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Bullion

Keywords

External debt stock, Foreign direct investment, Nigeria, Trade openness, VAR

Abstract

The paper investigates the impact of external sector liberalization (foreign direct investment, external debt stock, trade openness and exchange rate) on the output growth in Nigeria from the period 1981 to 2019, utilizing correlation analysis, Granger causality test and vector autoregression (VAR). The results indicate that foreign direct investment, external debt stock, trade openness and exchange rate all correlate positively with gross domestic product. Also, the granger causality test indicates that foreign direct investment, trade openness and exchange rate granger cause the output growth in Nigeria. From the VAR result foreign direct investment exerted positive and significant impact on the output growth in Nigeria. The paper thus recommended the formulation of an admixture of fiscal and monetary policy, including harmonized foreign exchange policy, to ensure stable macroeconomic environment that will attract foreign direct investment, especially into the tradeable sector that holds higher potential for output growth.

Author Bio

Dr. Emmanuel A. Onwioduokit and Dr. Obong E. Effiong are staff of Department of Economics, University of Uyo

Publication Title

CBN Bullion

Issue

3

Volume

45

First Page

60

Last Page

73

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