External Trade and Nigeria Economy: An Impact Analysis

This study tried to examine the determinants of the external trade in Nigeria. The objective of the study is to identify the major factors influencing external trade growth and make policy suggestions. This study made use of time series secondary data from Central Bank of Nigeria, International Financial Statistics, World Bank, etc. and test the significant relationship between the level of total trade as dependent variable while GDP, inflation rate, capacity utilization, exchange rate, government expenditure, interest rate, import and export are independent variables. The result reveals that GDP, inflation rate, capacity utilization exchange rate and export are all positively significant while government expenditure, interest rate and import are negatively signed. Empirical investigations using E-View package reveals that the R2 adjusted explain 75 percent of the total variation in the model showing a good fit. The econometric results suggested that the focus of the country’s trade should be on the development of dynamic, rather than static comparative advantage of the nation i.e promotion of non-primary exports and non-oil export, government should take necessary measures to enhance productivity and competitiveness of enterprises in the export sector by upgrading infrastructures, enhancement of human capital development, development and improvement of technology through increase allocation of resources to research and development etc., Keywords: External Trade, Economic Growth and Government Expenditure