This study empirically examined the impact of external trade on economic growth of Nigeria between the period 1980-2013. The study employed Ordinary least square (OLS) regression technique to analyze the data obtained from the CBN statistical bulletin for the relevant years under study. The empirical results were on Augmented Dickey Fuller test. In the second step, Johansen co-integration test was conducted. The presence of long run equilibrium found led to the use of Vector Error Correction Model (VECM)
. The entire regression plane is statistically significant. This means that the joint influence of the explanatory variables [Net Exports (NEX), Degree of Openness (DOP) and Exchange Rate (EXR)] on the dependent variable (RGDP) is statistically significant. There is significant causal relationship between external trade and economic growth in Nigeria.
The computed coefficient of multiple determination shows that 93.6% of the total variations in the dependent variable (RGDP) is influenced by the variation in the explanatory variables. The total variation of 6.4% in the dependent variable is attributable to the influence of other factors not included in the regression model. The study therefore recommended that the Nigerian government should adopt vibrant and workable policies that will promote export increase over imports, also Nigeria as a country should concentrate on commodities which she has comparative advantage over other countries as this measure will boost economic growth of her economy.
