Exports, Foreign Direct Investment and Economic Growth: An Empirical Application for Nigeria

Transcription

1 Expors, Foreign Direc Invesmen and Economic Growh: An Empirical Applicaion for Nigeria Sikiru Jimoh BABALOLA (Corresponding auhor) Deparmen of Economics, Modibbo Adama Universiy of Technology (Formerly Federal Universiy of Technology) PMB 2076, Yola, Adamawa Sae, Nigeria Shehu Dan Hassan DOGON-DAJI Senior Lecurer, Deparmen of Economics Usmanu Danfodiyo Universiy, PMB 2346, Sokoo, Sokoo Sae, Nigeria Jimoh Olakunle SAKA Lecurer, Deparmen of Economics Lagos Sae Universiy, Ojo, PMB 000, Ojo, Lagos Sae, Nigeria Received: January 26, 202 Acceped: March 7, 202 Published: April, 202 doi:0.5539/ijef.v4n4p95 URL: hp://dx.doi.org/0.5539/ijef.v4n4p95 Absrac The paper examines he relaionship among expors, Foreign Direc Invesmen (FDI) and economic growh in Nigeria over he period The ime series properies of he variables are examined using he Phillips-Peron echnique due o is robusness o a wide variey of serial correlaion and heeroscedasiciy. The resuls of Johansen coinegraion es indicae exisence of a leas six coinegraing vecors. The error correcion coefficien shows ha deviaion from long run RGDP pah is correced by abou 48% over he following year. As a way of correcing for mulicollineariy, we re-esimae he models of he saic regression using a Fully Modified Leas Squares Mehod (FMOLS) and error correcion coefficien. We find ou ha he removal of Degree of openness (DOP) variable may be derimenal even hough he percenage deviaion from equilibrium does no seem o change. The paper herefore concludes by shedding more ligh on he relevance of he degree of openness and his can faciliae more FDI inflows capable of acceleraing he growh process. The paper hus recommends immediae focus on more reforms/policies ha will creae enabling environmen for FDI inflows and expor growh hereby reducing he growh and developmen barriers in Nigeria. Keywords: Expors, FDI, Economic growh, Coinegraion and ECM JEL Classificaion Codes: C32, F2, F43, O, O6. Inroducion and Background The role of expors and FDI in promoing economic growh has much been recognized across he world. This has gradually esablished he imporance of openness and of course disappearance of impor subsiuion policy in he modern developmen economic lieraure and policy (Maneschiold, 2008). Expors have already been considered as he mos imporan source of foreign exchange, ha are required mos by developing counries o ease heir balance of paymens problem and reduce unemploymen hrough generaion of job opporuniies. Expors help he counry o inegrae in he world economy. Expors and FDI also allow domesic producion o achieve a high level of economies of scale (Ullah, Uz-Zaman, Farooq, & Javid, 2009; Abou-Sai, 2005; Musonda, 2007; Al-Yousif, 999). The experience of many developed, some emerging economies and more precisely he Asian Tigers such as Singapore, Hong Kong, Taiwan, Souh Korea and recenly China has provided good example of he imporance of Published by Canadian Cener of Science and Educaion 95

2 he expor secor o economic growh and developmen. This has no only made economiss o sress he vial role of expors and FDI as he engine of economic growh bu also engaged he aenion of researchers and policy makers in ha direcion (Abou-Sai, 2005). Neverheless, he Nigerian economy oo was well known for is expors-driven growh paricularly before he discovery of oil when he counry used o record a huge success in he expor of non-oil producs especially agriculural produce. I is obvious ha for long he non-oil expors in Nigeria had been aken over by he oil secor, even hough he performance of he economy in he las decade was quie very surprising. This is parly because of he counry s sronger ies wih developed and emerging economies especially afer he ransiion o civilian rule in 999 and parly he recen global economic and of course Niger Dela crises, which rendered he oil secor a disadvanage when i comes o he secor s conribuion o he growh of he economy. This underscores he need o no only diversify he economy bu also arge he counry s rae of growh hrough agriculural and non-oil expors. This is also paricularly imporan when one considers he comparaive advanage he counry has had in agriculural and non-oil