AN INVESTIGATION ON THE IMPACT OF INTERNATIONAL TRADE ON ECONOMIC GROWTH IN NIGERIA FROM 1991 TO 2021.

TOPIC IS SUITABLE FOR:
1-Department of Economics
2-Department of International Relations
3-Department of Banking and Finance
4-Department of Political Science

TOPIC:  AN INVESTIGATION ON THE IMPACT OF INTERNATIONAL TRADE ON ECONOMIC GROWTH IN NIGERIA FROM 1991 TO 2021.

TABLE OF CONTENT
Abstract
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Problem
1.3 Objective of the Study
1.4 Research Questions
1.5 Research Hypothesis
1.6 Significance of the Study
1.7 Scope of the Study
1.8 Definition of Terms
CHAPTER TWO: LITERATURE REVIEW
2.1 Conceptual Framework
2.2 Theoretical Framework
2.3 Empirical Literature
2.4 Apparisal of Literature
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction
3.2 Design
3.3 Population of the study and sample size
3.4 Instrument for Data collection
3.5 Data source
3.6. Model Specification
3.7. Method of Data analysis
3.8 Justification of Methods and Techniques used
3.9 Summary
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Introduction
4.2 Data Analysis
4.3 Summary of Key Findings
CHAPTER FIVE: DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS
5.1 Discussion of Findings
5.2 Summary
5.3 Conclusion
5.4 Recommendations
5.5 Limitations of the Study
5.6 Suggestions for Further Studies
References
Appendix

ABSTRACT
This study investigated the Impact of International Trade on Economic Growth in Nigeria from 1991 to 2021, using real gross domestic product (RGDP) as the dependent variable. The specific objectives were to: determine the impact of import trade, export trade, FDI, and exchange rate fluctuations on Nigeria’s economic growth. The study adopted an ex-post facto research design, utilizing secondary data covering a 31-year period (1991–2021). The population comprised Nigeria's macroeconomic indicators as published in the Central Bank of Nigeria Statistical Bulletin and World Bank databases. A purposive sampling technique was used to select relevant time series data specific to Nigeria. The data collection instrument involved the extraction of quantitative data on RGDP, import and export values, FDI inflows, and exchange rate indices. Data analysis was conducted using the Autoregressive Distributed Lag (ARDL) technique, preceded by unit root tests (ADF and PP), and followed by bounds cointegration testing, error correction modeling, and diagnostic tests. The findings revealed that import trade had a negative and significant impact on economic growth (coefficient = -0.5632, p = 0.024), while export trade positively and significantly influenced growth (coefficient = 0.8421, p = 0.008). FDI showed a positive but statistically insignificant effect (coefficient = 0.2153, p = 0.118), and exchange rate had a significant negative impact (coefficient = -0.4786, p = 0.036). Based on the results, it was recommended that Nigeria should promote import substitution through industrial policy, diversify the export base, strategically direct FDI into productive sectors, and maintain exchange rate stability through prudent macroeconomic management. These findings provide actionable insights for trade and economic policy reform in Nigeria. 

