Non-Oil Trade and Income Inequality in Nigeria

The paper examines the income inequality effects of non-oil trade in Nigeria during the period from 1981 to 2015. In doing this, the effects of non-oil export and non-oil imports on income inequality are examined using the DOLS estimator. The effects of other relevant variables which serve as control variables are also investigated. The study finds that income inequality is significantly reduced by increase in non-oil exports, financial development and economic development. It also finds that the effect of non-oil import on income inequality is not significant. Foreign direct Investment (FDI) is found to have contributed significantly to inequitable distribution of income in the country. Based on the empirical evidence, to reduce income inequality in the country, the paper recommends that the non-oil sectors of the economy should be developed through increased investment to enhance quality and volume of non-oil output and exports. It also recommends intensification of efforts by the government to develop the financial sector and the entire economy, relying while less on FDI which tends to be concentrated in the oil sector of the economy