Trade Openness and Output Growth in Nigeria: an Econometric Analysis (1970-2007)

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TRADE OPENNESS AND OUTPUT GROWTH IN NIGERIA: AN ECONOMETRIC ANALYSIS (1970-2007)

A PROJECT SUBMITTED IN PARTIAL FULFILIMENT FOR THE COURSE REQUIREMENT FOR THE AWARD OF BACHELOR OF SCIENCE (B.Sc) DEGREE IN ECONOMICS

BY

ALUM EMEKA .J.
EC/2006/259

DEPARTMENT OF ECONOMICS
FACULTY OF MANAGEMENT AND SOCIAL SCIENCES CARITAS UNIVERSITY AMORJI-NIKE EMENE, ENUGU

AUGUST 2010

APPROVAL PAGE
This is to certify that this project was undertaken by Alum Emeka Japhet and duly supervised and approved as having met the requirement for the award of Bachelors of Science (B.Sc.) degree in the department of economics, Caritas University. Amorji-Nike, Enugu State.

…………………………….Date:…………………. Ojike, R. O.
Project Supervisor

………………………..Date:…………………
Peter. C. Onwudinjo Esq
Head of Department

……………………………..Date:………………… Dr. C.C. Umeh
Dean, Faculty of Management
And Social Science

………………………….Date:……………….. External Examiner

DEDICATION
To God Almighty the Giver of wisdom and the creator of heaven and earth.

ACKNOWLEDGMENT
To my father and mother Mr. and Mrs. Alex, F. Alum, To BABA God in Heaven. To my supervisor Mr. Ojike R.O. for his kind supervision throughout the course of this project. Thank you very much. To my H.O.D Peter C. Onwudinjo Esq, all my lecturers, Mrs. Okonkwo P.C, Mr. Agu S.V, Mr. Ojike R.O, Dr Umeadi C.C, Dr Asogwa, Mr. Ugwu, Prof. Udabah and Prof. Onah for their inspiration throughout the course of my studies. May God Almighty bless them. To my brothers and sister Eloka, Uchenna and Mercedes. To my siblings Brother Prince, Brother Dan, Brother Godwin, and to all my Aunties, And all the Alum Families. To my friends Aduaka Hilary (Pojas), Ejike Ezeorah (Madukanaya), Joseph. O. Faithful (Kpanko), David (Night Walker), David Eme Njokwu (H.O.D), Chibuike, Kala, Mgbade, K.c, and all those that I could not include their names due to circumstances. To my class mates, Femi, Titi, Nwankwo John, Emenike, John, Enesi, Goodness, Ezinne, Jenifer, Onyekachi Kalu, and all my course mates, it was fun learning together. Special thanks to all my room mates, Chidera, Richard, Funcho, Koja, Godwin and Pastor Methusela. Alum Emeka Japhet

ABSTRACT
This research work studies the international competitiveness of the Nigerian economy in the global market by analyzing the relationship between trade openness and output growth in Nigeria. Using time-series data over the period 1970-2007, we show that output growth of the Nigeria economy is a function of two sets of shocks; (i) external shocks (openness and real exchange rate) and (ii) internal shocks (real interest rate and unemployment rate). A non-monotonic and an ANCOVA econometric models are postulated in order to capture the structural pattern of the relationship between openness and output growth as well as the policy effect of structural Adjustment program (SAP). The result shows that there is an inverted U-shape (no-monotonic) relationship between openness and output growth in Nigeria and the optimum degree of openness for the economy is estimated to be about 67%. Also, the liberalization policy of the SAP has positive economic effect on the output growth. The ECM reveals that 79% of the equilibrium error is being corrected in the next period. We concluded that unbridled openness may have deleterious effect on the real growth of output of the Nigerian economy.

TABLE OF CONTENTS
Title pagei
Approval pageii
Dedicationiii
Acknowledgement iv
Abstractv
Table of contents...
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