Empirical Investigation of the Impact of Export Diversification on Economic Growth: Evidence from Nigeria, 1980-2016

This study examined the impact of export diversification on economic growth in Nigeria from 1980 to 2016. The ARDL bound testing approach to cointegration was employed as a methodology for the study. The results showed that export diversification had a positive and insignificant relationship with economic growth in Nigeria. However, exports of goods and services and the growth rate of exports had a positive and statistically significant effect on the country’s economic growth, whereas openness to trade had a negative and insignificant influence. Furthermore, investment proxied by gross fixed capital formation exerted a positive and statistically significant relationship with economic growth. Nevertheless, the study concluded that trade openness was not a determinant of economic growth in Nigeria. The findings had important policy implications for economic policy and recommended that constructive attention should be given to exports of primary products which have persistently suffered from declining terms of trade in order to enhance economic growth. In addition, the current government should sustain the Economic Recovery and Growth Plan (ERGP), an export-led economic growth and development strategy. However, the country is encouraged to create the institutional capacity to ensure adherence to International Export Quality Assurance Standards, embark on value-addition to exportable goods through investment in technologies for the processing of primary export commodities to boost export quality and revenues and diversify the economy away from primary exports production for the ERGP to bear fruits. Furthermore, the enabling environment for the attraction of foreign direct investment in the export sector should be created by encouraging independent power supply providers through further liberalization of the power sector, for the country to realize its economic growth and development aspirations.