The Determinants of Import in Nigeria over the Period 1980 – 2015

International Journal of Research and Innovation in Social Science (IJRISS) | Volume II, Issue IV, April 2018 | ISSN 2454-6186

The Determinants of Import in Nigeria over the Period 1980 – 2015

Aduralere Opeyemi, OYELADE

  Department of Economics, University of Ibadan, Nigeria

Abstract: – Excessive importation of goods and services has serious implications for macroeconomic stability through imported inflation. It can also engender balance of payments disequilibrium and impinge on the credit rating of a country. Excessive importation can also lead to a drain on foreign exchange reserves and further worsen the balance of payments position. Therefore the study investigated the determinants of import in Nigeria over the period 1980 to 2015. The study employed expost facto research design. Secondary time series data were used for the study and these were sourced from World Integrated Trade Solution (WITS, 2013) Database and World Development Indicator (WDI, 2016).The data collected were analyzed using auto regressive distributed lag. The inferences were drown at 5% significance level. The result showed that domestic income and index of openness exert a long-run positive and significant impact on import of goods and services in Nigeria (β = 0.91022, t = 124.4775 and β = 1.7443, t = 11.7163 respectively) but domestic interest rate exerts a long-run negative and significant impact on import of goods and services in Nigeria (β = -0.08934, t = -1.9822). While import prices, domestic income and index of openness exert a short-run positive and significant impact on import of goods and services in Nigeria (β = 0.036972, t = 2.1542; β = 0.64899, t = 8.0852 and β = 1.0345, t = 6.6297 respectively). The value of the coefficient of the dummy variable is appropriately signed and statistically significant, meaning that SAP achieved its cardinal objectives of significant reduction in import of goods and services in Nigeria through exchange rate depreciation. The study concluded that trade openness in the short-run discourages import while openness in the long run encourages import. Most of the good imported are inelastic in nature during the period selected and they are normal goods. The study recommended that recalibration of the naira since devaluation or depreciation of the domestic currency which was the main ingredient of SAP did not work and this will improve the competitiveness of exports. It will also help to improve Nigeria’s trade balance with its trading partners by making imports of machineries and equipments less expensive.

Keywords: Domestic Income, Domestic Interest Rate, Import, Import Prices, Dummy variable and Real Exchange Rate, ARDL Bound Test

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