Journal of
Economics and International Finance

  • Abbreviation: J. Econ. Int. Finance
  • Language: English
  • ISSN: 2006-9812
  • DOI: 10.5897/JEIF
  • Start Year: 2009
  • Published Articles: 309

Full Length Research Paper

Market opening and economic growth in Nigeria

Siyanbola Trimisiu Tunji
  • Siyanbola Trimisiu Tunji
  • Department of Accounting, School of Management Sciences, Babcock University, Ilishan-Remo, Ogun State, Nigeria.
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Okolie Onyeisi Romanus
  • Okolie Onyeisi Romanus
  • Department of Accounting, Faculty of Management Science, Ambrose Alli University, Ekpoma – Edo State, Nigeria.
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Ogbebor Peter Ifeanyi
  • Ogbebor Peter Ifeanyi
  • Department of Banking and Finance, School of Management Sciences, Babcock University, Ilishan-Remo, Ogun State, Nigeria.
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  •  Received: 16 December 2019
  •  Published: 31 January 2020

Abstract

Market opening positively impacts economic growth due to reduction in the cost of capital and international risk diversification, amongst others in Nigeria. Using a robust set of econometric approach involving unit root test, co-integration, vector error correction model and granger causality, there is evidence that current value of economic growth responds to disequilibrium from past values of real gross domestic product, stock market development, foreign direct investment, trade openness, inflation and banking sector development in the long run. The result also shows that past values of real gross domestic product, foreign direct investment and trade openness promotes economic growth in the short run. The study, therefore, concludes that there are bi-directional causalities both in the short term and the long term between the dependent and explanatory variables. Based on the findings, the study recommends that policy makers in Nigeria should pay more attention to factors that can boost stock market development, foreign direct investment, trade openness, inflation and banking sector development in order to impact economic growth more positively in line with theoretical evidence that market opening positively impacts economic growth especially in frontier and emerging markets such as Nigeria.
 
Key words: Inflation, market opening, trade openness.