Balance of Payments Disequilibriumin and Implication for Economic Growth in Nigeria
Keywords:
Balance of Payment, Official Exchange Rate, Disequilibrium, Nigeria
Abstract
This study examined the impact of Balance of Payments Disequilibriumin And Implication for Economic Growth in Nigeria over the time frame of 1981 to 2020. Secondary data were sourced from Central Bank of Nigeria statistical bulletin of various issues and CBN annual reports. In analyzing the short and long-run dynamic relationship between Gross Domestic Product and selected Balance of Payment determinants which include; Balance of Payment and Exchange rate. This study utilized the Unit root test, Ordinary Least Square method, Granger Causality and Generalized Autoregressive Conditional Heteroskedasticity (GARCH) in capturing the short-run and volatility dynamics of the variables used in the model. The result revealed the existence of negative and insignificant relationship between Balance of Payment and Gross Domestic Product proxy for Economic growth while Exchange rate exhibited negative and significant relationship on economic growth in Nigeria. The study therefore recommends that Balance of payments position in Nigeria constitutes a structural problem that can hinder the attainment of potential growth. It has been shown clearly that, these problems can be addressed by diversifying the structure of production; reduce dependency on imports, making exports competitive in the international markets through macroeconomic stability, improvement in the state of infrastructure, human capital development, and eradication of corruption. Also, Government should create an incentive that would encourage investment in the country and also improve the balance of payments position.
References
1. Adeleye ,J. O., Adeteye O. S. & Adewuyi, M. O. (2015). Impact of the balance of trade on Economic Growth in Nigeria (1988-2012), International Journal of Financial Research, 6 (3).
2. Agbo, E. I., Agu, R. E. & Eze, L.O. (2018). Impact of the balance of trade on the economic growth of Nigeria. European Journal of Business and Management, 10(18), 1-10
3. Aliyu, S. U. (2018). Oil price shocks and the macroeconomy of Nigeria: a non-linear approach. Journal for International Business and Entrepreneurship Development, 5(3), 179-198.
4. Aliyu, S. U. R. (2019). Impact of oil price shock and exchange rate volatility on economic growth in nigeria: An Empirical Investigation. MPRA Paper No. 16319. Retrieved from http://mpra.ub.uni-muenchen.de/16319/
5. Aliyu, S.R.U. (2016). Impact of Oil Price Shock and Exchange Rate Volatility on Economic Growth in Nigeria: An Empirical Investigation, Research Journal of International Studies.
6. Amassoma, D., Ogbuagu, M. I., & Olaosebikan, B. (2020). Re-investigating the Effect of Monetary Approach to Balance of Payment Adjustment in Nigeria. Chiang Mai University Journal Of Economics, 24(2), 73-87.
7. Anyanwu, S.A.C. (2018) Descriptive Statistics for Business and Engineering Students. Springfield: Owerri.
8. Asher O. J. (2017). The Impact of Exchange rate Fluctuation on the Nigeria Economic Growth (1980 – 2010). Unpublished B.sc Thesis of Caritas University Emene, Enugu State, Nigeria.
9. Asika, N. (1991). Research Methodology in the Behavioral Sciences, Lagos: Longman Nigeria plc
10. Ayodele, O. S., & Obafemi, F.N (2005). Fiscal And Quasi-Fiscal Effects Of The Parallel Exchange Premium In Nigeria, University of Calabar, 01-45.
11. Ayogu, M. (1995). Empirical Studies of Nigeria’s Foreign Exchange Parallel Market I: Price Behavior and Rate Determination. African Economic Research Consortium, Research Paper 41, Nairobi Kenya, Regal Press Kenya Ltd.
12. Azeez, B.A., Kolapo, F. T., & Ajayi, L.B (2012). Effect of Exchange rate Volatility on Macroeconomic Performance in Nigeria. Interdisciplinary Journal of Contemporary Research in Business, 4(1), 149-155.
13. Babatunde, M. A., & Shuaibu, M. I. (2011). Liquidity Ratio, inflation and Economic performance in Nigeria. Asian-African Journal of Economics and Econometrics, 11(1), 147-163.
14. Bah, I., & Amusa, H. (2003). Real Exchange Rate Volatility and Foreign Trade: Evidence from South African Exports to the United States. The African Finance Journal 5, 2:1-20.
15. Baridam, D. M. (2001) Research Method in Administrative Science. Sherbroke Associate: Port Harcourt
16. Barkoulas, J. T, Baum C., & Caglayan, M. (2002). Exchange Rate Effect on the Volume and Variability of Trade Flows, Journal on International Money and Finance, 21, 481-406.
17. Baum C. F., Caglayan M., & Ozkan, N. (2004). Nonlinear effects of exchange rate volatility on the volume of bilateral exports, Journal of Applied Econometrics,19, 1–23.
18. Baum, C. F., & Caglayan, M. (2009). The Volatility of International Trade Flows and Exchange Rate Uncertainty, Boston College Working Paper, 695.
19. Benita, G., & Lauterbach, B. (2007). Policy Factors and Exchange rate Volatility: Panel Data versus a Specific Country Analysis. International Research Journal of Finance and Eeconomics, 2(7), 46-61.
