Is Trade Liberalization the Oil for Poverty Reduction in Nigeria? Evidence from African Continental Free Trade Agreement (AfCFTA) — Oak Academic Publishing
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Is Trade Liberalization the Oil for Poverty Reduction in Nigeria? Evidence from African Continental Free Trade Agreement (AfCFTA)
Department of Economics, Federal University Lafia, Lafia, Nigeria
,
Research Department, Central Bank of Nigeria, Abuja, Nigeria
1 Department of Economics, Federal University Lafia, Lafia, Nigeria
2 Research Department, Central Bank of Nigeria, Abuja, Nigeria
This paper examined the relationship between trade liberalization and poverty reduction in Nigeria using quarterly data from 2000 to 2022. The Augmented Dickey-Fuller test and Johansen co-integration test were used to determine the stationarity of the time series data. The research used the Error Correction Model (ECM) due to the stationarity status of the data. The findings show that important variables (capital importation, trade openness, foreign portfolio investment, foreign direct investment and poverty index) converge over the long term, demonstrating the presence of a long-term link between them. ECM is within the acceptable range of less than unity and has the a nticipated negative sign. Specifically, trade openness, capital importatio n and fore ign portfolio investment have positive impact on poverty level. The impact is significant for capital importation and foreign portfolio investment while trade openness has insignificant impact on poverty level. Foreign direct inv estment has negative and insignificant impact on poverty level wh ile exchange rate has positive and significant impact on poverty level. It is therefore recommended that government should enact trade policies that will make international trade favourable to Nigeria and beneficial to the citizenry. The Government should ensure that values are added to primary products being exported in order to gain more from trade liberalization. The Government should improve on the ease of doing business to attract and sustain more foreign investors in critical sectors of the economy that have capacity t o increase output, income and reduce poverty.
KeywordsLiberalizationNigeriaPovertyTrade
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