Open AccessThreshold Effects of Import Dependence on Economic Growth in Nigeria
Author(s) -
Oziengbe Scott Aigheyisi
Publication year - 2021
Publication title -
acta všfs/acta všfs
Language(s) - English
Resource type - Journals
eISSN - 1802-7946
pISSN - 1802-792X
DOI - 10.37355/acta-2021/2-04
Subject(s) - ordinary least squares , economics , inflation (cosmology) , econometrics , investment (military) , threshold model , estimator , statistics , mathematics , politics , physics , theoretical physics , political science , law
This study uses annual time series data spanning 1981–2018 to investigate the threshold effects of import dependence on economic growth in Nigeria. The ordinary least squares (OLS) and the fully modified OLS (FMOLS) techniques are employed for estimation of a quadratic regression model to determine the nature of the relationship betweenaggregate import dependence and economic growth. It is found that the relationship is concave, that is, it follows an inverted-U shape. The conditional least squares estimator is thereafter employed to estimate the threshold model specified to determine the threshold level of import dependence. The study finds a threshold level of 26% for aggregate import dependence. Below this threshold, import dependence positivelyaffects economic growth; above the threshold, the growth effect of import dependence is adverse. Furthermore, it is found that the long-run growth effect of Inflation is adverse, and investment is favourable to long-run economic growth. Based on these findings, the paper recommends efforts by Nigeria’s government to reduce import dependence below the estimated threshold of 26%, control inflation and encourage investment so as to enhance the growth of the nation’s economy.