THE EFFECTIVENESS OF NON-OIL EXPORT GROWTH TOWARDS ECONOMIC DEVELOPMENT IN NIGERIA: A VECTOR ERROR CORRECTION MODEL (VECM) TECHNIQUE

Emma Collins N.O,

Abstract


The Nigeria export sector is characterized by the dominance of single export commodity oil and a prominent feature of this sector has remained basically the same since independence. However, the adverse consequences of over dependence on oil trade heightened the need and call to diversify the Nigerian economy away from oil towards the direction of non-oil export trade. Proponents of this increased proportion of non-oil export argue that the non-oil trade has great potentials to propel Nigerian
economy to the desired growth and development. The paper thus seeks to evaluate the effectiveness of Non-Export Growth towards Economic Development in Nigeria between 1990 and 2014 employing vector error correction model (VECM) technique. Findings from the study revealed that long run equilibrium relationship exists among the variables used in the study which are Non-oil exports (NOE), Exchange rates (EXR), trade openness (TO) and per capita income (PCI). The results from the VECM
showed that coefficient of the error correction term ECT (-1) carries the expected negative sign which illustrates speed of adjustment from the previous year's disequilibrium towards long-run convergence of the model to equilibrium. NOE was found to have direct and significant relationship with the development of Nigeria's economy. The exchange rate was found to have a positive influence on non-oil exports within the period under study. TO was also found to have a positive influence on the growth of Nigeria's PCI, and has also been relatively significant over the period of
study. The study thus recommends that there is the need to systematically control and regulate her trade with other countries to avoid mounting pressures on the exchange rates. Exchange rates depreciation has a dampening multiplier effects on NOE and ultimately on PCI in general.


Keywords: Non-oil exports, Exchange rates, Trade openness, Per-capita income, Vector Error correction model.
JEL Classification: C51, C52, F13, R38, D24, D92, I15, O23, O47

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International Journal of Management Science Research ISSN ISSN 2536 – 605X(Print)

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