TRADE LIBERALIZATION, NON-OIL EXPORTS AND ECONOMIC GROWTH IN NIGERIA: AN EMPIRICAL INVESTIGATION USING STRUCTURAL VECTOR AUTOREGRESSIVE ANALYSIS

The study assessed the impact of trade liberalization on economic growth in Nigeria through non-oil exports. Employing quarterly time series data from 1986 – 2023, the analysis utilized the Structural Vector Autoregressive (SVAR) model to assess the transmission effects of trade liberalization on economic growth. The findings reveal that trade liberalization exerts a positive and statistically significant influence on economic growth through the channel of non-oil exports. In addition, the impulse response functions confirm a sustained and significant positive relationship among trade liberalization, non-oil exports, and economic growth. The forecast error variance decomposition further demonstrates that trade liberalization accounts for a substantial share of the short-run variation in non-oil exports, while the contribution of non-oil exports to economic growth is modest in the short run but exhibits an upward pattern over time. The major findings of the study are that: Non-oil exports have a positive and statistically significant shock on trade liberalization in Nigeria; real gross domestic product has a positive and statistically significant shock on trade liberalization during the study period; and non-oil exports have a statistically significant contemporaneous effect on economic growth in Nigeria. It is recommended based on the findings that the Federal Government of Nigeria, through the Central Bank of Nigeria (CBN) and the Federal Ministry of Trade and Industry should institutionalize a robust framework for supporting the non-oil export sector; the Federal and State Governments, in collaboration with the Ministry of Works and Housing should embark on a deliberate and sustained investment drive in infrastructure that facilitates the movement of agricultural and manufactured products from rural areas and production hubs to ports and export processing zones; and that, the Federal Ministry of Trade and Industry in collaboration with the Nigerian Customs Service and the Federal Ministry of Finance, should undertake a comprehensive review of existing trade tariffs, especially those on critical inputs for non-oil export production. These policies will likely promote the development of the non-oil exports sector which will enhance economic growth in Nigeria. The intuition of the study suggests how a resource-dependent economy such as Nigeria can explore non-oil exports, a relatively underexplored channel in Nigeria’s growth literature.