Title:
CAPITAL INFLOW, TRADE OPENNESS AND CURRENT ACCOUNT BALANCE IN NIGERIA

Authors:
Oke, Dorcas Funmilola, Adigun, Abiodun Oladele, Nigeria

Abstract:

Using time series, autoregressive distributed lags (ARDL)-bound test approach and error correction model (ECM), this paper examined the effect of capital inflow (proxied as foreign direct investment) and trade openness on Nigeria’s current account balance. Results revealed evidence of long run co integrating relationship as well as short run relationship among the variables. The result indicated a negative relationship between FDI inflow and current account balance.  The result also revealed that both in the short-run and long run there exist a positive relationship between trade openness and current account balance. Based on these empirical findings, we strongly recommend that government should focus on the policy that encourages trade openness.