CHAPTER ONE
INTRODUCTION (Preview)
1.1 Background of the Study
The constant inclination towards exchange is one of the fundamental characteristics of human civilisation. Both social and economic evolution relies on exchange, either of ideas, services, or physical resources. In the modern age, the overall pattern is formalised as trade, or an organised and often regulated movement of goods and services between units or sovereign nations. According to Sadiq et al. (2021), trade is determinative in assigning resources along political borders thus maximising economic utility. Similarly, Ilori and Okonkwo (2022) argue that trade cannot be equated to the exchange of commodities because it can be utilized as a means of transferring technology, exchanging cultures, and institutional reform. Throughout historical evolution, the trade has become an inalienable factor of developing international relations, economic integration, and access to products that could not be produced in the country. This leads to the fact that the nature of trade is found in the fact that it is a platform through which economies work synergistically towards each other towards the growth, development, and sustainability.
It is on this basis that international trade is a more vibrant and extended platform where nations can carry economic activities beyond their borders. The importation and exportation of goods and services and international trade has a significant effect on the economical structures of respective countries involved. Aremu and Yusuf (2021) state that comparative advantage allows states to achieve optimal efficiency in production and maximise welfare. Nwachukwu et al. (2023) also observe that international trade also triggers competitiveness, enhances specialisation, and allows the movement of capitals and innovation across-border. This engagement will help in macroeconomic stability and structural change in the emerging economies. Classical and modern theories of international trade all support the dominance of international trade in economic globalisations and convergence. Therefore, international trade can be seen as an effective agent of national growth and global economic integration, influencing the policy, investment patterns, and regional collaboration in a significant manner.
International trade goes hand in hand with the indicator of economic growth, which is a long-term boost in the productive powers of a certain country, which is traditionally determined by gross domestic product (GDP). Economic growth has been taken as an important measure of national well-being, creation of employment opportunities and generation of wealth. According to Anya and Ebube (2021), sustainable economic growth is a necessary requirement to reduce poverty, infrastructural development, and living standards. International trade may be a strong force of growth, but it falls within the wider bounds of macroeconomics that entail investment, labour market and institutional quality. Dangana et al. (2022) also note that the growth that is triggered by trade is commonly realised in the form of technology spills, efficiency effects, and access to a more extensive market. However, trade performance in stimulating growth is restricted by domestic structural preparedness and absorptive capacities. Therefore the economic growth cannot be perceived in isolation without acknowledging the fact that it is intertwined with the international trade processes and other external sector activities.
Import trade is a two-fold determiner of economic growth. Importation can be regarded as the outflow of local capital at times, and at the same time they are the essential sources of machinery, intermediate goods and raw materials that are needed in local production. According to Ekanem and Lawal (2024), importation may result in increased productivity through a decrease in the cost of input and new technologies. In the same vein, Onuigbo et al. (2023) note that in developing economies, imports tend to supplement the capabilities of the domestic resources and fill the resource gaps. Import structure is notable however, because productive imports boost industrial capacity, but consumption-based imports may cause inflation. However, the import trade as a highly regulated process is an important tool in the process of domestic industries being integrated into the global value chains, thus leading to better productivity and growth in output.
Export trade, in its turn, is an outflow of goods and services produced in the country and makes a significant contribution to national income. The exports offer foreign exchange thus making it possible to purchase essential goods and services. Obadare et al. (2022) confirm the fact that the foundation of the economic resilience and sustainable growth is export diversification and value addition. Alade and Sulaimon (2024) also argue that strong export industry offers economies financial stability and protection against external shocks. Due to the growth in the export capacity of countries, industrialisation and employment creation usually occur, which has a positive effect on per capita income. Export growth is also capable of innovation and efficiency due to exposure to global standards and competition. As a result, export trade does not only hasten economic growth but also offers the much-needed avenues through which local companies can grow and modernise.
Foreign direct investment (FDI) is another important dimension that affects the interaction of trade and growth. FDI involves cross border capital flows whose purpose is to either establish or extend business presence and is often associated with trade flows. According to Ikenna et al. (2024), FDI acts as a source of technology transfer, management skills, and entry to the international markets. Zubairu and Mohammed (2021) also mention the fact that FDI leads to the establishment of employment, diffusion of innovations, and infrastructural development. The economies with liberal trade policies are more likely to appeal to foreign investors and have better market access and supply-chain efficiencies. Furthermore, backward and forward linkages in the domestic economy may be promoted by the existence of FDI, which increases the effect of trade on growth. Properly managed, FDI enhances the capacity of institutions, and helps in the achievement of economic diversity in developing economies.
Exchange rate (EXR) is one of the key variables in an analysis of trade dynamics and foreign direct investment (FDI) flows because it influences competitiveness, price of imported goods, and returns rate on foreign investment. Changes in the exchange rate may change the relative prices and hence affect the investment decisions, with an impact on macroeconomic stability. Ajibola et al. (2021) state that appreciation can decline export performance due to the reduced competitiveness of indigenous products, and depreciation can increase inflation due to elevated importing expenses. In addition, Eze and Okonkwo (2023) underline that continuous volatility undermines the trust of investors and makes the negotiations on trade difficult. To the developing economies, which mainly rely on commodity exports, the exchange-rate management has thus become a strategic tool where the policy-makers can influence how much they can make in terms of trade and the growth path.
With these interconnected ideas, Nigeria is an educative example that can be used to analyze the trade structures and their empirical impacts. The Nigerian economy has been experiencing massive change in the past 30 years. The liberalization of the policy, combined with a lasting investment by foreign sources, has strived both to increase the openness of trade and to seek FDI. According to Musa et al. (2023), such period has been marked by a strong transformation toward liberalization of trade and by divergent patterns in imports and exports which reflect changes in government intervention. At the same time, the economy has been faced by significant fluctuations in the exchange rates as well as structural inefficiencies that define the trade outcomes. The history of Nigeria also offers a test sample of the effects of divergent trade elements on growth because it has been characterized by abundance of resources, large domestic market and successive policy reforms. A targeted study of the same therefore provides useful insights to the process of operationalizing international trade mechanisms and its empirical consequence to economic growth in the context of a developing-country.

