IMPACT OF TRADE LIBERALIZATION ON ECONOMIC GROWTH IN NIGERIA

Abstract

Abstract The study explores the impact of trade liberalization on the economic growth of Nigeria. Trade liberalization is germane because of the increase reality of globalization in recent time and its successes in projecting the economies of China and the Asian Tigers to high growing economies. Amongst other things, trade liberalization promotes economic efficiency, technological diffusion of trade ideas and technology that are growth-inducing, lower consumer prices and increase exports of highly competitive exports. The flip side of trade liberalization however is the possibility of creating unemployment, saturation of domestic markets with poor standards goods and deliberate sabotage of indigenous production technology. The study leveraged on Hecksher-Ohlin (OH) Factor Endowment Theory as basis of Nigeria’s adoption of trade liberalization economic policy. The OH theory leverages on factor abundance as drive for trade specialization and exports. The data for the study were collected through secondary sources and were analyzed to validate the study’s hypotheses. The results showed while exception of degree of openness and balance of trade, all the variables showed positive impacts on economic growth. In terms of statistical significance, only external trade aligns with the 0.05 statistical thresholds. Base on the findings, the study therefore recommends economic restructuring to internalize the gains of trade liberalization, increase spending on research and development on trade technologies and efficient management of the exchange rate to make Nigeria’s exports attractive.