The relationship between trade openness and economic growth: The case of Ghana and Nigeria.

Moyo, Clement and Kolisi, Nwabisa and Khobai, Hlalefang (2017): The relationship between trade openness and economic growth: The case of Ghana and Nigeria.

Abstract

This study purposed to determine the long run relationship between trade openness and economic growth in Ghana and Nigeria covering the period between 1980 and 2016. It incorporated investment, exchange rates and inflation as the additional variables. To test for stationarity of the data, the augments Dickey-Fuller (ADF) (Dickey and Fuller, 1981), the Phillips and Perron (1988) and the DF-GLS test proposed by Elliot, Rothenberg and Stock (1996) were used. The Autoregressive distributed lag (ARDL) model was employed in this study to examine the long run relationship between the variables. The findings of the study suggested existence of a long run relationship among the variables for both countries. The results further showed that trade openness has a positive impact on economic growth and significant at the 1% level in Ghana while in Nigeria trade openness has a negative but insignificant effect on economic growth. These results imply that different policy measures should be put into place for each of these two countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Trade Openness, Economic growth, ARDL, Nigeria and Ghana
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies

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