CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
The issue of employment is crucial to every economy, which is why achieving full employment is one of any country’s key macroeconomic goals. The topic of employment is critical throughout Africa, particularly in Nigeria, where high levels of poverty are evident due to rising unemployment rates. However, in order to address the issue of poverty, Oni (2006) suggested that lowering unemployment will boost the economy’s income level, hence lowering poverty levels. Some scholars have proposed that the movement of products and services (trade flows) could be used to boost employment generation, particularly in developing countries.
According to Pieper (2006), employment growth has a feedback effect on economic growth, such that a rise in employment leads to an increase in economic growth.
Economists have long been fascinated by the factors that cause countries to expand at various rates and achieve varying levels of wealth. Foreign trade is one of these variables. Nigeria is essentially an open economy, with international trade accounting for a sizable share of total output. Nigeria’s economic progress is heavily reliant on the prospects of her import and export trade with other countries. Foreign commerce generates foreign exchange earnings as well as market stimulus, resulting in faster economic growth (Obadan, 2004). Nigeria’s domestic market is large enough to support growth, but it is not large enough to maintain growth at the rates required to reduce unemployment and poverty. As a result, Nigeria has continued to rely on the international market (World Bank, 2002).
STATEMENT OF PROBLEM
Despite the country’s large pool of surplus labor, rapidly growing labor force, and increasing employment, the share of employed workers in the total labor force has been declining since 1980, and the trend has been below 70% in the last two decades, indicating high unemployment with more than 30% of the active population unemployed.
This tendency is unsurprising given Nigeria’s reliance on imports for the majority of its raw materials inputs (CBN, 2007), and the employment impact of these imports could be favorable if a significant fraction of them is used as inputs in labor-intensive industries. However, this trend has sparked debate in poorer countries, with worries raised about the loss of biodiversity. However, the government has attempted to buck this trend by enacting policies to diversify the country’s export base away from oil in order to boost export performance. Export promotion tactics, for example, were used to encourage the promotion of non-oil exports, particularly agriculture and labor-intensive manufacturing. Globalisation, as Arbache (2010) and Rama (2011) point out, boosts employment levels in countries that adopt the measures. As a result, there has been an ongoing debate between the government and the general public; while the former claims that her export promotion policies have increased employment, the majority of people believe that unemployment is on the rise; it is against this backdrop that we find it interesting to see if the flow of imports has increased.
OBJECTIVES OF THE STUDY
The main goal of this study is to analyze experimentally the influence of trade liberalization on employment growth in Nigeria from 1981 to 2013.
The study also aims to find out:
Examine the relationship between trade liberalization and employment development in Nigeria.
Examine the extent to which trade liberalization can result in job creation.
Providing a suitable framework based on the policy recommendations.
RESEARCH QUESTIONS
The following research questions will be addressed in this study:
Is there a long-run or short-run relationship between trade flows and employment, or both?
ii. What proportion of Nigeria’s total employment increase is due to domestic and external factors?
iii. What are the impediments to trade liberalization?
RESEARCH HYPOTHESIS
During the course of this research, the following hypothesis will be tested:
H0: In Nigeria, trade liberalization has had no substantial influence on job growth.
H1 Trade liberalization has had a substantial impact on Nigeria’s job growth.
SIGNIFICANCE OF THE STUDY
The results of this research will reveal whether trade liberalization has a substantial impact on Nigeria’s job growth. As a result, policymakers in Nigeria will be able to establish a clear and complete policy on trade liberalization management. This study will also give an objective assessment of the impact of trade liberalization on Nigerian job growth. The findings of this study will also be important as a source of information for future studies on the influence of trade liberalization on employment growth in the Nigerian economy.
SCOPE OF THE STUDY
The economy is a big component with many various and often complex aspects; nevertheless, this research will only focus on one aspect of the economy (Trade). This work will not be able to cover all aspects of the trade sector, but it will look at how trade liberalization has been used by the government to achieve economic progress and stability.
Between 1981 and 2013, the empirical analysis and estimation were conducted. Due to the non-availability of some data, this restriction is unavoidable.
The data for this study will primarily come from secondary sources, including publications from the Central Bank of Nigeria (CBN), such as the CBN Statistical Bulletin, CBN Annual Reports and Statements of Accounts, and publications from the National Bureau of Statistics.
RESEARCH METHODOLOGY
The analysis in this research will be based on macroeconomic data from the Nigerian economy. The Ordinary Least Square (OLS) estimation approach would be used to generate numerical estimates of the coefficients in the model using Eviews because to the linearity of the model design.
In order to estimate, two multiple regression models will be employed. The model will look into the impact of trade liberalization on Nigerian job development. This is a follow-up to the study’s stated aims.
LIMITATION OF THE STUDY
One of the elements that aids good research is finance. Financial constraints hampered the research process, but it did not prevent the research from being completed.
The fundamental drawback of this research is the lack of time. Based on recent and current events about the influence of trade liberalization on employment development in the Nigerian economy, the time provided for completion of this research is insufficient.
ORGANIZATION OF THE STUDY
This research will be broken down into five sections. The first chapter introduces the subject matter and justifies the study’s existence. The second chapter discusses the impact of trade liberalization on employment growth in Nigeria. In chapter three, the study methodology is presented, which includes the theoretical framework, data sources, model construction, estimating methodologies, and so on, while in chapter four, data presentation, analysis, and interpretation of regression results are presented. In chapter five, the concluding remarks reflect on the study’s summary, conclusion, recommendations, and suggestions for further research.
DEFINITION OF TERMS
The following terms are described in terms of how they would be used in this study.
Trade liberalisation is the process of removing or lowering barriers to the free flow of products between countries. This involves both tariff (duties and surcharges) and non-tariff barriers being removed or reduced (like licensing rules, quotas and other requirements).
Foreign trade is the exchange of goods and services between two or more countries. It’s also known as international trade or foreign trade. It is a trade that occurs outside of a country’s territorial borders. Bilateral trade, which is trading between two countries, or multilateral trade, which is trade between more than two countries, are examples of foreign trade.
Employment refers to having a legitimately compensated job. This is the inverse.
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