Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance

Edward Ogbonnia Eleje; Okechukwu Agha Eze; Ishiaku Irom Agabi

doi:doi:10.11648/j.ijefm.20200801.11

| Peer-Reviewed

Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance

Edward Ogbonnia Eleje, Okechukwu Agha Eze, Ishiaku Irom Agabi

Published in International Journal of Economics, Finance and Management Sciences (Volume 8, Issue 1)

Received: 6 December 2019 Accepted: 23 December 2019 Published: 4 January 2020

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

Openness to trade is one basic factor spotted as major determinant of whether a country is prone to sudden stops in capital inflow, product glut, or severe economic recession. To some researchers, trade openness raises vulnerability to sudden shocks and creates difficult economic scenario; to others, it makes adjustment to crises less painful and stimulates effective economic performance. It is on the premise of the foregoing arguments that this study sought to evaluate the effect of trade openness on primary commodity export trade. To achieve this, the study utilized disaggregated oil and nonoil primary commodity export data and Gross Domestic Product (GDP) from Nigeria for a period of 30 years (1989-2018). Data were first subjected to diagnostic tests aided by STATA econometric to check the presence of unit root, multicollinearity and autocorrelation. Cointegration analysis was performed using Johanson and Juselius maximum likelihood estimation. Diagnosed data were regressed to generate optimal multivariate estimators of the cointegrating parameters at 95% level of confidence. Trade openness was negative but not significant on nonoil export. It was however positive but not significant on oil export. The paper concludes that while trade openness could be permissible on oil export in Nigeria, it is a charade on nonoil export. The study therefore recommends among other things the adoption of partial openness policy in developing nations especially Nigeria such that will involve the employment of liberal trade in the oil export subsector and trade protection in the nonoil subsector respectively.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 8, Issue 1)
DOI	10.11648/j.ijefm.20200801.11
Page(s)	1-8
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Export Growth, Liberal Trade, Primary Commodity, Openness, Trade Barrier