expors as a labour abundan economy wih huge minerals and arable bu unculivaed lands. Generally, he driving facors of surge in FDI inflows o developing counries and Nigeria in paricular are basically abundance of naural resources, large marke or favourable business environmen, poliical and insiuional reforms, among ohers. Srucurally, he oil and exracive secors of he economy dominae in aracing FDI ino Nigeria. Hisorical daa on Nigerian economy indicae ha beween 960 and 970, oal expors grew from $475.9 million o $.24 billion while FDI also grew from almos zero o $.40 billion. The real GDP was also on he increase from $3.48 billion o $4.4 billion during he same period. The economy also winessed increase in he hree macroeconomic variables of ineres during he period By he year 2009, oal expors sood a $59.04 billion while FDI and RGDP sood a $2.95 and $3.53 billion respecively. I is worhy of noe ha beween , naira highly depreciaed agains US dollar and his accouned for he lower values of he hree variables when compared o wha is obainable in erms of Nigerian currency (naira). Today, many empirical works suppor he expor led economic growh hypohesis, even hough here is no consensus on his issue as ohers did no find much suppor o i (Holman, & Graves, 995; Chen, 2009; Anwar & Sampah, 997). Thus, he presen paper no only incorporaes FDI bu also examines he long run relaionship amongs expors, FDI and economic growh in Nigeria including possible adjusmen processes. The paper is organized ino five secions including his inroducion. Secion wo covers he lieraure while secion hree discusses mehodological issues and daa. Secion four presens he empirical resuls and discussion while secion five concludes he paper. 2. Theoreical Framework and Empirical Evidence 2. Theoreical Framework The argumen concerning he role of expors as one of he main deerminisic facors of economic growh is no new. I goes back o he classical economic heories by Adam Smih and David Ricardo, who argued ha inernaional rade plays an imporan role in economic growh, and ha here are economic gains from specializaion. I was also recognized ha expors provide he economy wih foreign exchange needed for impors ha canno be produced domesically. Thus, he relaionship beween expors and economic growh is heoreically rooed in he expor-led growh (ELG) hypohesis. The hypohesis argues for governmen resricion of impor rade and encouragemen of sraegies ha suppor manufacuring secor wih a view o promoing poenial comparaive advanage and growh (Elbeydi, 200). I is based on a noion ha inernaional rade could promoe specializaion in he producion of expor producs and reallocaion of resources from relaively inefficien non-expor rade secor o he more producive expors rade secor hereby leading o growh (Edwards, 992; Lucas, 988; Helpman, & Krugman,985; Feder, 983). The ELG paradigm has received renewed aenion following he highly successful Eas Asian expor-led growh sraegy during he 970s and 980s, and especially when compared wih he overall failure of impor subsiuion policies adoped by African and Lain American counries (Abou-Sai, 2005). Theoreically, expor-led growh appears among neoclassical economiss afer he vicorious sory of newly indusrialized Asian counries. They argue ha, for insance, Taiwan, Hong Kong, Singapore and Korea, he Four Asian Tigers, have been successful in achieving high and persisen raes of economic growh since early 960s; because of heir free-marke, ouward-oriened economies. Thus, he emergence of endogenous growh heories pu emphasis on he benefis resuling from a dynamic expor rade in a framework ha will lead o increasing reurns o scale and diffusion of echnological and managerial effecs from abroad o he oher secors of he economy (Alisana, & Rodrick, 999; Feder, 983). The heoreical argumens are furher suppored by some empirical sudies as seen in he nex secion. 96 ISSN 96-97X E-ISSN

