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International Trade as an Engine of Growth

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Submitted By CHE16
Words 6806
Pages 28
Centrepoint Humanities Edition

VOL.14, NO.1, PP.52-72

Determinants of Import in Nigeria: Application of Error Correction Model
Bayo Fatukasi
Department of Economics, Adekunle Ajasin University,
Akungba-Akoko, Ondo State
&
Bernard Olagboyega Awomuse
Dept. of Mathematics and Statistics
Rufus Giwa Polytechnic, Owo, Ondo State
Abstract
This paper assesses the determinants of demand functions for import in Nigeria using variables Real Gross Domestic Product (RGDP), External Reserves (EXTR), Real
Exchange Rate (REXCH), and Index of Openness (OPNS) as determinant factors.
The central aim of the study is to investigate the behavior of Nigeria’s aggregate import demand and its determinant (function) and then analyse the data from the period 1970 to 2008 and based on the above objectives, proffer policy proposals based on the results obtained from the analysis, for the optional management and control of Nigeria’s import demand. All the data used for the total import.
Independent variables were obtained from the Central Bank of Nigeria (CBN) year
2008 golden jubilee edition of statistical bulletin. The error correction model (ECM) approach was employed for analysis. The results reveal that the error correction model (ECM(-1)) is significant. This shows that a long run relationship exist among the quantity of import demand and its determinants over sample period of 1970 to
2008. The statistical significance of the lagged error correction model ECM(-1) suggests that the aggregate import demand adjust to correct longrun disequilibrium between itself and its function EXTR, RGDP, REXCH and OPNS. In the shortrun,
Real Gross Domestic Product is the major determinant of import demand in Nigeria.
Introduction
The importance of international trade in the development process has been of interest to development economists. In the recent years, because of the popularity of the

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