INSTITUTIONAL QUALITY, INTERNATIONAL TRADE, AND ECONOMIC DEVELOPMENT: THE MODERATING ROLE OF GOVERNANCE IN DEVELOPING COUNTRIES
Mohammed Alkali and Sameerah Haruna
Volume 6 Issue 1
Abstract
The study assessed the influence of institutional quality and international trade on the economic development of Nigeria while governance moderated the relationships. In specific terms, it examined the impact of regulatory quality and export diversification on GDP per capita, the effect of control of corruption and exports on poverty reduction and the moderating role of governance on these relationships. An ex post facto research design was employed using annual time-series data between 1996 and 2024 obtained from the World Bank, Worldwide Governance Indicators, UNCTAD, Central Bank of Nigeria, National Bureau of Statistics. The study utilized the Autoregressive Distributed Lag (ARDL) Bounds Testing approach to estimate the short-run and long-run effects. Furthermore, ADF and Phillips-Perron unit root test, Bounds Cointegration Test and Error Correction Model (ECM) were used for the estimation and diagnostic validation of the models. Governance was introduced through interaction terms with institutional quality and international trade variables. The results of the study showed that both regulatory quality and export diversification significantly enhance GDP per capita; and also that both control of corruption and exports have a positive and significant impact on poverty reduction. In addition, Governance significantly enhanced the relationship between institutional quality and international trade and economic development.The results of the diagnostic tests confirmed the stability, proper specification and freedom from serial correlation and heteroskedasticity of the estimated models. Based on these results, the study concludes that better quality governance amplifies the developmental benefits of institutional quality and international trade, thus advocates for enhancement in regulatory institutions, fight against corrupt practices, deepening in export diversifications, as well as adoption of good governance in the development agenda. Keywords: Institutional Quality, International Trade, Economic Development, Governance, Regulatory Quality, Control of Corruption, Export Diversification, ARDL, Nigeria.
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