References

[1]	Bacchetta, M., Marion J., Roberta P. and Alberto A. P. (2007), “Export Diversification as an Absorber of External Shocks”, World Trade Organization, Preliminary Draft Paper.
[2]	Eleje, E. O. (2015), “Trade Liberalization and Petroleum Price Adjustments in Developing Nations: What Happens to Nigeria’s GDP?” International Journal of Development Research, IJDR 1001-075.
[3]	Yaya, K. (2017), “The Impact of Trade Openness on Economic Growth: The Case of Cote D'ivoire”, Keho, Cogent Economics & Finance, 5: 1-14.
[4]	Emrah, I. C. Erdal, A., & Turhan, K. (2019), “Trade Openness and Economic Growth in Turkey: A Rolling Frequency Domain Analysis”, Economies, 7 (41) 1-16.
[5]	Rodriguez, F. and Rodrik, D. (2001), “Trade Policy and Economic Growth: A Skeptic’s Guide to the Cross-National Evidence”, NBER Macroeconomics Annual 2000, Cambridge, Mass., MIT Press, Pp. 261-324.
[6]	Amegashie, J. A. (2006), “The Economics of Subsidies”, Crossroads 6 (2) 7-15.
[7]	Obadan M. I. (2008), “Economic Globalization, Markets and National Development: How Sensibly do the Poor Countries (Nigeria included) Stand?” 98th Inaugural Lecture Series, University of Benin, September 18.
[8]	Billmeier, A. and Nannicini, T. (2009), “Trade Openness and Growth: Pursuing Empirical Glasnost”, IMF Staff Paper (56) 447-475.
[9]	Ijirshar, V. U. (2019), Impact of Trade Openness on Economic Growth among ECOWAS Countries: 1975-2017”, CBN Journal of Applied Statistics, 10 (1) 75-96.
[10]	UNCTAD (1999) United Nations Conference on Trade and Development, Working Paper.
[11]	Stein, H (1992), “Deindustrialization, Adjustment, the World Bank and the IMF in Africa”, World Development, (20), 1 January.
[12]	Mkandawire, T (1998), “The Road to Crisis, Adjustment and De-industrialization: The African Case”, Africa Development, (XIII) 1.
[13]	Mkandawire, T. (2005), “Maladjusted African Economies and Globalization”, Africa Development, Vol. (XXX) 1 & 2.
[14]	Nwaba, A. (1999), “Trade Liberalisation and Growth: Policy Options for African Countries in a Global Economy”, African Development Bank Economic Research Paper No. 60.
[15]	UNCTAD (2004) United Nations Conference on Trade and Development, Working Paper.
[16]	Khor, M. (2000), “Globalization and the South: Some Critical Issues” Penang: Third World Network.
[17]	Alwell, N., Mansi, N., & Owede, V. M.(2017) Trade Liberalization and Economic Growth in Nigeria, International Journal of Social Science and Economics Invention (IJSSEI) 03 (01): 120-132.
[18]	Yakubu, M. M., & Akanegbu, B. N. (2018), “Trade Openness and Economic Growth: Evidence from Nigeria”, European Journal of Business, Economics and Accountancy 6 (4): 30-44.
[19]	Krueger, A. O. (1978), “Liberalization Attempts and Consequences, Liberalization, Direction of Bias and Economic Growth”, Chapter 12 in Foreign Trade Regimes and Economic Development, Volume (X) 277-300.
[20]	Harrison, A. (1996), “Openness and Growth: A Time-Series, Cross-Country Analysis for Developing Countries”, Journal of Development Economics, 48 (2) 419-47.
[21]	Yanikkaya, H. (2002), “Trade Openness and Economic Growth: a Cross-Country Empirical Investigation”, Journal of Development Economics 72 (2003) 57–89.
[22]	Ejike, D. C., Anah, S. A., & Onwuchekwa, F. C. (2018), Trade Liberalization and Economic Growth in Nigeria: A Cointegration Analysis (1980-2015), IJRDO - Journal of Business Management, 4 (5): 81-94.
[23]	Edwards, S., (1993), “Openness, Trade Liberalization, and Growth in Developing Countries” Journal of Economic Literature (31) 1358–1393.
[24]	Romer, P. M. (1994) "The Origins of Endogenous Growth" The Journal of Economic Perspectives 8 (1): 3.
[25]	Fadare, S. O. (2010), "Recent Banking Sector Reforms and Economic Growth in Nigeria", Middle Eastern Finance and Economics (8); Retrieved 11/10/2011 via; http://www.eurojournals.com/MEFE_8_12.
[26]	Arrow, K. (1962), in Romer, P. M. (2011), "Monetary Growth Theory" Retrieved, 11/10/11 via; http://wxww.newschool.edu/nssr/het/essays/growth/moneygrowth.htm.
