Analysis of the impact of oil prices on trade openness in Nigeria: Further evidence from the ARDL bound test approach.

Abstract

This paper focused on investigating the impact of oil prices on trade openness in Nigeria. Secondary data were collected from World Development Indicator, International Monetary Fund and Central Bank of Nigeria (CBN) Statistical Bulletins and used for the study between1980-2020 to analyze the impact of crude oil prices on stock prices in Nigeria 1980 2020 and the impact of oil price on exchange rate in Nigeria 1980-2020. The method of estimation used in this study is Autoregressive Distribution Lag (ARDL) and the ARDL bounds test shows the existence of co-integration in model. Oil price has shown positive impact on trade openness in both short run and long run in this research. This study recommends that Stock market regulatory agencies should take steps that would allow and encourage oil and gas companies to participate fully in the market so that oil and gas companies can have more direct impact on the Nigerian economy. Transparency and accountability in the stock exchange market should also be giving by regulators so as to boost the confidence of investors in the market. Diversification policy should be ensured by the government to minimize overreliance of the economy on oil in order to reduce the negative effects of oil shocks on the economy. This should be done with proper planning, implementation and firm control of some macroeconomic variables like exchange rate, inflation, trade openness and so on to encourage manufacturers boost productivity and fast track growth.