Economic and Financial Review


Central Bank of Nigeria


External Competitiveness, Trade Performance, Economic Growth, REER, Price Level


The study investigated the determinants of Nigeria's external competitiveness, with a view to providing sound policy prescriptions on ways to improve competitiveness. The study employed an Autoregressive Distributed Lag (ARDL) model, using monthly data spanning 2008 to 2016 to determine the short- and long-run relationships among some selected macroeconomic variables. These included real effective exchange rate, exports, productivity, crude oil price, capital flow and consumer price index. The results from the short-run analysis revealed that productivity, proxied by government expenditure, and crude oil price were found to be the major determinants of external sector competitiveness in Nigeria, while CPI was significant in the long-run. However, Nigeria's exports and capital flows were not significant determinants of external competitiveness. The policy implication is that since the country has no control over crude oil price, the need to ensure prudence in government spending becomes imperative to boost productivity and trade. Also, the need to restructure government expenditure profile from recurrent to capital to guarantee infrastructural development is undisputable. This is because increased capital expenditure would enhance foreign investor confidence.

Author Bio

The authors are staff of the External Sector Division, Research Department, Central Bank of Nigeria

Publication Title

CBN Economic and Financial Review





Recommended Citation

Duke, O.; Yakub, M.; Nakorji, M.; Gaiya, B.; Ismail, F.; Sani, Z.; Zimboh, S.; Obiezue, T.; Asuzu, O. and Aliyu, V. (2017). Determinants of Nigeria's External Sector Competitiveness. CBN Economic and Financial Review. 55(2), 87-119



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