Testing the Export-Led Growth Hypothesis in Nigeria: The Roles of Exports, Imports, and Trade Balance in Economic Growth in the Context of AfCFTA and the 2026 Fiscal Reforms

Abstract

The study investigated the export-led growth hypothesis in Nigeria by examining the roles of exports, imports, and trade balance in economic growth within the context of the African Continental Free Trade Area (AfCFTA) and the 2026 fiscal reforms. Specifically, the study examined the long-run and short-run relationships among real gross domestic product, exports, imports, and trade balance over the period 1981–2026. The study adopted an ex post facto research design and utilized annual secondary time series data obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and the World Bank's World Development Indicators (WDI). The analytical framework was anchored on the Export-Led Growth Theory, Comparative Advantage Theory, and Endogenous Growth Theory. Data were analysed using trend analysis, descriptive statistics, the Augmented Dickey-Fuller and Ng-Perron unit root tests, the Johansen cointegration test, and the Vector Error Correction Model (VECM). Pairwise Granger causality, serial correlation, heteroskedasticity, normality, and stability tests were also conducted to validate the estimated model. The findings revealed that the variables were integrated of order one and possessed a long-run equilibrium relationship. The results further showed that exports and imports significantly Granger-caused economic growth, thereby providing empirical support for the export-led growth hypothesis, while trade balance did not exert a significant causal influence on economic growth. The study concluded that export expansion and productive imports are important drivers of sustainable economic growth in Nigeria, particularly within the opportunities created by AfCFTA and the 2026 fiscal reforms. Therefore, the study recommended that the government should promote non-oil exports, encourage productive imports, strengthen trade infrastructure, and implement supportive fiscal policies that enhance export competitiveness and long-run economic growth.