ABSTRACT

The rationale for this study derives from two sources. The first is that the New Partnership for Africa's Development (NEPAD) in its agricultural policy embodied in the Comprehensive Africa Agriculture Development Programme (CAADP) regards agriculture as Africa's engine for growth. The second, which is related to the first, is that the two most important strategies prescribed by NIEPAD for mobilizing resources for Africa's economic growth are liberalization of trade by member countries and stimulation of foreign direct investment (FDI) flow into the continent. This study utilized data on Nigeria to explore the empirical relationships between economic growth on one hand, and trade liberalization and FDI on the other, with a view to drawing lessons for NEPAl) countries. The specific objectives of the study were (i) to analyze quantitatively Nigeria's trade policy and evaluate the determinants of trade;(ii) to examine the growth of FDI and its determinants in Nigeria; (iii) to analyze the growth trend and evaluate the contribution of trade liberalization and FDI to the growth of the Nigerian economy. Statistical techniques were used to analyze the secondaiy data obtained for the research. The results of the regression model on the determinants of foreign trade showed that trade was directly related to the following variables at the indicated level of significance: supply of convertible currency (5%); market access for exports (5%); world real level of economic activity (5%); degree of industrialization (1%); factor endowment (10%); and economic growth (10%). The following variables were inversely related to trade: the share of FDI in the economy (1%); and relative prices of traded commodities (10%). Moreover, the estimated regression model of FDI in Nigeria showed that these variables were positively signed with FDI net flows to the country: trade liberalization (10%); and macro economic stability (10%). On the other hand, these variables were inversely related to FDI net flows: production inputs constraints ix (5%); investors' adaptation to risks (5%); and trend (5%). Furthermore, from the multiple time series regression model on the determinants of economic growth in Nigeria, these regressors were found positively signed with economic growth: agricultural activity (1%); macro economic stability (1%); trade liberalization (5%); foreign trade (5%); and share of FDI in the economy (10%). Conversely, these variables were negatively related to growth: FDI flows (5%); and trend (1%). . Having regard to the results of this study, recommendations are made as follows. For goods produced within member countries, NEPAD to implement trade liberalization policies. With respect to trade involving nonmember countries, export trade liberalization should be vigorously pursued. Since most of these economies are highly import dependent, member countries must be cautious with import trade liberalization to avoid higher balance of payment difficulties. NIEPAD should adopt measures to boost FDI inflows in the strategic areas of their economies. Privatization of public enterprises will form an essential component of this initiative to widen the remit within which these firms can invest to bring about adequate positive impact on the growth of NEPAD economies.