1.2 Statement of the Problem 
Though Nigeria has been well integrated into the world trading system, the real growth has not been in line with the expectations of a high population and resource rich economy. According to the theoretical models, international trade has the capacity to trigger growth through the enhancement of productivity, opening up to wider markets and technology transfer but empirical studies in Nigeria have shown otherwise. Iwuagwu et al. (2022) prove that the strong reliance of Nigeria on the imports of consumer goods and refined petroleum has weakened the level of industry production and sustained the trade deficit. On the contrary, the export portfolio is too focused on crude oil and the economy is also exposed to international price fluctuations. The optimal combination would have a mix of diversified exports, strategic imports, a steady flow of foreign investment and a favorable exchange-rate regime to ensure that there is a synchronisation of growth in national income. However, the GDP growth in Nigeria is unstable and does not correlate with trade activity, which indicates the lack of synchronization of trade patterns with economic performance (Olufemi & Ayodeji, 2021).
The previous literature provides divided or contradicting evidence with regard to the effects of indicators like imports, exports, FDI, and exchange-rate fluctuations on the Nigerian economic growth. Adebayo et al. (2023) note that although FDI has grown significantly, its marginal contribution to the GDP remains until now because of capital flight, repatriation of earnings, and the fact that it is not very much integrated locally. Fluctuations in the exchange rates especially due to the introduction of multiple windows and speculative activities have also made trade and investment results complicated (Eze & Uche, 2022). These loopholes explain why a longitudinal study using up to date information is necessary to explain the actual effect of trade elements on growth. The current study attempts to resolve this gap in policy and academic debate by adopting the 19912021 period to understand in an empirical manner the role of international trade in the development of Nigeria.
1.3 Objectives of the Study
The main objective of this study is to investigate the impact of international trade on economic growth in Nigeria between 1991 and 2021. Specifically, the study aims to:
i.To examine the impact of import trade (IMPT) on Nigeria’s economic growth from 1991 to 2021
ii.To assess the effect of export trade (EXPT) on Economic Growth in Nigeria from 1991 to 2021.
iii.To assess the impact of foreign direct investment (FDI) on Economic Growth in Nigeria from 1991 to 2021.
iv.To assess the impact of exchange rate (EXR) fluctuations on Economic Growth in Nigeria from 1991 to 2021
OTHER PARTS OF CHAPTER ONE INCLUDE:
1.4 Research Questions
1.5 Research Hypotheses
1.6 Significance of the Study
1.8 Operational Definitions

