How Foreign Exchange Misallocation Leads to Business Recession : Application of Wald-Wolfowitz Runs Test

The study investigates how mis-allocation of Nigeria's foreign exchange among the consumer and capital goods and new materials between 1970 and 1983 contributed to the deep/worst business recession in the 1980s and 1990s. In recognition of the structural mal-adjustment problems faced by a debt ridden country like Nigeria, the country can ill-afford to depend on continual imports of raw materials, etc. and base its industrialization strategy on utilization of untapped raw materials. The research findings, applying the wall-Wolfowitz Runs Test, based on available evidence supports the claim that the allocation of foreign exchange, in the midst of deep recessionary trends between consumer goods and capital goods was indiscriminate