POLICY RECOMMENDATIONS FOR EXCHANGE RATE IN NIGERIAN ECONOMY

Summary of Findings

This research work evaluates the impact of international trade on the economic growth of Nigeria within the period; 1970-2007. To examine the impact of international trade on Nigeria’s economic growth, international trade was captured with Export (EXPT), Import (IMPT), Exchange Rate (EXR) and Interest Rate (INT)^R while economic growth was captured with Gross Domestic Product (GDP).

Considering the statistical techniques employed, the following results were obtained;

(i)               International trade has significant impact on economic growth in Nigeria within the period under study; 1970-2007.

(ii)             The entire regression plane is statistically significant. This means that the joint influence of the explanatory variables (EXP, IMPT, EXR and INTR) on the dependent variable (GDP) is statistically significant;

(iii)          The computed coefficient multiple of determination (R^{2 =}0.872500) shows that 87.25% of the total variations in the dependent variable (GDP) is influenced by the variation in the explanatory variables namely Export (EXPT), Import (IMPT), Exchange Rate (EXR) and Interest Rate (INT)^R while 12.75% of the total variation in the dependent variable is attributable to the influence of other factors not included in the regression model.

(iv)           There is presence of positive first-order serial correlation (autocorrelation) in the model.

 Conclusion  

International trade and economic growth cannot be over-emphasized in the economics of development. In the light of this, effort was made to evaluate the impact of international trade on the Nigeria’s economic growth from 1970-2007. With the aid of recent revamping financial and economic policies, International trade has witnessed a significant growth in Nigeria.

However, international trade often requires supporting investments in distribution and marketing facilities. Improved transportation and communications permit multinational firms to spread production according to each country’s comparative of advantage. Thus, many foreign investments increase imports and exports. Countries frequently accompany international trade and foreign direct investment. Consequently, International trade is an important main element of the growing interdependence of the world’s economics commonly referred to as globalization.

Policy Recommendations

Sequel to the researcher’s findings, the following recommendations are presented:

·               There is need for LDCs especially Nigeria to create room for foreign investment with more advanced technology so that they could register increases in the rate of innovation thereby leading international trade growth.

·               Nigerian government should embark on trade liberalization policies which encourage trade openness and equally benefit Nigeria’s economic growth.

·               Import substitution strategies should be adopted by the government so as to restrain excess import. This will help Nigerians to improve on export drive. Thus, increasing international trade relationship Nigeria and other countries.

·               CBN authority should undertake monetary policies which will favour international trade between Nigeria and other countries.

·               The idea of consuming nation should be discourage as government empower producers through provisions of subsidies. This will as well help to boost the marginal propensity to produce. Thereby, increasing the stock of goods for international trade.