CHAPTER THREE
METHODOLOGY
INTRODUCTION
This section specifically deals with the methodology of the study attention has been focused on source of data, model formulation and method of data analysis. The data used in this study were mainly secondary data. They covered the period of 32 years and obtained from CBN statistical bulletin (1981-2013 ) and economic journals. Others were obtained from textbooks and websites.
Research Design
This study focused on the effect of foreign earning on economic growth in Nigeria. However, this study focused particularly on the impact of oil and non-oil earning on the economic growth of Nigeria. The study will cover a period of (32) years (1981-2013). Secondary data will be amassed from the Central Bank of Nigeria’s Bulletin for the periods covered in the study.
CHAPTER FOUR
PRESENTATION OF DATA AND DATA ANALYSIS
DATA ANALYSIS
At this section we looked at the result of the estimation done with a view to determining the impact of export on the growth of Nigerian economy.
CHAPTER FIVE
RECOMMENDATION AND CONCLUSION
This study, as one of the empirical investigations on the relationship between export earnings and growth in Nigeria has provided a good understanding of the impact that export earnings has on the growth of Nigeria’s economy with particular reference to oil and non-oil export. The study covered the period of 1981 to 2013 and time series data obtained from CBN were used. The econometrics tools used in this study include; Ordinary Least Squares (OLS) and Granger Causality test which were used to determine the level of impact that one variable has on the other as well as the direction of causality between them. The result arising from our findings indicates that oil export positively and significantly impacted on the growth of Nigeria’s economy for the period under review. It was also shown in the result that non-oil export has a positive and significant impact on GDP. The result of the granger causality test indicates that there is unidirectional causality between oil export and GDP,. This finding is in line with that of Odusola and Akinlo(1995), Ekpo and Egwaikhide(1994) and Idowu(2005) who used the traditional Granger causality test in examining whether the growth-led-export hypothesis is valid for Nigeria. The results of the study indicated that a unidirectional relationship between exports and economic growth exists in Nigeria. Based on this, we conclude that growth-led-export hypothesis is applicable in the Nigeria context. Therefore to improve the living standard of the populace emphasis should not be directed only to the export sector of the economy but should be far reaching as the growth in the economy also has the potential to drive the export sector of the economy.
REFERENCES
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