Trade-related infrastructure and bilateral trade flows: evidence from Nigeria and its trading partners

Abstract

Abstract This study examines the relative impacts of transport and information and communications technology (ICT) components of trade-related infrastructure on bilateral trade flows between Nigeria and its major trading partners. An augmented standard gravity model that featured variables for the transport infrastructure component and the ICT component was estimated using bilateral trade data on 22 major trading partners of Nigeria for the period 2005–2021. The panel instrumental variables technique, precisely pooled two-stage least squares technique leveraged on fixed and random effects models, was used for the analysis. The findings show that the two components of trade-related infrastructure, transportation and information and communication technology (ICT) have a significant impact on trade flows between Nigeria and its trading partners. In the exports model, the differential impact of the transport infrastructure component is higher than the ICT component, but the differential impact of the ICT component is greater in the imports model. This suggests that the efficient provision of both transport and ICT infrastructure facilitates trade, while the inefficient provision of either or both hinders it. Therefore, greater attention must be placed on improving both components.

Keywords

• Trade-related infrastructure
• Bilateral trade flows
• Gravity model
• Panel instrumental variables
• Nigeria and trading partners