Foreign Exchange Reserve Accumulation and Economic Growth in Nigeria

Oladunjoye Opeyemi Nathaniel; Akinbobola Temidayo Oladiran

doi:7280261

This study investigate the impact of foreign exchange reserve accumulation on economic growth in Nigeria. Secondary data on gross domestic product, domestic investment, financial deepening, trade openness, covering the period from 1980 to 2015 were sourced from Statistical Bulletin of the Central Bank of Nigeria while data on foreign exchange reserve, and labour force participation covering the period from 1980 to 2015 were sourced from the World Development Indicators (WDI) of the World Bank. Data collected were analysed using econometrics techniques of autoregressive distributed lag (ARDL) model. The study found that foreign exchange reserve accumulation (t = -0. 094950, p ˃ 0.05) had negative impact on economic growth in Nigeria while financial deepening (t = 2.945244, p < 0.05) and trade openness (t = 3.422999, p ˂ 0.05) both had positive and significant impact on economic growth in Nigeria. The result implies that a unit increase in foreign exchange accumulation will lead to 1% decline in economic growth in Nigeria whilst financial deepening and trade openness would lead to 9% and 5% increase in economic growth in Nigeria respectively. The study concluded that foreign exchange reserve accumulation does not promote economic growth in Nigeria.

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