Openness, Government Size and Economic Growth in Nigeria

This study appraised the extent of openness, government size and economic growth in Nigeria for the period 1986 to 2015. It also determined the effects of openness and government size on economic growth and tested the validity of the compensation and efficiency hypotheses in Nigeria. These were with a view to determining the relationship among openness, government size and economic growth in Nigeria. Data collected were analysed using descriptive statistics and the Autoregressive Distributed Lag (ARDL) econometric technique. ARDL results showed that in the long run, financial openness (t = -1.87; p > 0.05) and trade openness (t= -1.96; p > 0.05) had an insignificant negative effect on economic growth while physical capital (t= 6.97; p < 0.05) and government size (t= -2.48; p < 0.05) had significant positive and negative effect on economic growth respectively. The testing of the validity of the compensation and efficiency hypotheses showed that trade openness (t= 2.69; p < 0.05) had significant positive effect on government size while financial openness (t= -5.03; p < 0.05) had significant negative effect on government size in the long run.