Does Trade Openness Matter for Economic Growth in Niger?

Abstract

The trade openness is one of the most important determinants of a country’s relative level of economic health. It plays a vital role for most free market economies in the world. This research is an attempt to investigate, particularly, the impact of the trade openness on the economic growth in Niger; and generally, the relationship between all the variables under study. Four (4) variables namely real economic growth rate represented by real gross domestic product growth rate (GDPGR), trade openness (TRDOP), real exchange rate (REEXR) and foreign direct investment (FDI) have been considered in the model. The paper used time series data covering the period from 1980 to 2013 as well as time series methods for the econometric analyses. The results show that there exists a long term relationship between all the variables; the independent variables affects the economic growth in the short-run; only the trade openness and the real exchange rate influence economic growth unidirectionally; except foreign direct investment (FDI), all the variables have explanatory power on economic growth in Niger. The implication of this study is that the trade openness has been efficient to spur the economic growth in Niger over the period of study. Therefore, it is a key indicator which the government should care about.