International Trade and Nigerian Economy: the influence on domestic consumption

Aloy Chinedu Ezirim, Titus Okeke, Patrick Z. Akpobolokemi


This study is necessitated by the need for a fresh empirical investigation of the effects of international trade on domestic consumption. This field of global interest has captured Nigerian attention, but no model was used to measure the effects since the study requires a theoretical analysis. The study reviewed panel data of 59 developing nations from 1960-70 but emphasis was on Nigeria from 1981-2006 the regression model was adopted.     In the first regression analysis, real GDP has a positive beta coefficient with lower standard error while international trade has negative beta coefficient with higher standard error and a lower but negative t statistic. To ensure that the model is a best fit, stepwise regression was further employed and real GDP still has a positive beta coefficient while international trade was excluded from the model because of collinearity problem. International trade in the stepwise analysis also has negative t statistic, meaning that it is a biased and unreliable predictor of domestic consumption. The implication of this is more trade reforms in Nigeria. Export instability and commodity concentration are other issues in international trade but were not considered in the analysis and further research incorporating these variables is recommended. Further recommendations are export consolidation and stimulation of Local productivity.

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