Economic Liberalization and Growth in Nigeria: An Empirical Analysis
Keywords:
Balance of payment, exchange rate, economic liberalization, foreign direct investment, gross domestic product, interest rateAbstract
This study analyzed the influence of liberalization on growth in the Nigerian economy. Employing time series analysis, data from the Central Bank of Nigeria and other relevant sources were empirically examined. The study is guided by the hypothesis on the effect of interest rate, foreign direct investment (FDI), the balance of payment, and exchange rate on real gross domestic product. Data were analyzed with some statistical tools: descriptive statistics, trend analysis, unit root test, co- integration test, long and short run ARDL error correction model, and post estimation test as well as a stability test. The outcome of the long-run analysis shows a significant positive effect on liberalization, induced due to exchange rates in Nigeria. Similarly, the short-run analysis also indicates that interest rate, FDI, and balance of payment all trigger a significant positive impact in relation to liberalization. Exchange rate has a detrimental effect on Nigeria’s progress toward economic liberalization. Based on the findings, the article recommends amongst others: Government and policymakers should reduce the rate of interest, to promote financial assistance from the financial institution, encourage FDI by providing security and making the working environment conducive for socioeconomic activities, and increase the balance of payment by promoting industrialization through giving of grant and loan to the infant industries.
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