ABSTRACT

 This study investigated the effects oftrade liberalization policy on Nigerian economy, from 1970 to 2020. The specific objectives were to determine the trend of GDP growth in agricultural and manufacturing sectors between 1970 and 2020, examine the effect oftrade liberalization policy on the output of agricultural and manufacturing sectors ofNigeria, determine the overall effect ofthe trade liberalization policy on Nigeria aggregate output, examine the effect of the trade liberalization policy on import and export in Nigeria and ascertain the effect oftrade liberalization on the economic development ofNigeria at the micro level. Data were collected from Central Bank ofNigeria (CBN) statistical report bulletins, CBN online data base, National Bureau of Statistics, International Financial Statistics as well as World Development Indicators ofWorld Bank for the period 1970-2020. Data were analyzed using Ordinary Least square, demand functions and the 2SLS regression technique with the help ofEview9 software. Unit root test was carried out using ADF to ensure the stationarity of data, Error Correction Model was used to stationalize the nonstationary data and finally co-integration test was carried out and a long-term relationship was ascertained to exist among the variables. The trend analysis showed a steady increase in GDP growth in agricultural sector and an increase at a decreasing rate in manufacturing sector in the period under study. The minimum GDP for agricultural sector is 1690000 million naira and the maximum is 18124411.58 million naira while that ofmanufacturing is 2303505.42 million naira and 15952220.14 million naira for minimum and maximum respectively. On the effect of trade liberalization policy on the output of both sectors, the study found that the degree of openness in trade has a positive and significant effect on agricultural GDP at 1% level, and the absence of a significant relationship with manufacturing GDP. Trade openness has a negative but insignificant relationship with overall aggregate output at the long-run and a positive insignificant value at the short-run. On the effect oftrade liberalization policy on import and export, it has a negative and significant effect on Nigeria growth rate ofreal exports during the period in which liberalization took place and a positive and significant effect for import in the same period, implying that the period in which liberalization took place favoured imports. The effect oftrade liberalization on the economic development ofNigeria was determined by its effects on poverty, inequality ofincome distribution, per capita gross domestic product and employment. The study found that degree of openness has a negative and insignificant effect on poverty, a positive and significant effect on income inequality, negative and significant effect on per capita GDP and a positive and significant effect on employment. The study recommends amongst others that the government puts in place policies to encourage export diversification rather than import, policies that will encourage smallscale and large-scale manufacturers alike and also engage in wealth generation programmes at the rural areas, so also the private sector, to help close the income inequality gap