Drivers of Sectorial Export Earnings’ Performance in Nigeria: A Supply Leading Approach

Abstract

The paper investigated the supply leading drivers of sectorial export earrings’
performance in Nigeria from 1984 to 2018 using the ARDL Bound test and ECM
approach. The regressed variable is drivers measured by import penetration, economic
(trade) openness, foreign direct investment, exchange rate, and inflation rate while the
regressor being sectorial export earnings’ performance were disaggregated into oil and
non-oil earnings’ performance based on data derived from the Central Bank of Nigeria
(CBN) Statistical Bulletin and World Bank Development index (2018). The result reported
that only import penetration positively affected oil export earnings in the long run but in
the short run, it adversely affected oil export earnings though FDI inflows passed the test
of statistical significance. On the other hand, economic openness and stable inflation rate
have a favourable effect on non-oil export earnings’ performance both on the long and
short run. Again, while exchange rate and FDI inflows have a favourable effect on nonoil export earnings' performance in the short run, in the long-run exchange rate has a
negative insignificant effect on oil export earnings' performance. However, only import
penetration passed the test of significance both in the long and short run. To this end, we
recommended, reduce tariffs and quota on imported industrial inputs to encourage
continuous injection of foreign capital into the Nigerian non-oil sector. Again, continuous
effort must be made to ensure that the present inflation and exchange rate is consistent
with her export promotion strategy to ensure that the Nigerian naira is been not overrated.