Trade Openness, Manufacturing Capacity Utilization Rate and Output Expansion Nexus in Nigeria

Abstract

The paper examined the nexus among trade openness, manufacturing capacity utilization rate, exchange rate, investment and output expansion in Nigeria using the annual time series data spanning from 1981 to 2019 by using the Autoregressive Distributed Lags Model application to co-integration and Error Correction Model techniques. The stationarity of the variables in the study was determined by using Philip-Perron unit root test. The study finds evidence that trade openness, exchange rate, investment and manufacturing capacity utilization rate have a significant impact on output expansion in Nigeria. In same vein, the paper also finds evidence that there is long run relationship among trade openness, manufacturing capacity utilization rate, exchange rate, investment and output expansion in Nigeria. These findings are imperative in formulating macroeconomic policies and framework in explaining the relationship among trade openness, manufacturing capacity utilization rate, exchange rate, investment and output expansion in Nigeria. Based on the findings of the study, it is hereby concluded that policy makers and economic planners should take cognizance of trade openness, manufacturing capacity utilization rate, exchange rate and investment as the key macroeconomic variables influencing output expansion in Nigeria.