IMPACT OF TRADE OPENNESS ON MANUFACTURING OUTPUT IN NIGERIA
Badamasi Sani Mohammed, Shehu Aliyu and Muhammad Sagir Dutsin-ma
Volume 4 Issue 1
Abstract
Trade liberalization otherwise known as trade openness is one of the policies adopted by the federal government dated back to the introduction of Structural Adjustment Programme (SAP) in the country to allow free movement of good and service among the countries. Trade-growth nexus is identified by two conflicting viewpoints. One theory contends that trade liberalization will reduce industrial productivity; while the other holds that trade openness will increase manufacturing productivity. The study investigates the impact of trade openness on manufacturing output in Nigeria from 1981 to 2022 using Structural vector autoregressive (SVAR) model. The findings of the paper show that trade openness has no any significant impact on manufacturing output in Nigeria as its detriment manufacturing output in Nigeria, while exchange rate and interest rate have significant impact on manufacturing output in Nigeria, with a shock to exchange rate having a much more significant and positive impact on manufacturing output. This implies that trade liberalization policy does not have much impact on manufacturing output in Nigeria. Based on these results, the study recommends that trade policy should be geared toward protecting our local manufacturing sector through imposition of high import duties of the similar product produce in the country to protect the manufacturing sector. Keywords: Manufacturing Output, Structural Vector Autoregressive (SVAR) Model, Trade Openness
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