IMPACT OF INTERNATIONAL TRADE ON ECONOMIC GROWTH: THE GRANGER CAUSALITY TEST APPROACH

Abstract

The study analyzes the impact of international trade on economic growth in Nigeria. Using Granger Causality test it indicates that trade balance does not Granger cause real gross domestic product at 5% level of significance. It also indicates that the degree of trade openness does not Granger cause real gross domestic product at 5% level of significance. The regression result shows that trade is not statistically significant to economic growth. Also, the result shows that trade openness is not statistically significant to economic growth. It is recommended that there is need for effective foreign exchange management capable of ensuring optimal productivity in the critical sectors of the economy. This can be achieved by diversification of the economy away from oil with a view to expanding export of non-oil goods and services to strengthen naira exchange rate under the managed float regime.