Nigeria’s Trade Openness and Relative Merchandise Exportation

Abstract

This study examines the management of Nigeria’s trade openness and the distribution of its merchandise exports to low- and middle-income countries (LMICs) from 2000 to 2023. The main objective is to assess how export flows to LMICs specifically in South Asia, Sub-Saharan Africa, East Asia and the Pacific, and Europe and Central Asia impact Nigeria’s trade openness. The study addresses a major gap in existing literature, which tends to focus on Nigeria’s trade with advanced economies, overlooking the strategic potential of South–South trade and the influence of trading partners’ income levels. Theoretical grounding is provided by the Gravity Model of Trade, which better captures spatial, economic, and structural trade dynamics compared to the Theory of Comparative Advantage. Using an ex-post-facto research design, the study employed time series data sourced from the World Bank and the Central Bank of Nigeria. Quantitative analysis, including the Augmented Dickey-Fuller test and the ARDL model, was applied to assess variable relationships. Key findings reveal that exports to South Asia have a positive and significant impact on trade openness, while exports to Sub-Saharan Africa and East Asia and Pacific regions show negative and significant effects. Exports to Europe and Central Asia exhibit a negative but statistically insignificant impact. Recommendations include diversifying export markets, strengthening trade agreements especially with South Asia and improving infrastructure to support trade with African and Asian partners.