3 2.2 Some Empirical Evidence The empirical sudies on he relaionship beween expors and economic growh are usually classified ino wo broad caegories depending on he ype of daa used for analysis i.e. he cross-secional and ime series sudies. Alhough, evidences from boh caegories of sudies have yielded a mixed resul, here exis significan numbers of oher sudies ha idenify expors as an imporan facor in deermining growh (Shirazi, & Manap, 2004). However, our focus in his paper is on hose sudies ha uilized ime-series daa. Erecakar (20) for insance, analyzed he relaionship among growh, foreign direc invesmen, rade and inflaion in Turkey over he period of 970 and 2008 using co-inegraion echnique o esablish heir long run relaionship. The resuls of he sudy indicaed ha only one co-inegraing relaion exiss among he variables. The resuls furher disclosed ha while foreign direc invesmen, inflaion and rade surplus have posiive and saisically significan impac on GDP growh, he coverage raio of expors for impor has a negaive impac on GDP growh. Miankhel, e al. (2009) also invesigaed he impac of foreign direc invesmen and expors on economic growh of six (6) emerging counries of Chile, India, Mexico, Malaysia, Pakisan and Thailand using a mulivariae VAR analysis approach. The resuls of he sudy have favoured expors led growh hypohesis in Souh Asian counries. The sudy has furher provided evidence of Long-run impac of expors on growh of FDI and GDP in Lain-American counries of Mexico and Chile. Finally, he sudy esablished he exisence of bi-laeral causaliy beween GDP and FDI in Thailand, while no evidence of such relaionship in he case of Malaysia. Ullah, e al. (2009) examined he validiy of expor-led growh hypohesis in Pakisan for he period The sudy employed coinegraion and causaliy framework and he resuls revealed he exisence of unidirecional causaliy from GDP o expors. Similarly, Pop Silaghi (2009) sudied he expors-economic growh causaliy for 0 Cenral and Easern European (CEE) counries over he period 990 o 2006 using Johansen coinegraion and he Vecor Error Correcion Modeling (VECM) echniques. The resuls of he sudy showed he exisence of a feedback effec beween expors and GDP in hree ou of 0 counries in he sample. Jordaan and Eia (2007) sudied he causal relaionship beween expors and economic growh in Namibia for he period The sudy concluded ha expor-led growh sraegy has had posiive impac on economic growh. Shirazi and Manap (2004) analyzed boh he shor-run and long-run relaionship among real expors, real impor and real oupu in Pakisan using he coinegraion and Toda Yamamoo causaliy echnique for he period The sudy found srong evidence of unidirecional causaliy from expors o economic growh, even hough Tang (2006) found no evidence of long-run relaionship beween expors and economic growh in China. Thurayia (2004) invesigaed he relaionship beween expors and economic growh in Saudi Arabia and Republic of Sudan, using co-inegraion and error correcion framework. The resul of he sudy indicaed srong evidence in suppor of expor led growh hypohesis for Saudi Arabia bu a week evidence for Sudan. Anwar and Sampah (2000) examined expor-led hypohesis using a large sampling of 97 counries and he resul has shown evidence of posiive impac of expors on economic growh. Bahmani-Oskooee and Alse (993) employed Error-correcion modeling (ECM) echnique o examine he relaionship beween expors and economic growh for nine developing counries. The resuls revealed srong evidence in favour of expor-led growh hypohesis for all he counries. Ram (987) examined he impac of expors growh on economic growh using a sample of 88 LDCs for he period and he sudy found evidence o validae he expor-led growh hypohesis. Hsiao (987) sudy esablished he causaliy and exogeneiy beween expors and economic growh employing he Granger and Sim causaliy es echniques. The sudy could no provide evidence o suppor expor-led growh hypohesis. Jung and Marshall (985) also employed sandard Granger causaliy es o examine expor-growh relaionship for 37 developing counries. The resuls showed evidence o suppor he expor-led growh hypohesis in only four counries. In he case of Nigeria, Chimobi and Uche (200) sudied he relaionship beween expors, domesic demand and economic growh using he Granger causaliy echnique o deermine he direcion of causaliy. The resuls of he sudy showed ha economic growh Granger caused boh expors and domesic demand while expors caused domesic demand. Osinubi and Amaghionyeodiwe (200) oo carried ou empirical invesigaion of foreign privae invesmen and economic growh in Nigeria, using co-inegraion and error-correcion framework over he period covering 970 o The sudy found ha foreign privae invesmen, domesic invesmen growh and ne expor growh posiively influenced economic growh in Nigeria. Similarly, Ayanwale and Bamire (2004), and Ayashagba and Abachi (2002) found posiive effec of FDI on economic growh for Nigeria. Published by Canadian Cener of Science and Educaion 97

