Poverty Reducing Effect of Trade Openness: The Nigerian Experience
Keywords:
Keywords: Trade Openness; Poverty Reduction; Import Volume; Export Volume; ARDL Model.Abstract
The research analyzes the connection between trade openness and the poverty situation in Nigeria for 2000-2024, particularly paying attention to the impact of the trade openness, the volume of imports and exports on the poverty reduction in Nigeria. The primary objective of the research is to analyze the level of impact of trade openness on poverty, the impact of imports on poverty rates and the connection between export volumes and poverty in Nigeria. According to the review of the existing literature, there are several gaps: firstly, previous research analyzes either the global economy or the region excluding Nigeria, which fails to consider the specific economic features of the country, including the dependence on the oil production and regional differences. Secondly, most previous research uses trade indexes calculated since simple trade level figures and the outdated statistics, which do not allow reflecting dynamic long-term connections and shocks occurred after 2022, including the global crisis. Through the application of the descriptive survey design, it becomes feasible to conduct an in-depth analysis of the link between trade and poverty using secondary data for a period of 25 years. The results have revealed that the rates of poverty are highly significant in countries with high trade openness and high export volumes; however, the import level is found to significantly reduce poverty in Nigeria. This implies that the efforts aimed at reducing poverty in Nigeria through import-based strategies may become more difficult due to the relationship between the volume of exports and poverty. Recommendations made in this study include the need for strict measures in matters relating to trade policy to ensure fair gains from trade openness, proper management of imports and diversification of exports from oil to agriculture and manufacturing. Further research into foreign direct investment, small and medium enterprises, and microfinance in relation to poverty is recommended.
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