Acta Universitatis Danubius. Œconomica, Vol 10, No 6 (2014)

Capital Inflow and Economic Growth Nexus in Nigeria: The Role of Trade Openness

Olufemi Muibi Saibu

Abstract


The paper examines direct and interactive effects of capital inflow, trade opennessand economic growth using a composite indicator derived from principalcomponent analysis (PCA).  AutoregressiveDistributed Lag (ARDL) bound testing model was used to explore the interactiveeffects of capital inflow and trade openness on economic growth based on timeseries data from Nigeria. The result provides new evidence in support of themodernization hypothesis that capital inflow and trade policy are complementaryand growth enhancing. The paper concludes that trade liberalization policiestend to enhance effectiveness of capital inflow and they jointly promote highereconomic growth in Nigeria

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