4 3. Mehodological Issues and Daa As we observed in he previous secion, many sudies have used he coinegraion and error correcion specificaion. The presen sudy adops same as eviden from exising lieraure such as Thuravia (2004), Shirazi and Manap (2004) and Pop Silaghi (2009) concenraing on a mulivariae case. Our key variables for his sudy are he Real gross domesic produc(rgdp) represening he macroeconomy, Foreign direc invesmen(fdi), Real expor (REXP), while he conrol variables are Degree of openness (DOP), Gross fixed capial formaion(gfcf), Inflaion rae (INF), Real exchange rae (REXR), Real impor (RIMP) and Terms of rade(tot). We use he normal series of he variables for all our compuaions wihou logarihmic ransformaion. This is due o he naure of he variables considered. For insance aking he log of DOP, EXR, ec may resul in negaive values, which seems no o make economic sense. 3. The Model Firs, we observe he behaviour of each variable hrough some diagnosic es and his is followed by examinaion of he sochasic properies based on Phillips-Peron es. We adop he Phillips-Perron (PP) es in our case on he ground ha i is robus o a wide variey of serial correlaion and heeroscedasiciy. Phillips and Perron (988) developed a generalizaion of he ADF es procedure ha allows for mild assumpions regarding he disribuion of he error process and hus i modifies he ADF es. The PP es is based on an AR () processes y 0y e () and y 0 2y e (2) Equaion 2 includes a linear rend; he PP es is he value associaed wih he esimaed coefficiens and 2 < 0 and significan for no uni roo. Excep for he case of all variables being I (0), we move on o he coinegraion es based on he Johansen approach (Johansen & Juselius, 990) is carried ou in a mulivariae frame. Consider using marix noaion for Z Y, X, Q, Z AZ A2Z 2 AZ A Z (3) The vecor error- correcion model represenaion is k k Z Z Z Z... Z Z (4) k k i ( AA2 A3... Ak) for i, 2,3,..., k ) and ( A A2 A3... A k ) (5) The marix is a 33 x since we have 3 variables in Z Y, X, Q and conains informaion abou he long run relaionships. We decomposed ' where 2 and 2 ' include he speed of adjusmen o equilibrium coefficiens and long-run marix of coefficiens respecively. Assuming k 2 for simpliciy, we can wrie Y Y Y Y Y aa2 Y 23 X X X e X X a2a22 X e (6) Q Q Q Q Q a3a 32 Q Now he ECM par of Y = Z a Y 2X 3Q a2 2Y 22X 32Q ( ) ( ) (7) which shows wo coinegraing vecors wih speed of adjusmen o equilibrium, a and a 2. The Johansen approach uses wo likelihood es saisics, namely he race (λ race ) and he maximum eigenvalue (λ max ). Consider hypohesis H: r0 r k, i can be esed using he saisic race k jr0 ~ j ( r0 ) T log( ) (8) The es is so-called race es because i verifies wheher he smalles k r eigenvalues are significanly differen 0 from zero. Moreover, hypohesis H : r r can be esed agains a more resricive alernaive H: r r0 using max 0 k jr0 ~ j ( r ) T log( ) (9) 98 ISSN 96-97X E-ISSN

5 This alernaive es is called he maximum eigenvalue es, as i is based on he esimaed H: r r0 larges eigenvalue (Verbeek, 2004). For he specific case, he model linking RGDP, REXP, FDI and oher conrol variables is: RGDP f ( DOP, FDI, GFCF, REXP, REXR, RIMP, TOT, ) (0) RGDP DOP FDI GFCF REXP REXR RIMP TOT ) () Where RGDP = Real gross domesic produc, DOP = Degree of Openness, FDI =Foreign Direc Invesmen, GFCF =Gross fixed capial formaion, REXP =Real expors, REXR =Real exchange rae, RIMP =Real impor, and TOT= erms of rade. 0,, 2... are slope coefficiens excep for 6 0 and = error erm 3.2 Daa Source The annual daa used for his sudy were obained from he Saisical Bullein and Annual Repors published by he Cenral Bank of Nigeria (CBN) over he period However, daa for GFCF sared from 98, FDI daa from 962 and INF daa from 96. Those periods for which he daa were no available are considered as missing values and agged no available (NA) by he compuaional ool. Daa for DOP were compued using raio of sum of expor and impor o he