Exchange Rate Dynamics, Trade Openness and Industrial Productivity in Nigeria

Purpose: The study analysed the dynamic interaction among exchange rates, trade openness and industrial productivity in Nigeria within the period. Design/Methodology/Approach: Descriptive survey research design was adopted, and annual secondary data between 1986 and 2019 were employed. Data were analysed using descriptive statistics and inferential statistics. Descriptive statistics use tables and graphs, while inferential statistics use the Vector Autoregressive (VAR) model. Findings: The results showed that the exchange rate is volatile in the system, and industrial productivity witnessed a rise and a fall throughout the period under study. In addition, it was discovered that industrial productivity responds positively to shocks in exchange rates and trade openness. Consequently, the variance decomposition substantiates the extent of the shocks in the system. The results revealed that the exchange rate dynamic exerts more shocks on industrial productivity than trade openness towards the end of the period. Implications/Research Limitations: The study's methodology had inherent limitations since it used descriptive survey. Practical Implications: The government should enact sustainable industrial policies that will enhance and improve the industrial sector to achieve increased productivity, as increased productivity will further reduce the country's over-dependence on the oil sector and intensify economic diversification. Originality/Value: The authenticity of this study lies on the premise that it is a country-specific study. Also, it accounted for the dynamic interaction among exchange rates, trade openness and industrial productivity in Nigeria, one of Africa's biggest economies.