This study investigates the relationship between trade, poverty and sustainable development in Nigeria for the period 1980-2013. The paper uses Autoregressive Distributed Lag (ARDL) technique for examining the long-run equilibrium condition and a re-parameterized framework to capture the short-run dynamics. The results show that long-run equilibrium condition exists between trade and sustainable development, on the one hand, and trade and poverty, on the other. Interestingly, the results also indicate that the relationship between trade, poverty and sustainable development is more of a dynamic nature than static as the lagged dependent variables are significant. It is observed that though development is highly sustainable and poverty is fairly alleviating as the recovery back to equilibrium when affected by shock is fast. But a striking result shows that trade only matters for sustainable development and not for poverty reduction in Nigeria. The growth process of the Nigerian economy is the major driver for poverty reduction, as it significantly increases the per capita income. Again, the results obtained indicate that only optimum levels of government involvement, exchange rate and economic growth that will not aggravate poverty and at the same time will also stimulate sustainable development, are desirable.

As was widely circulated by development practitioners, the key to sustained poverty alleviation is trade (Bruno et al., 1998). However, it was posited that the early studies were based on rather small samples, while the recent works have extended the sample and reached mixed conclusions laced with great controversy. In general, empirical studies suffer from a number of shortcomings and the question surrounding the correlation between trade and poverty have not been resolved (Baldwin, 2000). Baldwin (2000) offers explanations for the differences among researchers of the trade-poverty nexus. While econometric analyses are limited by the scope and comparability of available quantitative data, differences in what investigators regard to as appropriate econometric models and sensitivity test analyses are based, in part, on the personal policy predictions of authors which results in significant differences in the conclusions reached under such quantitative approaches (Baldwin, 2000). Also, many empirical studies on trade, poverty and sustainable development have, at least, being conceptually deficient with development synonymously taken as sustainable development for analyses. However, these concepts are not totally one and the same (Asefa, 2005).

Applied Economics Journal, Trade, Poverty, Sustainable Development, Nigeria, Autoregressive Distributed Lag (ARDL), Autoregressive Distributed Lag (ARDL), SuE, PANTA RHEI, Dynamic Analysis.