Trade Openness, FDI and Oil Price: The Impacts to the Economic Growth: A Time Series Study of Nigeria

This is a time series study that examines the connection among the Foreign Direct Investment (FDI), trade openness and economic performance as in Gross Domestic Products (GDP) growth in Nigeria, within the vector autoregressive (VAR) framework. In this study, the Johansen cointegration test is employed to check if an equilibrium exists in the long run among the selected economic factors,spanning the period from 1970 to 2012. The finding with the Johansen test shows that there is no cointegration. Subsequently, we consider the Granger causality test for the analyses of the causality between Openness, FDI, Oil Price and Growth. Also, we made use of nexus triangular figure to show the transmission of the variables. We equally made use of impulse response figure from the VAR Model to show the responses of the variables to the shocks in the system. Granger causality test indicates that the FDI Granger causes the GDP and trade openness in the Nigerian economy in the long run, whereas oil price is Granger causing all other variables as an exogenous variable. This is clearly depicted with the Triangular nexus structure from the causality test. Keywords: Cointegration, Diagnosis, Growth, Openness, FDI, Granger causality, VAR, Nigeria.