Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance
International Journal of Economics, Finance and Management Sciences
Volume 8, Issue 1, February 2020, Pages: 1-8
Received: Dec. 6, 2019; Accepted: Dec. 23, 2019; Published: Jan. 4, 2020
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Authors
Edward Ogbonnia Eleje, Department of Banking and Finance, Federal University, Wukari, Nigeria
Okechukwu Agha Eze, Liquidity Management Unit, Treasury Department Keystone Bank Limited, Lagos, Nigeria
Ishiaku Irom Agabi, Department of Banking and Finance, Federal University, Wukari, Nigeria
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Abstract
Openness to trade is one basic factor spotted as major determinant of whether a country is prone to sudden stops in capital inflow, product glut, or severe economic recession. To some researchers, trade openness raises vulnerability to sudden shocks and creates difficult economic scenario; to others, it makes adjustment to crises less painful and stimulates effective economic performance. It is on the premise of the foregoing arguments that this study sought to evaluate the effect of trade openness on primary commodity export trade. To achieve this, the study utilized disaggregated oil and nonoil primary commodity export data and Gross Domestic Product (GDP) from Nigeria for a period of 30 years (1989-2018). Data were first subjected to diagnostic tests aided by STATA econometric to check the presence of unit root, multicollinearity and autocorrelation. Cointegration analysis was performed using Johanson and Juselius maximum likelihood estimation. Diagnosed data were regressed to generate optimal multivariate estimators of the cointegrating parameters at 95% level of confidence. Trade openness was negative but not significant on nonoil export. It was however positive but not significant on oil export. The paper concludes that while trade openness could be permissible on oil export in Nigeria, it is a charade on nonoil export. The study therefore recommends among other things the adoption of partial openness policy in developing nations especially Nigeria such that will involve the employment of liberal trade in the oil export subsector and trade protection in the nonoil subsector respectively.
Keywords
Export Growth, Liberal Trade, Primary Commodity, Openness, Trade Barrier
To cite this article
Edward Ogbonnia Eleje, Okechukwu Agha Eze, Ishiaku Irom Agabi, Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance, International Journal of Economics, Finance and Management Sciences. Vol. 8, No. 1, 2020, pp. 1-8. doi: 10.11648/j.ijefm.20200801.11
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Copyright © 2020 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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