GDP, he expor and impor daa were deflaed o ge heir real erms 4. Resuls and Discussion The diagnosic es carried ou firs using ime series plos displays he varying naure of he variables used. The plos show ha mos of he variables appear wih rend bu he exchange rae variable does no show a clear paern of rend behaviour. The correlogram compued shows ha for all he variables, he auocorrelaions and parial m auocorrelaions a all lags ( k ) 0 and nearly all he Q saisic denoed by 2 Q T are significan where T = sample size, m = lag lengh happen and k k =auocorrelaion coefficien. Hence, we rejec H k 0 (2) in he presen case (correlogram resuls are oo cumbersome o display here bu available upon reques). Excep for oher variables, he larges probabiliy value of displayed by he inflaion series makes i no o be significan a k 20. So far, he P-P es resul displayed in appendix using Newey-Wes auomaic based on Barle Kernel indicaes ha he highes number of imes a series is differenced before aaining saionariy=number of uni roos=number of inegraion=2 and no series has a uni roo, even hough mos have differen order of inegraion. Only 22.2% of he variables used are I(0) and his includes INF and TOT, 44.4% are I() involving GFCF, REXR and RGDP and 33.3% are I(2) wih DOP, FDI and REXP, his is eviden from he P-P es saisic and heir respecive probabiliies. Our resuls suppor he claim ha mos economic variables are I(). The Johansen es for coinegraion was carried ou and he resul shown in appendix. The resul indicaes ha a leas 6 coinegraing vecors for race es and 4 coinegraing vecors for max-eigen es. In oher words, we accep he hypohesis r 0, r, r 2, r 3, r 4, r 5 and r 0, r, r 2, r 3 coinegraing equaions for he race and max-eigen ess. The high number of coinegraing vecors suppors he claim of sabiliy of he sysem of equaions, he higher he number of coinegraing vecors. Our finding of long-run relaionship suppors some findings in he lieraure. For example, i is in line wih ha of Erecakar(20) who invesigaed he long run relaionship among growh, FDI, rade and inflaion in Turkey bu conrary o Tang(2006) who found no evidence of long-run relaionship beween expors and economic growh in China. Explaining his on a heoreical ground, he exisence of a long -run relaionship among hese variables is no surprising. The key variables RGDP, FDI and REXP and he conrol variables DOP, GFCF, INF, REXR, RIMP and TOT inerac hrough a chain of ransmission mechanism. For insance, a rise in expor increases he degree of openness which may resul in echnological ransfer hrough FDI and increasing he level of Gross fixed capial formaion and hen sabiliy in he exchange rae and inflaion rae. This may necessiae he erms of rade o be favourable and impor on he decline. However, he analysis does no clearly show which of he variables is coinegraing wih one anoher and by wha magniude. The error correcion resul clearly shows ha he error correcion erm is negaive and significan (0.48). This implies ha 48% of he adjusmen akes place each period suggesing ha deviaion from long run RGDP pah is correced by abou 48% over he following year. The RGDP equaion showing he error correcion erm is RGDP DOP 0.06FDI 0.04GFCF INF 0.38REXP REXR 2.5RIMP TOT 0.48ecm (3) k Published by Canadian Cener of Science and Educaion 99

6 wih he saisic for ecm 3.0 and is highly significan. The dynamic process of he variables used for he error correcion compuaion was compued by he auhors and is available on reques. The summary of he coinegraing regression deermining he long run relaionship is compued for he RGDP funcions as indicaed in able III and he full coinegraing regression resuls are conained in ables IV and V, all provided in he appendix. From he coinegraing regression resul using a fully modified leas squares mehod, only he DOP, FDI, GFCF, REXR and TOT mee he heoreical expecaion wih FDI being significan. By implicaion, a uni rise in DOP gives rise o abou a rise of 75 unis in he RGDP. This explains he relevance of openness of he economy hrough exposures o various rade ineracions. Oher variables for which a uni change would cause a very large change on he economy are INF, REXR and TOT. However, uni increase in he RIMP creaes abou 3.2 unis increase in he RGDP. Even hough he variables FDI and GFCF have he expeced