Globalization and Economic Growth in Nigeria: An ARDL Cointegration Approach

Abstract

Among the advantages of globalization facilitated by the interplay of innovation and technology,
are access to foreign capital and new markets. In order to improve their lots and increase their
prospects of survival, countries and organizations are embracing the new trend. This study aims at
evaluating the long and short run effects of globalization on the Nigerian economy. The study uses,
unlike other similar studies, a number of econometric methods of autoregressive distributed lag
(ARDL), cointegration bound tests, and unit root tests, to examine the long and short run
relationship between globalization and economic growth. The presence of a long-run relationship
between the variables is supported by cointegration bound tests. The sources of annual time series
data used are World Bank Database (WDI), the KOF Swiss Economic Institute Database and the
Nigerian Central Bank Statistical Bulletin. Findings show that Nigeria's economic growth is
positively and significantly affected by the globalization index, foreign direct investment and
international remittances. Capital accumulation is found to be significant but with negative signs.
The effects of trade openness on economic growth is however found to be insignificant. The study
recommends that individuals and the government should utilize technical and global opportunities
presented by globalization to strengthen the country’s productive capacity, leveraging on
productive use of remittance inflows.