New Insights into Export-growth Nexus: Wavelet and Causality Approaches

Abstract

It is observed that exports play a significant role in economic expansion. Thus, this study tends to shed more light on the export and economic growth interaction in Nigeria using data between 1981 and 2018. Due to inconclusiveness in the literature, this study employs a more superior econometric technique to ascertain this link. Econometrics techniques utilized include ARDL, Toda Yamamoto causality, variance decomposition and wavelet coherence techniques. Findings from the study show; (i) there is cointegration among the variables utilized; (ii) there is evidence of synchronization hypothesis; (iii) gross capital formation, gross domestic savings, and export have a positive and significant impact on economic growth with foreign direct investment having an adverse effect; (iv); unidirectional causality was found running from gross capital formation, gross domestic savings and foreign direct investment to economic growth; (v) the wavelet coherence approach provide a supportive evidence for the ARDL and causality tests; and (vi) economic growth can predict a significant variation in export in the tenth year. Various recommendations were suggested based on these findings.