Saudi Journal of Economics and Finance (SJEF)
Volume-3 | Issue-03 | 126-133
Original Research Article
External Sector Aggregates and Economic Growth in Nigeria
Francis Agboola Oluleye, Augustine Armstrong Horgan
Published : March 31, 2019
Abstract
The study examined the impact of the external sector aggregates on economic growth in Nigeria for the period 1980-
2016. The external sector aggregates used were external debt, exchange rate and export. A combination of correlation
analysis and Error correction mechanism was employed in this study. Pre-estimation tests showed no evidence of
multicollinearity and all the variables were integrated of order one, I (1). Johansens cointegration test showed four
cointegrating equations indicating the existence a long-run relationship which provides a reason for error correction
modeling. The error correction results showed that EXR had a negative and significant impact on economic growth
while external debt (EXD) and export (EPP) had positive and significant impact on GDP, respectively. The ECM term
had the hypothesized negative sign and was statistically significant at 5% level. Economic growth adjusts to long-run at
the speed of 29.98% per annum. There was no serial correlation problem. Results are therefore appropriatre for policy
analysis. The study concluded that external sector aggregates have significant impact on economic growth in Nigeria but
the impact could be positive or negative depending on the variable of interest. Among other things the study
recommended that there should be promotion of the country’s export trade and stimulation of domestic production.