Impact of Nigeria External Economic Interactions on Economic Sustainability: A Dynamic ordinary Least squares Approach

  ABSTRACT : Countries of the world interact either bilateral or multilateral in different forms to achieve economic benefits. Thus the paper investigated the impact of economic external interactions and economic sustainability of Nigeria. The specific objectives of the study were to examine the variance decomposition of one variable on another, and to investigate the impulse response function (shocks) of one variable on another. The investigation span from 1980 -2023, time series data for the variables captured were sourced from CBN bulletins and National Bureau of Statistics (NBS). A vector autoregressive (VAR), model was specified and estimated. The real gross domestic product (RGDP) was a proxy for economic sustainability and the dependent variable. Export (EXP), imports (IMP), exchange rate (EXCH), and external debt (EXTD) were proxies for external economic interaction, and the independent variables. The impulse response function and the variance decomposition were estimated to examine the effects of shocks of one variable on another in both short run and long run. Findings revealed that, the greatest shocks are own shocks in the short run both more shocks from other variables in the long run. On the basis of the findings the study recommend for increase in exports and external debt reducing policies by channelling external debt to real sectors of the economy.

KEY WORDS: Economic sustainability, External interaction, External debt, Exports, Imports