DETERMINANTS OF TRADE PERFORMANCE IN NIGERIA

Abstract

This study empirically examined the determinants of trade performance in Nigeria over the period 1995–2024. Specifically, the study investigated the effects of inflation rate, and control of corruption on trade performance. Annual secondary data were obtained from the World Development Indicators (WDI), Worldwide Governance Indicators (WGI), and the Central Bank of Nigeria (CBN). The study was anchored on the New Institutional Economics (NIE) Theory and adopted a correlational research design. Preliminary analyses included descriptive statistics, correlation analysis, multicollinearity test, Augmented Dickey–Fuller (ADF) unit root test, lag length selection, and diagnostic tests, were conducted with the aid of Stata 17. Although the Autoregressive Distributed Lag (ARDL) model was initially specified, diagnostic results revealed the presence of serial correlation and heteroskedasticity. Consequently, the Newey–West Heteroskedasticity and Autocorrelation Consistent (HAC) estimator was employed to obtain robust estimates. The findings revealed that inflation rate exerted a negative and significant effect, while control of corruption had a positive but insignificant effect on trade performance in Nigeria over the period 1995–2024. The study concludes that inflation was the only significant determinant of trade performance in Nigeria during the study period. It recommends that policymakers prioritise macroeconomic stability through effective inflation management while strengthening institutional reforms, and enhancing governance quality to foster sustainable trade performance.