[27]	Hirofumi, U. (1965), in Romer, P. M. (2011) "Monetary Growth Theory" Retrieved 11/10/2011 via http://www.newschool.edu/nssr/het/essays/ growth/moneygrowth.htm.
[28]	Miguel Sidrauski (1967), in Romer, P. M. (2011) "Monetary Growth Theory" Retrieved 11/10/2011 via http://www.newschool.edu/nssr/het/essays/growth/moneygrowth.htm.
[29]	Levine, R., and Renelt, D. (1992), “A Sensitivity Analysis of Cross-Country Growth Regressions”, American Economic Review, 82 (4) 942–63.
[30]	Temple, J., (1999), “The New Growth Evidence”, Journal of Economic Literature XXXVII, 112–156.
[31]	Tajudeen E. & Tomola M. O. (2018) Foreign Trade and Economic Growth: A Study of Nigeria and India, Acta Universitatis Danubius, 14 (7): 72-87.
[32]	Winters, A. L., McCulloch, N. and McKay (2002), “Trade Liberalization and Poverty: The Empirical Evidence”, Discussion Paper 88, University of Sussex, Falmer, Brighton BN1 9SN, UK.
[33]	Dollar, D. (1992), “Outward-Oriented Developing Economies Really Do Grow More Rapidly: Evidence from 95 LDCs, 1976-1985”, Economic Development and Cultural Change, Vol. 40 (3) 523-44.
[34]	Sachs, J. D. and Warner, A. M. (1995), “Natural Resource Abundance and Economic Growth” NBER Working Paper, No. 5398.
[35]	Rodrik, D. (1998), “Why Do More Open Economies have Bigger Governments?” Journal of Political Economy, (106) 997-1032.
[36]	Aizenmann, J. and Marion, N. (1999), “Volatility and Investment: Interpreting Evidence from Developing Countries, Econometrica, (66), 157-179.
[37]	Razin, A. and Rose, K. A. (1992), “Business-Cycle Volatility and Openness: An Exploratory Cross-Sectional Analysis”, in Leiderman, L. and Razin, A. (eds) “Capital Mobility: The Impact on Consumption, Investment and Growth”, Cambridge, Cambridge University Press.
[38]	Easterly, W. and Kraay, A. (2000), “Small States, Small Problems? Income, Growth, and Volatility in Small States”, World Development, 28 (11) 2013-27.
[39]	Eleje, E. O. and Okafor, F. O. (2010) “Development of Commodity Derivatives Market in Nigeria: An Empirical Assessment”, African Journal of Contemporary Issues, Vol. 10 No. 1.
[40]	Lutz, M. and Singer, H. W. (1994), “The Link between Increased Trade Openness and the Terms of Trade: An Empirical Investigation”, World Development, (22) 1697-1709.
[41]	Bevan, D., Collier, P. and Gunning J. W. (1990), “Economic Policy in Countries Prone to Temporary Trade Shocks”, in Scott M. F. G. and Lal D. (eds) Public Policy and Economic Development, Oxford, Clarendon Press.
[42]	Okoh, R. N. (2004), “The Global Market Place: How Far can Nigeria go With The Present Non-Oil Product Mix?” African Development and Poverty Reduction: The Macro-Micro Linkage, Forum Paper, 13-15 October.
[43]	Onayemi S. O and Akintoye, I. R. (2009), “Diversifying the Productive Base of Nigeria, an Econometric Approach to the Assessment of Non-Oil Export Promotion Strategies”, International Research Journal of Finance and Economics ISSN 1450-2887 Issue 24.
[44]	Belsley, D. A., Kuh, E. and Welsh, R. E. (1980), “Regression Diagnostics: Identifying Influential Data and Sources of Collinearity”, New York, John Wiley & Sons.
[45]	David, G. K., Lawrence, L. K., and Keith, E. M. (1988), “Applied Regression Analysis and other Multivariate Methods”, 2nd ed., PWS-Kent, Boston, Mass.
[46]	Genova, A. and Toyin F. (2003) “Oil in Nigeria: A Bibliographical Reconnaissance” History in Africa, (30) 133-156.
[47]	Odularu, G. O. (2009), “Crude Oil and The Nigerian Economic Performance” Oil and Gas Business, 2008 http://www.ogbus.ru/eng/.
[48]	Ogunleye, E. K. (2008) “Natural Resource Abundance in Nigeria: from Dependence to Development”. Resources Policy 56.
[49]	Nwidobie, B. M. (2011) “An Impact Analysis of Foreign Exchange Rate Volatility on Nigeria’s Export Performance” European Journal of Economics, Finance and Administrative Sciences ISSN 1450-2275 Issue 37.
[50]	Olayungbo, D. O. (2019) “Effects of Global Oil Price on Exchange Rate, Trade Balance, and Reserves in Nigeria: A Frequency Domain Causality Approach,” Journal of Risk and Financial Management 12 (43): 1-14.

