ON THE ESTIMATION OF EXPORT-LED GROWTH: A COMPARATIVE STUDY BETWEEN ARDL AND JOHANSEN PROCEDURES

Abstract

The Study was an estimation of export-led growth in the long-run by comparing ARDL and Johansen procedures. It examined the validity of export-led hypothesis in Nigeria using time series annual data over the period of 1981 to 2015 for Nigeria. The two approaches were used to test for cointegration, and for estimating long-run coefficients. The variables considered were, Gross Domestic Product (GDP) as proxy for economy growth, Exports, Imports, Gross Fixed Capital Formation as proxy for capital and total labour force as proxy for labour. The series were tested for unit root and were found to contain unit root but are integrated of order one I(1) in exception of labour that was integrated of order zero I(0) . The cointegration test by Johansen procedure showed one cointegrating equation in the VAR model, also, ARDL model indicated long run relationship between the variables therefore confirming the validity of export-led growth in Nigerian economy. The long run coefficients derived for the Export-led growth give the same results by the signs of the coefficients using the two methods. However, there is a slight difference in determinants parameters magnitudes. The coefficient of determination in ARDL model was higher than that of the Johansen procedure. However, the diagnostic test for normality of the residual was not in favour of Johansen VECM approach.