20. Benson , U. O., & Victor, E.O (2012). Real Exchange rate and macroeconomic performance: testing for the Balassa-Samuelson hypothesis in Nigeria. International Journal of Economics and Finance, 4(2), 127-134.
21. Bosworth, B., Collins, S., & Yu-chin, C. (1995). Accounting for differences in economic growth. Unpublished manuscript. Brookings Institution, Washington, DC.
22. Collier, P. and Gunning, J.W. (1999), “Explaining African economic performance”, Journal of Economic Literature, 37 (1), 64 – 111.
23. Esezobor, E,A.(2009) International Finance : 2nd edition CIBN publishers ISBN:978-37278-4-2.
24. Ghilous, A., & Ziat, A. (2021). Domestic Credit and the Balance of Payment Deficit: Evidence from a Heterogeneous Panel of Five Selected Mena Countries. Economics and Business, 35(1), 133-148.
25. Iyoha, M.A. (2000), “The source of economic growth in Nigeria, 1960 – 1997: A growth accounting exercise”, The Nigerian Economic and Financial Review, Vil. 5 (2), 1 – 20.
26. Jadhav, B. (2020). The Study of Direction of India's Balance of Payment and Balance of Trade Position: A Contemporary Scenario. ITIHAS-The Journal of Indian Management, 10(2).
27. Kolte, A., Rossi, M., Torriero, O., Patil, A., & Pawar, A. (2021). Balance of payment crisis: lessons from Indian payment crisis for developing economies. International Journal of Behavioural Accounting and Finance, 6(3), 262-279.
28. Lerner, A. P. (1944). The Economics of Control: Principles of Welfare Economics. London: Macmillan Company, N.Y.
29. Marshall, A. (1923). Money, Credit and Commerce. London: Macmillan.
30. Meade, J. (1951). The Balance of Payments, Oxford: Oxford University Press
31. Musili, D. (2021). A Descriptive Analysis of Trade and Balance of Payment in Kenya. Available at SSRN 3771675.
32. Naandam, D. (2019). Effect of exchange rate volatility on balance of Payment: evidence from Ghana (Doctoral dissertation, University of Cape Coast).
33. Nwakoby, I. C., Manasseh, C. O., Abada, F. C., Okonkwo, O. N., & Akamike, O. J. (2021). A review of covid-19 effect on balance of payment in Nigeria: an overview of pre and post era. Management and Human Resource Research Journal, 10(8), 1-10.
34. Nwani, V.M. (2003), “Determinants of balance of payments fluctuation in Nigeria”, Economic Associates, 13(10) 2 – 17.
35. Sach, J. and Warner, A. (1995), “Economic reforms and the process of global integration”, paper on economic activity, Brooking, 1-117.
36. Sangvikar, B. V., Pawar, A., Bora, R., & Thite, A. (2019). Comprehending the pre and post economic turbulence calamity of India: the realization message from the nineties. Sangvikar, B., Pawar, A., Bora, R., and Thite, A.(2019). Comprehending the Pre and Post Economic Turbulence Calamity of India: The Realization Message from the Nineties. Journal of Critical Reviews, 6(6), 345-349.
2. Agbo, E. I., Agu, R. E. & Eze, L.O. (2018). Impact of the balance of trade on the economic growth of Nigeria. European Journal of Business and Management, 10(18), 1-10
3. Aliyu, S. U. (2018). Oil price shocks and the macroeconomy of Nigeria: a non-linear approach. Journal for International Business and Entrepreneurship Development, 5(3), 179-198.
4. Aliyu, S. U. R. (2019). Impact of oil price shock and exchange rate volatility on economic growth in nigeria: An Empirical Investigation. MPRA Paper No. 16319. Retrieved from http://mpra.ub.uni-muenchen.de/16319/
5. Aliyu, S.R.U. (2016). Impact of Oil Price Shock and Exchange Rate Volatility on Economic Growth in Nigeria: An Empirical Investigation, Research Journal of International Studies.
6. Amassoma, D., Ogbuagu, M. I., & Olaosebikan, B. (2020). Re-investigating the Effect of Monetary Approach to Balance of Payment Adjustment in Nigeria. Chiang Mai University Journal Of Economics, 24(2), 73-87.
7. Anyanwu, S.A.C. (2018) Descriptive Statistics for Business and Engineering Students. Springfield: Owerri.
8. Asher O. J. (2017). The Impact of Exchange rate Fluctuation on the Nigeria Economic Growth (1980 – 2010). Unpublished B.sc Thesis of Caritas University Emene, Enugu State, Nigeria.
9. Asika, N. (1991). Research Methodology in the Behavioral Sciences, Lagos: Longman Nigeria plc
10. Ayodele, O. S., & Obafemi, F.N (2005). Fiscal And Quasi-Fiscal Effects Of The Parallel Exchange Premium In Nigeria, University of Calabar, 01-45.
11. Ayogu, M. (1995). Empirical Studies of Nigeria’s Foreign Exchange Parallel Market I: Price Behavior and Rate Determination. African Economic Research Consortium, Research Paper 41, Nairobi Kenya, Regal Press Kenya Ltd.
