EXAMINATION OF CAUSAL RELATIONSHIP BETWEEN TRADE OPENNESS, EXCHANGE RATE CHANGES AND MANUFACTURING CAPACITY UTILIZATION

Okoye, Lawrence U. and Modebe, Nwanneka J. and OKOH, JOHNSON IFEANYI and Ahmed, A. (2018) EXAMINATION OF CAUSAL RELATIONSHIP BETWEEN TRADE OPENNESS, EXCHANGE RATE CHANGES AND MANUFACTURING CAPACITY UTILIZATION. DUTSE .JOURNAL OF ECONOMICS AND DEVELOPMENT STUDIES (DUJEDS), 4 (2).

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Abstract

A major policy cha//enge f or open developing economies is determination of an optimal exchange rate consistent with their economic development objectives. These economies are characterized by heavy dependence on commodity exports while relying extensively on consumer and industrial goods imports. This translates to massive outflow of fore ign exchange from developing economies to industrialized nations thereby impeding the capacity of developing nations to build a robust domestic production base. This study examines the channel of transmission of impact between manufacturing capacity utilization, exchange rate and trade openness using the Granger causality estimation technique. Interest rate and inflation rate were introduced as control variables. The study covers the period 1986-2013. The study did not produce evidence of causal relationship between exchange rate andmanufacturing capacity utilization and between trade openness and manufac turing capacity utilization. However, there is evidence of unilateral causation from inflation rate to manufacturing capacity utilization. The study recommends that policies which support moderate levels of inflation be implemented

Item Type:	Article
Uncontrolled Keywords:	Manu factu ring Capacity Utilization, Trade Openness, Exchange Rate Changes, Manufacturing Sector
Subjects:	H Social Sciences > HF Commerce H Social Sciences > HF Commerce > HF5601 Accounting
Divisions:	Faculty of Law, Arts and Social Sciences > School of Management Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User:	Mrs Patricia Nwokealisi
Date Deposited:	13 Jun 2018 14:48
Last Modified:	13 Jun 2018 14:48
URI:	http://eprints.covenantuniversity.edu.ng/id/eprint/10946

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