signs, hey have small uni increases in he RGDP for uni rise in each of hem compared o oher variables wih large impac. The FDI and GFCF, hough, expeced o remain as caalyss ha can speed up he rae of growh, bu his resul may be deduced from he parasiic naure of FDI as described by some lieraure. If really, his holds, hen here is possibiliy of FDI over-aking he domesic invesmen environmen. The posiive effecs of FDI and GFCF suppor some findings in Nigeria such as Osinubi and Amaghionyeodiwe (200) who found ha foreign privae invesmen, domesic invesmen growh and ne expor growh posiively influenced economic growh. Our finding is also in agreemen wih he work of Ayashagba and Abachi (2002) who obained a posiive effec of FDI on economic growh for Nigeria. I is however, surprising ha he REXP and RIMP are of he conrary sign o heoreical expecaion, even hough boh are significan wih REXP having a larger coefficien. This may be explained by he periods of macroeconomic flucuaions including he recessionary periods ha end o wipe ou he poenial gains from wha may serve as an injecion o he economy and hen seemed o make exernal dependency a major growh driven. However, he inclusion of boh he DOP and REXP in he RGDP funcion calls for concern especially on he sabiliy of he esimaed coefficiens. We herefore esed for he presence of mulicollineariy in he model. We firs obained he correlaion marix of he enire variables wih he resuls being symmerical. The diagonal elemens are equal o since hey are correlaions of same variables. We also noed ha he correlaion of DOP and REXP is as high as 0.956(abou he highes apar from he diagonal elemens) showing he possibiliy of he negaive effecs of mulicollineariy. Theoreically, correlaions among variables may no be enough o jusify he presence of mulicollineariy. We herefore compared he full model OLS o he one wih omied variable suspeced o cause mulicollineariy problem. In he full saic regression model, apar from he conrary signs of he coefficiens of some of he explanaory variables paricularly he REXP, he sandard error reads wih R Since our key variable is REXP, we dropped DOP from he new coinegraing regression and he summary of he resul is conained in able III while he deailed one is presened in able V, boh in he appendix. Dropping he DOP increases he exen of he variables no being significan. For example, his has led o he non-significance of REXR which was iniially significan when he DOP was included. Though in he wo cases, all 2 he explanaory variables have high explanaory power and are wihin close range wih R 0.865for he model 2 wih DOP and R for he model excluding DOP. Meanwhile, he coefficiens of he variables GFCF, INF and REXP also reduced. I is quie noiceable ha he sandard error of regression is higher han before, and his implies a larger variance. I seems, herefore, ha removal of DOP from he model significanly changes he model srucure; hence removal of DOP migh be derimenal. The only ousanding feaure noiceable is jus ha auocorrelaion seems o have been correced parly due o he increased Durbin-Wason Saisic in he model excluding DOP. We equally have same number of coinegraing vecors for boh race and max-eigen ess as before. The error correcion represenaion in his case is: RGDP FDI 0.04GFCF INF 0.2REXP REXR 2.6RIMP TOT 0.48ecm (4) wih error correcion erm coefficien being negaive and is highly significan ( raio 3.09). Even wih DOP omied, same percenage deviaion from long run equilibrium posiion is correced for. 5. Concluding Remarks The sudy has examined he relaionship among he expors, FDI and economic growh in Nigeria over he period The resuls of he sudy have found among oher hings ha FDI, capial formaion, degree of openness, impor and erms of rade played a significan role in he economy along side wih oher variables paricularly as demonsraed by he long run relaionship. As a maer of fac, his resul is slighly differen compared o he former when he DOP suspeced o cause mulicollineariy problem is dropped. The paper, herefore, concludes by shedding 00 ISSN 96-97X E-ISSN

