Import Trade Liberalization and Economic Growth Rate in Nigeria

Proponents of ‘free trade’ agree that increasing trade through liberalization would lead to economic growth and overall development of the economy. However, statistics have shown that Nigeria’s economy has not fared better despite the adoption of numerous trade liberalization policies by successive administrations. Hence, this study examined the relationship between trade liberalization and economic growth in Nigeria from 1986 to 2023, using the Autoregressive Distributed Lag (ARDL) technique to identify the long-run and short-run effects of trade liberalization policies on economic growth in Nigeria. The time-series data used in this study were sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin, World Bank Development Indicators, National Bureau of Statistics (NBS), and National Population Commission (NPC). The GDP growth rate was used as the dependent variable, while the Average Import Tariff (AIT) was used as the independent variable. The confounding variables in the model include Foreign Direct Investment (FDI), Institutional Quality (INSQ), Remittances, Exchange Rate, Gross Fixed Capital Formation, Domestic Credit to the Private Sector, and Secondary School Enrollment. The findings show that trade liberalization in Nigeria had a significant negative impact on economic growth in the short-run, while a significant positive impact was recorded in the long-run. This study, therefore, recommended targeted tariffs for vulnerable sectors of the economy, increasing efficiency in non-oil revenue collection, institutional and infrastructural reforms, which will help to amplify the long-term benefits of trade liberalization. Keywords: Trade Liberalization, Economic Growth, AIT, Institutional Quality, ARDL.