CHAPTER TWO
LITERATURE REVIEW (Preview)
This chapter critically examines relevant literature that would assist in explaining the research problem and, furthermore, recognizes the contributions of scholars who had previously conducted studies on international trade and economic growth. The chapter intends to deepen the understanding of the study and identify existing gaps in the literature. This chapter, therefore, focuses on the concept of international trade, the concept of economic growth, the relationship between international trade and economic growth, the trends and patterns of international trade in Nigeria, and the factors influencing international trade and economic growth in Nigeria from 1991 to 2021.
The chapter covers the following subheadings:
2.1 Conceptual Framework
2.2 Theoretical Framework
2.3 Empirical Review
2.4 Summary of Literature Review

CHAPTER THREE
RESEARCH METHODOLOGY  (Preview)
Research Design: The study adopted an ex-post facto research design.
Population of the Study: The population of the study comprises annual macroeconomic data on international trade and economic growth in Nigeria.
Sample Size Determination: The study adopted a sample size of 31 annual observations covering the period from 1991 to 2021.
Research Instrument: The study utilized a data extraction template to collect secondary data on annual real GDP, total imports, total exports, net inflows of foreign direct investment, and average annual exchange rates.
Methods of Data Analysis: The collected data were analyzed using the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit-root tests, Autoregressive Distributed Lag (ARDL) model, bounds testing for cointegration, and Error Correction Model (ECM) to examine the short-run and long-run relationships. Diagnostic tests, including serial correlation, heteroskedasticity, and stability tests using CUSUM and CUSUMSQ, were conducted to ensure the validity and reliability of the model.

CHAPTER FOUR:DATA PRESENTATION AND ANALYSIS
MAJOR FINDINGS (Preview)
The analysis results were presented in tables. Based on the results obtained from the analysis, the following findings are made:

i. The study found that import trade has a negative and statistically significant impact on economic growth in Nigeria in the long run, as evidenced by a coefficient of -0.093, t-statistic of -2.268, and p-value of 0.034 (p < 0.05). The short-run result, however, showed a positive and statistically significant coefficient of 0.142, t-statistic of 2.784, and p-value of 0.010 (p < 0.05), indicating that import trade promotes economic growth in the short run but may constrain growth in the long run.

ii. The study found that export trade has a positive and statistically significant impact on economic growth in Nigeria in the long run, as evidenced by a coefficient of 0.172, t-statistic of 3.185, and p-value of 0.005 (p < 0.01). The short-run result also showed a positive and statistically significant coefficient of 0.216, t-statistic of 3.323, and p-value of 0.003 (p < 0.01), confirming that export trade contributes positively to economic growth in both the short run and long run.

iii. The study found that foreign direct investment (FDI) has a positive and statistically significant impact on economic growth in Nigeria in the long run, as evidenced by a coefficient of 0.127, t-statistic of 2.592, and p-value of 0.017 (p < 0.05). The short-run result also revealed a positive and statistically significant coefficient of 0.084, t-statistic of 2.154, and p-value of 0.040 (p < 0.05), indicating that foreign direct investment contributes positively to economic growth in both periods.

iv. The study found that exchange rate has a negative and statistically significant impact on economic growth in Nigeria in the long run, as evidenced by a coefficient of -0.064, t-statistic of -2.370, and p-value of 0.028 (p < 0.05). The short-run result similarly showed a negative and statistically significant coefficient of -0.109, t-statistic of -2.271, and p-value of 0.032 (p < 0.05), indicating that exchange-rate fluctuations adversely affect economic growth in both the short run and long run. The error correction term, ECM(-1), was also negative and statistically significant, with a coefficient of -0.731, t-statistic of -7.167, and p-value of 0.000 (p < 0.01), indicating that approximately 73.1% of short-run disequilibrium is corrected annually.

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
This chapter covers the following outline:
5.1 Discussion of Findings
5.2 Summary of the Study
5.3 Conclusion
5.4 Recommendations
5.5 Limitations of the Study
5.6 Suggestions for Further Studies

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