7 more ligh on he relevance of he degree of openness and can faciliae more FDI inflows capable of acceleraing he growh process. Finally, he paper recommends immediae focus on more reforms/policies ha will creae enabling environmen for FDI inflows and expor growh hereby reducing he growh and developmen barriers in Nigeria. References Abou-Sai, F. (2005). Are expors he engine of economic growh? An applicaion of coinegraion and causaliy analysis for Egyp, Economic Research Working Paper Series. Tunis: African Developmen Bank. Adelegan, J. O. (2000). Foreign direc invesmen and economic growh in Nigeria: A seemingly unrelaed model. African Review of Money, Finance and Banking, supplemenary issue of savings and Developmen, 2000 pp Milan, Ialy. Alisana, A., & Rodrik, D. (999). Disribuive poliics and economic growh. Quarerly Journal of Economics, 09, Al-Yousif, Y. K. (999). On he Role of Expors in he Economic Growh of Malaysia: A Mulivariae Analysis. Inernaional Economic Journal, 3(3), Auumn. Anwar, M. S., & Sampah. (997). Expors and Economic Growh, Paper Presened a Wesern Agriculural Economic Associaion 997 Annual Meeing, July 3-6, Reno/Sparks, Nevada.. (2000). Expors and Economic Growh. Indian Economic Journal, 47(3), Ayanwale, A. B., & Bamire, S. (2004). Direc Foreign Invesmen and Firm-Level Produciviy in he Nigeria Agro/agro-allied Secor. Journal of Social Sciences, 9(), Ayashagba, G. I., & Abachi, P. I. (2002). The Impac of Foreign Direc Invesmen (FDI) On Economic Growh of he Less Developed Counries (LDCs): A Case of Nigeria ( ). Journal of Economic and Social Research,, Bahmani-Oskooee, M., & Alse, J. (993). Expor Growh and Economic Growh: An Applicaion of Co-inegraion and Error-Correcion Modelling. Journal of Developing Areas, 27(4), Chen, H. (2009). A Lieraure Review on he Relaionship beween Foreign Trade and Economic Growh. Inernaional Journal of Economics and Finance, (). Rerieved from hp:// Chimobi, O. P., & Uche, U. C. (200). Expors, Domesic Demand and Economic Growh in Nigeria: Granger Causaliy Analysis. European Journal of Social Sciences, 3(2). Rerieved from hp:// Edwards, S. (992). Trade Orienaion, Disorions and Growh in Developing Counries. Journal of Developmen Economics, 39, hp://dx.doi.org/0.06/ (92)90056-f Elbeydi, K. R. M. (200). The Relaionship beween Expor and Economic Growh in Libya Arab Jamahiriya. Theoreical and Applied Economics, XVII, (542), Erecakar, M. E. (20). Growh, Foreign Direc Invesmen, Trade and Inflaion: An Empirical Applicaion on Turkey. Middle Easern Finance and Economics, 9, Rerieved from hp:// Feder. (983). On Expors and Economic Growh. Journal of Developmen Economics, 2(), hp://dx.doi.org/0.06/ (83) Helpman, E., & Krugman, P. (985). Marke Srucure and Foreign Trade, MIT Press, Cambrigde. Holman, J. A., & Graves, P. E. (995). Korean Expors Economic Growh: An Economeric Reassessmen. Journal of Economic Developmen, 20(2). Hsiao, M. W. (987). Tess of Causaliy and Exogeneiy Beween Expors and Economic Growh: The Case of Asian NICs. Journal of Economic Developmen, 2(2), Johansen, S., & Juselius, K. (990). Maximum Likelihood Esimaion and Inference Coinegraion wih Applicaions o he Demand for Money. Oxford Bullein of Economics and Saisics. Jordaan, A. C., & Eia, J. H. (2007). Expors and Economic Growh in Namibia: A Granger Causaliy Analysis. Souh African Journal of Economics, 75(3). Tesing he Expor-Led Growh Hypohesis for Boswana. A Causaliy Analysis, BOJE: Boswana Journal of Economics. Published by Canadian Cener of Science and Educaion 0

8 Jung, W., & Marshall, P. (985). Expors, Growh and Causaliy in Developing Counries. Journal of Developmen Economics, 8. hp://dx.doi.org/0.06/ (85) Lucas, R. E. (988). On he Mechanics of he Economic Developmen. Journal of Moneary Economics. 22, hp://dx.doi.org/0.06/ (88) Maneschiold, P. (2008). A Noe on he Expor-Led Growh Hypohesis: A Time Series Approach. Cuadernos De Economia, 45, Miankhel, A. K., Thangavelu, S. M., & Kalirajan, K. (2009). Foreign Direc Invesmen, Expors, and Economic Growh in Souh Asia and Seleced Emerging Counries: A Mulivariae VAR Analysis. Cener for Conemporary Asian Sudies Doshisha Universiy, CCAS Working Paper, No. 23. Musonda, I. (2007). Is Economic Growh Led by Expors in Zambia? Minisry of Finance and Naional Planning Planning and Economic Managemen Lusaka, Zambia. Osinubi, T. S., & Amaghionyeodiwe, L. A. (200). Foreign Privae Invesmen and Economic Growh in Nigeria. Review of Economic and Business Sudies, 3(), Rerieved from