How Sustainable is Current Account in Nigeria and Venezuela?

Abstract

The study examined the long run relationship between exports and imports in Nigeria and Venezuela with a view to assessing current account sustainability in the two countries. Secondary data on imports and exports from 1980 to 2018 were obtained from World Development Indicators (WDI) and analysed using unit root test, Autoregressive Distributed Lag's (ARDL) bounds test as well as the Dynamic Ordinary Least Square (DOLS) approaches. The result showed a statistically significant positive long-run linear relationship between exports and imports for Nigeria and Venezuela. However, import coefficient value of less than unitary in Venezuela indicated that Venezuelan economy was in a state of weak sustainability for both goods and services. Thus, the study concluded that current account was strongly sustainable in Nigeria and weakly sustainable for Venezuela. There is need to conserve resources to address the challenges of possible insufficient export receipts to smooth future consumption in Venezuela