12. Azeez, B.A., Kolapo, F. T., & Ajayi, L.B (2012). Effect of Exchange rate Volatility on Macroeconomic Performance in Nigeria. Interdisciplinary Journal of Contemporary Research in Business, 4(1), 149-155.
13. Babatunde, M. A., & Shuaibu, M. I. (2011). Liquidity Ratio, inflation and Economic performance in Nigeria. Asian-African Journal of Economics and Econometrics, 11(1), 147-163.
14. Bah, I., & Amusa, H. (2003). Real Exchange Rate Volatility and Foreign Trade: Evidence from South African Exports to the United States. The African Finance Journal 5, 2:1-20.
15. Baridam, D. M. (2001) Research Method in Administrative Science. Sherbroke Associate: Port Harcourt
16. Barkoulas, J. T, Baum C., & Caglayan, M. (2002). Exchange Rate Effect on the Volume and Variability of Trade Flows, Journal on International Money and Finance, 21, 481-406.
17. Baum C. F., Caglayan M., & Ozkan, N. (2004). Nonlinear effects of exchange rate volatility on the volume of bilateral exports, Journal of Applied Econometrics,19, 1–23.
18. Baum, C. F., & Caglayan, M. (2009). The Volatility of International Trade Flows and Exchange Rate Uncertainty, Boston College Working Paper, 695.
19. Benita, G., & Lauterbach, B. (2007). Policy Factors and Exchange rate Volatility: Panel Data versus a Specific Country Analysis. International Research Journal of Finance and Eeconomics, 2(7), 46-61.
20. Benson , U. O., & Victor, E.O (2012). Real Exchange rate and macroeconomic performance: testing for the Balassa-Samuelson hypothesis in Nigeria. International Journal of Economics and Finance, 4(2), 127-134.
21. Bosworth, B., Collins, S., & Yu-chin, C. (1995). Accounting for differences in economic growth. Unpublished manuscript. Brookings Institution, Washington, DC.
22. Collier, P. and Gunning, J.W. (1999), “Explaining African economic performance”, Journal of Economic Literature, 37 (1), 64 – 111.
23. Esezobor, E,A.(2009) International Finance : 2nd edition CIBN publishers ISBN:978-37278-4-2.
24. Ghilous, A., & Ziat, A. (2021). Domestic Credit and the Balance of Payment Deficit: Evidence from a Heterogeneous Panel of Five Selected Mena Countries. Economics and Business, 35(1), 133-148.
25. Iyoha, M.A. (2000), “The source of economic growth in Nigeria, 1960 – 1997: A growth accounting exercise”, The Nigerian Economic and Financial Review, Vil. 5 (2), 1 – 20.
26. Jadhav, B. (2020). The Study of Direction of India's Balance of Payment and Balance of Trade Position: A Contemporary Scenario. ITIHAS-The Journal of Indian Management, 10(2).
27. Kolte, A., Rossi, M., Torriero, O., Patil, A., & Pawar, A. (2021). Balance of payment crisis: lessons from Indian payment crisis for developing economies. International Journal of Behavioural Accounting and Finance, 6(3), 262-279.
28. Lerner, A. P. (1944). The Economics of Control: Principles of Welfare Economics. London: Macmillan Company, N.Y.
29. Marshall, A. (1923). Money, Credit and Commerce. London: Macmillan.
30. Meade, J. (1951). The Balance of Payments, Oxford: Oxford University Press
31. Musili, D. (2021). A Descriptive Analysis of Trade and Balance of Payment in Kenya. Available at SSRN 3771675.
32. Naandam, D. (2019). Effect of exchange rate volatility on balance of Payment: evidence from Ghana (Doctoral dissertation, University of Cape Coast).
33. Nwakoby, I. C., Manasseh, C. O., Abada, F. C., Okonkwo, O. N., & Akamike, O. J. (2021). A review of covid-19 effect on balance of payment in Nigeria: an overview of pre and post era. Management and Human Resource Research Journal, 10(8), 1-10.
34. Nwani, V.M. (2003), “Determinants of balance of payments fluctuation in Nigeria”, Economic Associates, 13(10) 2 – 17.
35. Sach, J. and Warner, A. (1995), “Economic reforms and the process of global integration”, paper on economic activity, Brooking, 1-117.
36. Sangvikar, B. V., Pawar, A., Bora, R., & Thite, A. (2019). Comprehending the pre and post economic turbulence calamity of India: the realization message from the nineties. Sangvikar, B., Pawar, A., Bora, R., and Thite, A.(2019). Comprehending the Pre and Post Economic Turbulence Calamity of India: The Realization Message from the Nineties. Journal of Critical Reviews, 6(6), 345-349.
Published
2023-01-11
How to Cite
M., P., E. P., I., & S. S., O. (2023). Balance of Payments Disequilibriumin and Implication for Economic Growth in Nigeria. International Journal on Economics, Finance and Sustainable Development, 5(1), 53-66. Retrieved from https://journals.researchparks.org/index.php/IJEFSD/article/view/3880
2.png)
