The Impact of Trade Openness on Sectoral Performance in Nigeria: Insights for Sustainable Economic Growth

Understanding the relationship between trade openness and economic performance is crucial, particularly for emerging economies like Nigeria. This study examines the sector-specific impacts of trade openness on Nigeria’s economic output using quarterly data from 1981 to 2022. Employing the Autoregressive Distributed Lag (ARDL) bounds co-integration approach and Granger causality tests, the analysis reveals that trade openness significantly enhances output performance in the industrial and service sectors, while its impact on the agricultural sector is negligible. These findings highlight the varying effects of trade openness across sectors and underscore the need for tailored economic strategies. To maximize the benefits of trade openness, policymakers are encouraged to adopt sector-specific interventions, such as fostering industrial growth and enhancing service sector competitiveness. Concurrently, addressing structural challenges in agriculture and promoting investment in this sector are essential to boost its productivity and contribution to economic performance. This study enriches the existing literature by providing empirical evidence on the differentiated impacts of trade openness across sectors in Nigeria, offering actionable insights for sustainable development strategies in emerging economies.