Cite This Article

Plain Text BibTeX RIS

APA Style

Edward Ogbonnia Eleje, Okechukwu Agha Eze, Ishiaku Irom Agabi. (2020). Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance. International Journal of Economics, Finance and Management Sciences, 8(1), 1-8. https://doi.org/10.11648/j.ijefm.20200801.11

Copy | Download

ACS Style

Edward Ogbonnia Eleje; Okechukwu Agha Eze; Ishiaku Irom Agabi. Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance. Int. J. Econ. Finance Manag. Sci. 2020, 8(1), 1-8. doi: 10.11648/j.ijefm.20200801.11

Copy | Download

AMA Style

Edward Ogbonnia Eleje, Okechukwu Agha Eze, Ishiaku Irom Agabi. Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance. Int J Econ Finance Manag Sci. 2020;8(1):1-8. doi: 10.11648/j.ijefm.20200801.11

Copy | Download

@article{10.11648/j.ijefm.20200801.11,
  author = {Edward Ogbonnia Eleje and Okechukwu Agha Eze and Ishiaku Irom Agabi},
  title = {Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {8},
  number = {1},
  pages = {1-8},
  doi = {10.11648/j.ijefm.20200801.11},
  url = {https://doi.org/10.11648/j.ijefm.20200801.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20200801.11},
  abstract = {Openness to trade is one basic factor spotted as major determinant of whether a country is prone to sudden stops in capital inflow, product glut, or severe economic recession. To some researchers, trade openness raises vulnerability to sudden shocks and creates difficult economic scenario; to others, it makes adjustment to crises less painful and stimulates effective economic performance. It is on the premise of the foregoing arguments that this study sought to evaluate the effect of trade openness on primary commodity export trade. To achieve this, the study utilized disaggregated oil and nonoil primary commodity export data and Gross Domestic Product (GDP) from Nigeria for a period of 30 years (1989-2018). Data were first subjected to diagnostic tests aided by STATA econometric to check the presence of unit root, multicollinearity and autocorrelation. Cointegration analysis was performed using Johanson and Juselius maximum likelihood estimation. Diagnosed data were regressed to generate optimal multivariate estimators of the cointegrating parameters at 95% level of confidence. Trade openness was negative but not significant on nonoil export. It was however positive but not significant on oil export. The paper concludes that while trade openness could be permissible on oil export in Nigeria, it is a charade on nonoil export. The study therefore recommends among other things the adoption of partial openness policy in developing nations especially Nigeria such that will involve the employment of liberal trade in the oil export subsector and trade protection in the nonoil subsector respectively.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance
AU  - Edward Ogbonnia Eleje
AU  - Okechukwu Agha Eze
AU  - Ishiaku Irom Agabi
Y1  - 2020/01/04
PY  - 2020
N1  - https://doi.org/10.11648/j.ijefm.20200801.11
DO  - 10.11648/j.ijefm.20200801.11
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 1
EP  - 8
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20200801.11
AB  - Openness to trade is one basic factor spotted as major determinant of whether a country is prone to sudden stops in capital inflow, product glut, or severe economic recession. To some researchers, trade openness raises vulnerability to sudden shocks and creates difficult economic scenario; to others, it makes adjustment to crises less painful and stimulates effective economic performance. It is on the premise of the foregoing arguments that this study sought to evaluate the effect of trade openness on primary commodity export trade. To achieve this, the study utilized disaggregated oil and nonoil primary commodity export data and Gross Domestic Product (GDP) from Nigeria for a period of 30 years (1989-2018). Data were first subjected to diagnostic tests aided by STATA econometric to check the presence of unit root, multicollinearity and autocorrelation. Cointegration analysis was performed using Johanson and Juselius maximum likelihood estimation. Diagnosed data were regressed to generate optimal multivariate estimators of the cointegrating parameters at 95% level of confidence. Trade openness was negative but not significant on nonoil export. It was however positive but not significant on oil export. The paper concludes that while trade openness could be permissible on oil export in Nigeria, it is a charade on nonoil export. The study therefore recommends among other things the adoption of partial openness policy in developing nations especially Nigeria such that will involve the employment of liberal trade in the oil export subsector and trade protection in the nonoil subsector respectively.
VL  - 8
IS  - 1
ER  -

Copy | Download

Author Information

Edward Ogbonnia Eleje

Department of Banking and Finance, Federal University, Wukari, Nigeria
Okechukwu Agha Eze

Liquidity Management Unit, Treasury Department Keystone Bank Limited, Lagos, Nigeria
Ishiaku Irom Agabi

Department of Banking and Finance, Federal University, Wukari, Nigeria

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Edward Ogbonnia Eleje, Okechukwu Agha Eze, Ishiaku Irom Agabi. (2020). Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance. International Journal of Economics, Finance and Management Sciences, 8(1), 1-8. https://doi.org/10.11648/j.ijefm.20200801.11

