THE IMPACT OF TRADE LIBERALIZATION ON BALANCE OF PAYMENT: A CASE OF THE NIGERIAN ECONOMY

This research analyse the effect of trade liberalization on balance of payment. This study focused extensively on the trade pattern of Nigeria from 1980 to 2012 with more attention on the various trade policies that had been adopted over the years. The use of ordinary least square was adopted to estimate the coefficient using an observation of thirty one years. Secondary data was used for the estimation and was source from Central Bank Statistical Bulletin of 2013 volume. The effect of liberalization on the balance of payments was significant at 5% with the use F-statistics. Subsequently, the empirical analysis investigates whether the changing trade performance of Nigeria has affected its long run economic growth rate consistent with balance of payments equilibrium. Results indicate that the increase in the demand for imports, which has not been compensated by a higher rate of growth of exports, has contributed to the slowdown of Nigeria’s long run balance of payment equilibrium. The findings have important policy implications for the trade liberalization variation in place of exchange rate. It is important that the exchange rate is not over-valued, because this will result in unsustainable balance of payments. In contrast, the exchange rate should find its equilibrium level to make the balance of payments position viable.

TABLE OF CONTENT

CHAPTER ONE: INTRODUCTION

• Background of the study
• Statement of the problem
• Research questions
• Objective of the study

1.5 Research hypothesis

1.6 Significance of study

1.7 Source of data and basic methodology

1.8 Scope of study

1.9 Limitation

CHAPTER TWO: LITERATURE REVIEW AND THEORETICAL FRAMEWORK

2.1Conceptual literature

2.2 Theoretical framework

2.2.1 International trade theories

2.2.2 Absolute advantage theory

2.2.3 Comparative advantage theory

2.2.4 Comparative advantage theory in a macro concept

2.2.5 Comparative advantage theory about Nigerian crude oil

2.2.6 Tariff as a trade policy

2.2.7 Theories of balance of payment

2.2.7.1 Monetary approach

2.2.7.2 Elasticity approach

2.2.7.3 Absorption approach

2.3 Empirical literature

2.3.1 Trade liberalization and balance of payment: Evidence

from Developed Economies

2.3.2 Evidence from Emerging and Developing economies

2.3.3 Evidence from Nigeria

CHAPTER THREE: METHODOLOGY

3.1Restatement of research hypothesis

3.2Model specification

3.3Apriori expectation

3.4Method of data analysis

• Criteria for decision making

CHAPTER FOUR: PRESENTATION AND INTERPRETATION OF DATA

4.1Presentation of data

4.2 Presentation of regression result

4.3 Interpretation of result

4.4 General discussion

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1: Summary

5.2 Conclusion

5.3 Recommendations

Reference

Appendix