Empirical Analysis of Trade and Economic Growth Nexus: A Regression-Based Approach

The nexus between trade and growth can be traced back to the mercantilist theoretical analysis. The expositions and assumptions that underline the mercantilist theory provides clear insights into how trade stimulates economic growth in a country. This study tries to examine the trade-growth correlation of the Nigerian economy between 1980 and 2023. The econometric model adopted in this study was estimated using Ordinary Least Square (OLS) with data of the macroeconomic variables from the Central Bank of Nigeria Statistical Bulletin. The empirical results from the econometric analysis showed that there was a structural break of the Nigerian economy as a result of trade liberalization of 1986. Oil exports and imports have a positive and significant impact on growth. Non-oil exports have a positive but insignificant impact on growth, while inflation had negative but significant impact on growth and exchange rate had a negative and significant impact on growth. From the results, it was recommended that, there is need for intensive resource industries, gradual scaling down of barriers to trade, and promotion of domestic and foreign investment in the service industries.