INSTITUTIONS, TECHNOLOGICAL CAPABILITY AND NON-OIL BALANCE OF TRADE IN NIGERIA: LESSONS FOR DEVELOPING COUNTRIES
Publication Type: Journal Article
Publication Year: 2026
Author(s): Olaide R. Akande
Journal Name: (IJAEMD)
ABSTRACT
Motivated by the low contribution of non-oil trade to many developing countries’ economies, the study assessed the effects of institutional and technological capability determinants on Nigeria’s non-oil trade balance. The generalized method of moments (GMM) model was used on longitudinal data spanning from 1976 to 2024. The findings revealed that Nigeria’s non-oil trade balance is significantly influenced by its own value in the immediate past period (P≤ 0.01), net inflow of foreign direct investment (P≤ 0.1), inflation rate (P≤ 0.1), and population growth (P≤ 0.01). However, while the effect of foreign direct investment inflow, population growth and the first lag of non-oil balance of trade were positive, the influence of inflation was negative. Also, a major challenge to the process that generates positive balance from non-oil trade in Nigeria is that bank credit to private sectors (P> 0.1) and the level of industrial production (P> 0.1) have no significant influence. The hypothesis that government revenue growth from oil exports plays a detrimental role in the growth of the non-oil trade balance was also rejected (P> 0.1). Given the result, public policies that build technological capability, promotes industrial production and attract more foreign direct investment into non-oil sectors as well as that that strictly controls inflation are recommended. Reforms that make the banking sector more efficient and supportive of manufacturing, industrial growth and trade are also needed.
Keywords: Non-oil balance of trade, Institutional factors, Technological capability factors, GMM model, Resource curse