Empirical Analysis of Trade Barriers and Economic Growth in Nigeria

AbstractThe impact of trade barriers on economic growth remains an issue that can only be resolve empirically, in view of this, the study investigates the relationship between trade barriers and economic growth in Nigeria over the period of 1970-2006. The study employed ordinary least square regression techniques. The period covered is 37 years. Data was collected on Gross Domestic Product (GDP) which is proxy for economic growth. Trade barriers are in form of tariffs such as import and export duties, quotas and bans. Due to unavailability of required data on import quota and unquantitative nature of ban, data was collected only on import duty and export duty which form tariff variable. Data was also collected on Aggregate export, Aggregate import and ratio of export to GDP. The result showed that Tariff barrier, Aggregate export and openness are positively related to economic growth while Aggregate import and Ratio of export to GDP are negatively related to economic growth. The empirical findings shows that trade barriers have positive and statistical impact on economic growth in Nigeria. Keywords: Trade, Barriers, Growth and Developmen

Empirical Analysis of the Buoyancy and Elasticity of Tax in Nigeria

Many countries in the world have greatly sponsored their government expenditures with the aid of tax revenue, and owe their developments to this internally generated revenue. The rate of increase depends on the elasticity and buoyancy of tax and it is on this premise that, this study investigates the elasticity and buoyancy of tax in an attempt to ascertain its flexibility and hence the possibility of increasing the tax base in Nigeria The study adopted the standard OLS estimation procedure which was modified into Dynamic OLS (DOLS) and was incorporated in vector error correction model (VECM). The results of the study therefore suggest that aggregate revenue is relatively elastic and significantly buoyant according to the 2004 tax reforms. And the results of the four major taxes tested showed that only PPT was found to be relatively elastic while VAT, CED and CID were relatively inelastic. However the results further suggest that, while VAT and CIT are not significantly buoyant according to the 2004 tax reforms, PPT and CED are significantly buoyant. Finally, the study used the 2005 structural break to establish that aggregate tax revenue dropped significantly after the boom period. The study therefore concludes that tax in Nigeria is relatively flexible with respect to growth and therefore more could be done to increase it. Keywords: Tax, tax reform, elasticity, buoyancy, Nigeria

Empirical Test of Hechscher-Ohlin Theory between Nigeria and USA

This study empirically tested if Nigeria patterns of production and trade are consistent with the Heckscher-Ohlin framework. The theory predicts that countries export the products that use their abundant factors intensively. As such, Secondary sources of data were collected from Central Bank of Nigeria and United Nation Conference on Trade and Development (UNTCTAD). The data for the study were transformed into nine sectors, namely manufacturing sector, Agricultural sector, mining sector, service sector, consumption sector, trade, Electricity, export and import sectors which formed the input-output table. The study utilizes an estimation methodology used by Leontief in the construction of input-output table. The study observed that the value of capital\labour ratio imported from U.S.A to Nigeria showed a value of (2.09) which exceeds the critical value of (1) or a representation of 55.7% of Nigeria total major imports from USA. This empirical result showed that Nigeria’s pattern of production and trade are inconsistent with the prediction of Heckscher-Ohlin theory. This is because; Nigerian experience has proven Heckscher-Ohlin theory a dynamic model as against static model argued by others. This is indeed a major departure of Nigerian experience of Heckscher-Ohlin theory from others countries of the world. As such, the key policy implication from the study is that Nigeria should shift her patterns of production and trade from capital intensive oil production to labour intensive agricultural production as capital is scarce resources in Nigeria and at the same time make intensive use of her relatively abundant endowed labour resources, rich soils and favourable climatic conditions. Though, the study observed that there are some agricultural commodity and activities that Nigeria cannot do without employing labour intensive, such as groundnut, cocoa and palm products harvesting. KEYWORDS: Heckscher-Ohlin theory, labour intensive, imports, input-output matrix & capital intensiv