Document Type : Original Research


Department of Economics, Federal University Oye-Ekiti, Ekiti State, Nigeria


Over the years, there has been unresolved debate in the literature and studies have generated mixed results on the direction of influence between trade liberalization and trade tax revenue. Against this background, this study examined the causal nexus between trade liberalization and trade tax revenue in Nigeria with data spanning 1986 to 2014 with a view to determining whether there is any complementarity between trade policy and revenue generation drive of the Nigerian government. Utilizing a bi-variate VAR model, the study observed a unidirectional causation from trade tax revenue to trade liberalization. Base on this finding, the study recommended the need for efficient implementation and functioning of trade policy and to de-emphasize the focus on crude-oil in order to ensure the successful performance of trade liberalization policy. In addition, the implementation of the trade liberalization policy should be guided to mitigate any adverse consequence.


Adam C., Bevan, D., & Chambas, G. (2001). Exchange Rate Regimes and Revenue Performance in Sub-Saharan Africa. Journal of Development Economics, 64, pp 173-213.
African Economic Policy in Light of the Global Economic and Financial Crisis” held in Nairobi, Kenya on 6‐8 December 2009.
Agbeyegbe, T., Stotsky, J. G., & WoldeMariam, A. (2004). Trade Liberalization, Exchange Rate Changes and Tax Revenue in Sub-Saharan Africa. IMF Working Paper WP/04/178
Amarakoon, B. (2009). The Impact of Global Financial and Economic Crisis on Africa: Transmission channels and policy implications. International Conference on “Rethinking
Baunsgaard, T., & Keen, M. (2005). Tax Revenue and (or?) Trade Liberalization. IMF Working Paper 2005-112 (June 2005).
Ebrill, L., Stotsky, J., & Gropp, R. (1999). Revenue implication of Trade Liberalization. IMF Occasional Paper 180 IMF Washington D. C.
Engle, R. F., & Granger, G.W.J. (1987). Co-integration and error correction: representation, estimation and testing”. Econometrica, 55, 251-276.
Ferda, H. (2007). The Financial Development and Economic Growth Nexus for Turkey. Economic and Econometrics Research Institute (EERI) Research Paper Series No 6/2007
Fukasaku, K. (2003). Fiscal Impact of Trade Liberalization: A Review of Recent Country Experiences in Africa,” UNECA, Addis Ababa, 2003.
Jaffri, A. A., Tabassum, F. and Asjed, R (2015) An Empirical Investigation of the Relationship between Trade Liberalization and Tax Revenue in Pakistan, Pakistan Economic and Social Review Vol. 53(2), pp. 317-330.
Khattry, B., & Rao, J. M. (2002). Fiscal Faux Pas?: An Analysis of the Revenue Implications of Trade Liberalization, World Development, Vol. 30, No. 8. (2002), pp. 1431-1444.
Matlanyane, A., & Harmse, C. (2002). Revenue Implications of Trade Liberalization in South Africa. South African Journal of Economics vol.70, issue 2 (March 2002): 155-161.
Ogundele, F. (2001). Effect of Trade Liberalization on Nigeria’s Fish and Shrimps Exports Short-run forecasting model. NISER Monograph Series, 2001.
Okodua, H. and Alege, P. O. (2014) Household Welfare Impact of Trade Liberalization in Nigeria: A Computable General Equilibrium Model, Journal of economic and Sustainable Development, Vol. 5(28), pp. 41-52.
Olaifa, G, O., Subair, K. and Biala, M. I. (2013). Trade Liberalization and Economic Growth in Nigeria: A Co-integration Analysis, Journal of Business, Economics and Finance, Vol. 2(30, pp. 43-52.
Olomola, P. A. (1998). Market Liberalization and its Effect on Nigerian Agriculture. A Publication of the NISER/SSCN National Research Network. 1998.
Peters, A. (2002). The Fiscal Effects of Tariff Reduction in the Caribbean Community. CARICOM Secretariat.
Pritchett, L., & Sethi, G. (1999). Tariff Rates, Tariff Revenue, and Tariff Reform. World Bank Policy Research Working Paper 1143 (May 1993).
Safdari, M., Mehrizi, M. A., & Elahi, M. (2011). The Effect of Trade Liberalization on Gross Domestic Product in Iran, European Journal of Scientific Research, 62(3), 403-409
Tosun, M. S. (2005). The Tax Structure and Trade Liberalization of the Middle East and North Africa Region. Review of Middle East Economics and Finance. Vol. 3, No. 1, pp 21-38
Zafar, S., & Butt, M. S. (2008). Impact of Trade Liberalization on External Debt Burden: Econometric Evidence from Pakistan, Munich Personal RePEc Archive (MPRA) Paper No. 9548.