hp:// Phillips, P., & Perron, P. (988). Tesing for a Uni Roo in Time Series Regression. Biomerika, 75, hp://dx.doi.org/0.093/biome/ Pop Silaghi, M. L. (2009). Expors-Economic Growh Causaliy: Evidence from CEE Counries. Romanian Journal of Economic Forecasing, 2, Ram, R. (987). Expors and Economic Growh in Developing Counries: Evidence from Time Series and Cross-Secional Daa. Economic Developmen and Culural Change, 36, hp://dx.doi.org/0.086/45636 Shirazi, N. S., & Manap, T. A. A. (2004). Expor-Led Growh Hypohesis: Furher Economeric Evidence from Pakisan. The Pakisan Developmen Review, 43(4), Tang, T. C. (2006). New Evidence on Expor Expansion, Economic Growh and Causaliy in China. Applied Economics Leers, 20. Thurayia, S. (2004). The Relaionship beween Expors and Economic Growh Experience of Saudi Arabia and Republic of Sudan. Economic Sudies: Scienific Series of Saudi Economic Associaion, 6(A). Ullah, S., Zaman, B. U., Farooq, M., & Javid, A. (2009). Coinegraion and Causaliy beween Expors and Economic Growh in Pakisan. European Journal of Social Sciences, 0(2), Rerieved from hp:// Verbeek, M. (2004). A Guide o Modern Economerics, (2 nd Ed). John Wiley, & Sons, Ld: England. Table. Phillips-Perron Uni Roo Tes Resul Summary Variable P-P es saisic 5% level criical value Order of inegraion Probabiliy DOP I(2) 0.00 FDI I(2) 0.00 GFCF I() 0.02 INF I(0) 0.0 REXP I(2) 0.00 REXR I() 0.00 RGDP I() 0.00 RIMP I() 0.00 TOT I(0) 0.00 Source: Auhors compuaion. using Eviews. 02 ISSN 96-97X E-ISSN

9 Table 2. Coinegraion Tes Resuls Dae: 0/22/ Time: 8:29 Sample (adjused): Included observaions: 27 afer adjusmens Trend assumpion: Linear deerminisic rend Series: DOP GFC INF REXP REXR RGDP RIMP TOT Lags inerval (in firs differences): o Unresriced Coinegraion Rank Tes (Trace) Hypohesized Trace 0.05 No. of CE(s) Eigenvalue Saisic Criical Value Prob.** None * A mos * A mos 2 * A mos 3 * A mos 4 * A mos 5 * A mos A mos Trace es indicaes 6 coinegraing eqn(s) a he 0.05 level * denoes rejecion of he hypohesis a he 0.05 level **MacKinnon-Haug-Michelis (999) p-values. Unresriced Coinegraion Rank Tes (Maximum Eigenvalue) Hypohesized Max-Eigen 0.05 No. of CE(s) Eigenvalue Saisic Criical Value Prob.** None * A mos * A mos 2 * A mos 3 * A mos A mos 5 * A mos A mos Max-eigenvalue es indicaes 4 coinegraing eqn(s) a he 0.05 level * denoes rejecion of he hypohesis a he 0.05 level **MacKinnon-Haug-Michelis (999) p-values Source: Auhors compuaion using Eviews. Table 3. Summary of Coinegraing Regression using Fully Modified Leas squares (FMOLS) Mehod a. Model wih DOP included b. Model wih DOP excluded EXP.VAR COEFF T-STAT DECISION COEFF T-STAT DECISION DOP no sig FDI Sig Sig GFCF no sig no sig INF Sig Sig REXP Sig Sig REXR sig no sig RIMP Sign Sig TOT Sign Sig C R 2, DW 0.87, ,.55 Key: sig. means saisically significan and no sig. means no saisically significan Source: Auhors compuaion using Eviews Published by Canadian Cener of Science and Educaion 03

10 Table 4. Coinegraing Regression wih DOP Dependen Variable: RGDP Mehod: Fully Modified Leas Squares (FMOLS) Dae: 03/02/2 Time: 20:37 Included observaions: 28 afer adjusmens Coinegraing equaion deerminisics: C Long-run covariance esimae (Barle kernel, Newey-Wes fixed bandwidh = ) Variable Coefficien Sd. Error -Saisic Prob. DOP FDI GFCF INF REXP REXR RIMP TOT C R-squared Mean dependen var Adjused R-squared S.D. dependen var S.E. of regression Sum squared resid 5.5E+0 Durbin-Wason sa Long-run variance.09e+09 Source: Auhors compuaion using Eviews. Table 5. Coinegraing Regression wihou DOP Dependen Variable: RGDP Mehod: Fully Modified Leas Squares (FMOLS) Dae: 03/02/2 Time: 20:4 Included observaions: 28 afer adjusmens Coinegraing equaion deerminisics: C Long-run covariance esimae (Barle kernel, Newey-Wes fixed bandwidh = ) Variable Coefficien Sd. Error -Saisic Prob. FDI GFCF INF REXP REXR RIMP TOT C R-squared Mean dependen var Adjused R-squared S.D. dependen var S.E. of regression Sum squared resid 5.6E+0 Durbin-Wason sa Long-run variance.5e+09 Source: Auhors compuaion using Eviews. 04 ISSN 96-97X E-ISSN

11 Millions of USD Year EXP FDI RGDP Figure. The Trends of Expors, Foreign Direc Invesmen and Real Gross Domesic Produc in Nigeria ( ) Published by Canadian Cener of Science and Educaion 05