IMPACT OF TRADE LIBERALIZATION ON BUSINESS PERFORMANCE OF SELECTED MULTINATIONAL CORPORATIONS
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IMPACT OF TRADE LIBERALIZATION ON BUSINESS PERFORMANCE OF SELECTED MULTINATIONAL CORPORATIONS
Chapter one
INTRODUCTION
Background for the study
Over the last few decades, one of the trade policy objectives that policymakers in Nigeria have focused on has been the maintenance of economic stability that supports the growth of her economy’s real sector, resulting in a more outward-oriented trade regime, greater global integration, competitiveness, and export-led growth.
This was a response to the Nigerian economy’s vulnerability to oil price swings in the post-civil war era, as well as the meltdown of the global oil market in the early 1980s, both of which had a negative impact on the Nigerian economy.
Political and institutional uncertainties remain in Nigeria, and the erosion of the rule of law has deterred foreign direct investment and trade flows outside of the oil export industry. This episode, among other things, is about inefficiency and incorrect policies.
Between 1980 and 2019, successive Nigerian administrations implemented a variety of policy frameworks, the most of which dealt with trade policy, to solve these difficulties.
For example, the Economic Stabilisation Act and the Structural Adjustment Programme (SAP) were implemented in 1982 and 1985, respectively, to create the groundwork for long-term, inflation-free growth.
There were also National Rolling Plans from 1992 to 1996, as well as the National Economic Empowerment and Development Strategy (NEEDS I) (2004-2007) and NEEDS II (2007-2011). These policy measures were intended to revitalise Nigeria’s actual economy.
Trade liberalisation aims to promote economic welfare by creating a more efficient allocation of resources over time. Successful trade liberalisation is tied to macroeconomic policy, which is concerned with the short-term management of the entire economy.
Organisational performance analysis entails comparing a company’s performance to its objectives and goals. A multinational corporation (MNC) is typically a major corporation formed in one country and that manufactures or sells goods or services in other nations. However, the ability of multinational corporations (MNCs) to fulfil their aims is heavily reliant on the effectiveness of the trade policies of the countries where they operate.
Since 1986, Nigeria has undergone various structural adjustments in terms of external equilibrium, exchange rate, trade liberalisation, and trade policy reform. Nigeria has opened its borders to trade over the years, with a significant volume of commodities and services imported and exported.
The president’s government (Muhammadu Buhari) has announced the launch of the Economic Recovery and development Plan (ERGP), a medium-term (2017-2020) plan to revive Nigeria’s economic development.
However, an examination of Nigeria’s trade policy from the 1960s reveals a pattern that has been observed to characterise unstable and unpredictable trading regimes.
Since the 1960s, trade policy has seen severe policy changes, ranging from heavy protectionism in the early decades after independence to its current more liberal attitude.
Statement of the Problem
Regardless of the numerous trade policy regimes, macroeconomic difficulties such as inflation, exchange rate volatility, and unstable external balances remained a threat to Nigeria’s economic progress.
The failure of monetary policy measures to solve macroeconomic difficulties has been attributed to a policy gap, as Okoroafor (2010) observed. However, Ogbaji and Ebebe (2012) ascribed the failure to Nigeria’s trade policies (1984-2011) incapacity to significantly contribute to the country’s economic progress.
Given Nigeria’s high level of trade (imports and exports) over the years, as well as the sluggish growth recorded over the last five decades of her political history (growth rates in Nigeria averaged 4.3% from 1980 to 2015), it is vital to investigate the impact of trade liberalisation on company performance.
Objectives of the Study
The purpose of this study was to assess the influence of trade liberalisation on the business performance of chosen multinational corporations, using Samsung Mobile and Blackberry as case studies. The specific objectives are listed below:
To assess the impact of Nigeria’s trade liberalisation policy revisions on multinational corporations’ turnover, employment figures, and wage structures.
To assess the impact of trade liberalisation policy measures on issues of economic empowerment and foreign ownership.
To assess the influence of trade liberalisation policy reforms on the import and export initiatives of multinational corporations.
1.4. Research Questions.
This study will be led by the following research questions.
What effect will trade liberalisation policy revisions in Nigeria have on multinational corporations’ turnover, employment figures, and wage structure?
What impact have trade liberalisation policy revisions had on how issues of economic empowerment and foreign ownership have been addressed?
What impact do trade liberalisation policy reforms have on multinational corporations’ import and export initiatives?
Research Hypothesis
The following null hypotheses were developed to assist the study in meeting its aims.
H0: Nigerian trade liberalisation policy measures have no effect on multinational corporations’ turnover, employment figures, or wage structure.
1.6 Significance of the Study
Efficiency and effectiveness are the most important factors of corporate performance, and this cannot be done without acknowledging the role of trade liberalisation in creating business success. This research is critical in understanding the significance and impact of trade liberalisation on corporate success.
This study will be extremely valuable to investors, the government, and scholars since it will provide policy suggestions to various Nigeria stakeholders for taking appropriate economic steps to promote rapid growth and industrialization.
It will add to the current body of knowledge on the subject by experimentally investigating the impact that trade liberalisation plays in the country’s economic progress. This study will be beneficial to:
Members of the academic community will find the study useful because it will serve as a foundation for future research and a reference tool for academic work.
Government: This study will inform the government about developments in the worldwide market. The development and implementation of policies based on these findings would ensure growth.
Investors: This study will also benefit investors, particularly those with a research interest, as it will drive their private investment selections.
Scope of the Study
The study focused on MTN while assessing the influence of trade liberalisation on the business performance of selected multinational corporations.
1.7. Operational Definitions of Terms
The terms listed below have been defined operationally.
Liberalisation is a process in which the state removes prohibitions on some private person activity.
Trade liberalisation is the removal or reduction of limitations or impediments to free trade between nations.
Multinational corporations are multinational corporations based in one country that produce or sell goods or services in multiple nations.
1.9 Organisation of the Study
The study is divided into five chapters: the first chapter contains the introduction, context to the study, statement of the problem, purpose of the investigation, research questions, research hypothesis, relevance of the study, scope, and limitations of the study.
Chapter two provides a literature overview, an empirical review, and a theoretical framework. The third chapter discusses the subject area and method of investigation, which contains the following:
introduction, research design, study population, sample size and sampling procedure, data collection sources, data collection instrument, instrument validity and reliability, and data analysis methods.
Chapter four covers the presentation of data, analyses, and discussion of findings, while Chapter five contains the summary, recommendations, conclusion, limits, and suggestions for future research on the subject.
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