Trade Intensity, Debt Sustainability and Growth Performance in Nigeria

The challenges of rising burden of public debt and inadequate international trade intensity have taken a dynamic dimension on the economic growth of Nigeria over the years. This study ascertains the empirical evidence of both short run and long run causal interrelationships among trade intensity, debt sustainability and economic growth in Nigeria. The study covers a forty-year period of 1984 to 2023 with growth rate (GRT) expressed as a function of trade intensity index of Nigeria and Africa (TII), Nigeria’s share of world export (NSW), trade to GDP ratio (TGR), federal government debt servicing to revenue ratio (DRR), and the total debt stock to GDP ratio (DGR). The Autoregressive Distributed Lag (ARDL) technique of cointegration was adopted having established stationarity at levels and first difference using the ADF test.

The results revealed that the effect of trade intensity on the economic growth of Nigeria is positive, while the impact of debt sustainability on economic growth is negative both in the short run and long run. Based on these findings, the study recommends the need for improved trade intensity through adequate economic diversification. With diversification, the tendency is high for Nigeria to earn more in foreign exchange, thereby limiting its quest for more debts and this may result in a more sustainable economic growth.

Keywords: Trade intensity, debt sustainability, economic growth, ARDL cointegration, Nigeria.