Dynamic Effects Of Export Diversification On Economic Growth In Nigeria: A Test Of Structural Stability

R14Dynamic Effects of Export Diversification on Economic Growth in Nigeria: A Test of Structural StabilitySiyan, P.Department of Economics, University of Abuja-NigeriaOjonye, S.M.Department of Economics, University of Abuja-NigeriaAbstractecent economic downturn in Nigeria occasioned by fallen oil prices at the international market has led to the resurgence of interest on export diversification as one of the most important economic policy objectives of development strategies. The realism of whether export diversification could guarantee economic stability and sustainability, enhance revenue expansion and improve value-addition to result to economic growth has remained a conceptual puzzle. This study is conducted with the objective of investigatingthe dynamic effects of export diversification on economic growth in Nigeria for the period 1970 –2015. The fourty-six (46) year period of investigation was bifurcated into two main periods: short-run periods of Pre-SAP (1970 –1985) and Post-SAP (1986 –2015) in order to ascertain whether there was a structural change in the relationship between export diversification and economic growth in Nigeria. A Chow test of equality between sets of coefficients in two linear regressions was adopted while the Herfindahl index of Diversification was used to measure the extent of export concentration in Nigeria. Adopting an Error Correction Model (ECM) as a technique of analysis, the study exploits time-series data to estimate both the short-run and long-run dynamic relationship between export diversification and economic growth in Nigeria for the period of investigation. Results show that in both time horizons, there was high degree of export concentration –particularly primary product exports and that there was no structural stability in the relationship between export diversification and economic growth in Nigeria The study concludes with recommendations such as getting the country-wide “horizontal basics”, sound trade and exchange rate policies, strong institutions,expanding the range of export goods and diversifying the economy into non-oil exports such as manufacturing and services.