Copy | Download

ACS Style

Edward Ogbonnia Eleje; Okechukwu Agha Eze; Ishiaku Irom Agabi. Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance. Int. J. Econ. Finance Manag. Sci. 2020, 8(1), 1-8. doi: 10.11648/j.ijefm.20200801.11

Copy | Download

AMA Style

Edward Ogbonnia Eleje, Okechukwu Agha Eze, Ishiaku Irom Agabi. Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance. Int J Econ Finance Manag Sci. 2020;8(1):1-8. doi: 10.11648/j.ijefm.20200801.11

Copy | Download

@article{10.11648/j.ijefm.20200801.11,
  author = {Edward Ogbonnia Eleje and Okechukwu Agha Eze and Ishiaku Irom Agabi},
  title = {Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {8},
  number = {1},
  pages = {1-8},
  doi = {10.11648/j.ijefm.20200801.11},
  url = {https://doi.org/10.11648/j.ijefm.20200801.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20200801.11},
  abstract = {Openness to trade is one basic factor spotted as major determinant of whether a country is prone to sudden stops in capital inflow, product glut, or severe economic recession. To some researchers, trade openness raises vulnerability to sudden shocks and creates difficult economic scenario; to others, it makes adjustment to crises less painful and stimulates effective economic performance. It is on the premise of the foregoing arguments that this study sought to evaluate the effect of trade openness on primary commodity export trade. To achieve this, the study utilized disaggregated oil and nonoil primary commodity export data and Gross Domestic Product (GDP) from Nigeria for a period of 30 years (1989-2018). Data were first subjected to diagnostic tests aided by STATA econometric to check the presence of unit root, multicollinearity and autocorrelation. Cointegration analysis was performed using Johanson and Juselius maximum likelihood estimation. Diagnosed data were regressed to generate optimal multivariate estimators of the cointegrating parameters at 95% level of confidence. Trade openness was negative but not significant on nonoil export. It was however positive but not significant on oil export. The paper concludes that while trade openness could be permissible on oil export in Nigeria, it is a charade on nonoil export. The study therefore recommends among other things the adoption of partial openness policy in developing nations especially Nigeria such that will involve the employment of liberal trade in the oil export subsector and trade protection in the nonoil subsector respectively.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - Trade Openness for Developing Nations: A Charade or Desideratum for Viable Commodity Export Performance
AU  - Edward Ogbonnia Eleje
AU  - Okechukwu Agha Eze
AU  - Ishiaku Irom Agabi
Y1  - 2020/01/04
PY  - 2020
N1  - https://doi.org/10.11648/j.ijefm.20200801.11
DO  - 10.11648/j.ijefm.20200801.11
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 1
EP  - 8
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20200801.11
AB  - Openness to trade is one basic factor spotted as major determinant of whether a country is prone to sudden stops in capital inflow, product glut, or severe economic recession. To some researchers, trade openness raises vulnerability to sudden shocks and creates difficult economic scenario; to others, it makes adjustment to crises less painful and stimulates effective economic performance. It is on the premise of the foregoing arguments that this study sought to evaluate the effect of trade openness on primary commodity export trade. To achieve this, the study utilized disaggregated oil and nonoil primary commodity export data and Gross Domestic Product (GDP) from Nigeria for a period of 30 years (1989-2018). Data were first subjected to diagnostic tests aided by STATA econometric to check the presence of unit root, multicollinearity and autocorrelation. Cointegration analysis was performed using Johanson and Juselius maximum likelihood estimation. Diagnosed data were regressed to generate optimal multivariate estimators of the cointegrating parameters at 95% level of confidence. Trade openness was negative but not significant on nonoil export. It was however positive but not significant on oil export. The paper concludes that while trade openness could be permissible on oil export in Nigeria, it is a charade on nonoil export. The study therefore recommends among other things the adoption of partial openness policy in developing nations especially Nigeria such that will involve the employment of liberal trade in the oil export subsector and trade protection in the nonoil subsector respectively.
VL  - 8
IS  - 1
ER  -

Copy | Download