IMPACT OF TRADE LIBERALIZATION ON MANUFACTURING SECTOR IN NIGERIA.
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IMPACT OF TRADE LIBERALIZATION ON MANUFACTURING SECTOR IN NIGERIA.
Chapter one
Background of the study
1.1 Introduction
Aside from the reality that trade is unavoidable in any economy and that countries are not gifted equally, trade is essential as an engine of growth (Robinson, 1999).
This is the primary reason why the importance of commerce for a country like Nigeria cannot be overstated.This is because it has realised that the majority of Nigeria’s investment money are directly affected by the outcome of its export trade.
As a result, if trade fails to fulfil these critical functions, a significant macroeconomic problem may arise. Other issues include massive external debt, a balance of payment deficit, and chronic inflationary pressure (Giddens, 1996).
When compared to other countries that began at the same time, Niger’s economy is referred to as developing rather than developed.
However, trade liberalisation implies free trade because its genesis is classical in nature and it asks for ideal competition, in which a tiny price-taking country benefits from eliminating or lowering tariffs and therefore trading almost freely.
Trade liberalisation increases product variety and productivity by making intermediate goods less expensive or more promptly available through free trade.
Trade liberalisation, as previously said, entails free trade, which can only happen in an open economy.An open economy promotes an open trading environment, as well as the transfer of knowledge, which can occur through a process known as Osmosis.Observation has shown that what (J.S. Mill, 1996) said a century ago is still significantly correct in terms of the aforementioned reasons.
It is difficult to overstate the importance of exposing people to people who are different from themselves and those with whom they are familiar in the current condition of human development.
Trade liberalisation includes opening up the domestic economy to the rest of the world through trade and rigorous policy planning. Trade policy innovation is driven by a variety of factors, including anti-stationery, bad economic performance, information, and World Bank pressure (DMBUSCH, 1992).
The policy contributes to a speedier transition to economic growth and domestic improvement for a country.One of the numerous benefits of the programme is that it has increased, as shown in the majority of developing countries around the world.
However, the World Bank (1992)-supported structural adjustment programme, which was implemented in Nigeria in the third quarter of 1986, rendered the manufacturing sector critical to structural transformation and the growth of the Nigerian economy.
Given Nigeria’s low degree of industrialization and the SAP-induced underutilization of industrial capacity, trade liberalisation under the pretence of globalisation has resulted in the restriction of Nigeria’s primary commodities, which is externally determined.This has left Nigeria impotent, with no direct influence over the economic catastrophe because her hands are shackled by globalization’s conditions and dictates.
In light of the preceding overview of the manufacturing sector over the last two decades. Nigeria was classified as a country suffering deindustrialization.
As a result, there is an unavoidable necessity to examine whether a manufacturing sector operating in the Nigerian economy is equipped and capable of running favourably while also coping with the tough demands of globalisation.
1.2 Statement of Problem
One of the most significant challenges that trade liberalisation poses to the manufacturing sector is capacity utilisation. The structural Adjustment Programme (SAP) and subsequent developments exacerbated the problem.
The manufacturing industry is on the edge of collapse, with thousands of workers losing their jobs.Again, Nigeria has become a dumping ground for a variety of foreign products.
As a result, it is unavoidable to focus on globalisation and everything that comes with it, as well as the impact on Nigeria’s industrial industry.
This is done to determine whether it is helpful and to suggest how Nigeria’s interests can be protected under the global agenda or arrangement if Nigeria continues to participate in it.
The impact of trade policy on a country’s economic well-being is one of the most hotly disputed themes in economics, but the question of how trade liberalisation restrictiveness should be interpreted, as well as its impact on the manufacturing sector, has hitherto gotten little attention.
Most economies, particularly emerging countries, have ubiquitous and complicated trade systems. This presents issues for analysts and policymakers alike.
In the face of a complex array of tariffs and quantitative restrictions, it can be extremely difficult to estimate the timing of a country’s policy move that stimulates trade in some product lines while discouraging it in others.
It is difficult to evaluate plans for trade liberalisation that are part of a stabilisation package, as well as to assess progress towards less restrictive trade, particularly in the manufacturing sector.
The purpose of this study is to provide a coherent exposition of the major trade policy changes in Nigeria between 1970 and 2004, as well as to use a model that is close to the complexity of a real-world structure to indicate trade liberalisation episodes in Nigeria and their impact on the manufacturing sectors during this time period.
Manufacturing sectors have a significant impact on development plans and policies since they assist determine whether policies should be discouraged or adopted in favour of a new policy.
1.3 RESEARCH QUESTIONS.
This research will strive to answer the following questions:
i. How does trade liberalisation affect Nigeria’s manufacturing sector?
ii. What are the challenges to trade liberalisation?
iii. How does government policy affect trade liberalisation?
iv. How do you see trade liberalisation affecting the manufacturing sector?
1.4 Objectives of the Study
The overall goal of this research is to investigate the impact of trade liberalisation on Nigeria’s manufacturing sector.
i. To investigate the factors influencing growth in Nigerian commerce.
ii. Determine the extent to which trade liberalisation has improved manufacturing sector performance.
iii. Analyse the characteristics of important trade policy developments in Nigeria between 1991 and 2005.
iii. Investigate the pace of growth in the manufacturing sector during liberalisation.
1.5 Significance of the Study
The study would add to the existing literature on trade liberalisation, particularly its justification. The study would assess the value of trade liberalisation by looking at its influence on economic growth. The study is relevant in the following aspects.
i. It would be useful to take a viewpoint on the problematic role of trade liberalisation in the manufacturing sector of emerging nations, with a special focus on Nigeria.
ii. The research would aid in identifying the obstacles that impede commercial relations with other countries.
iii. It will also assist analyse the performance of different trade policies that Nigeria’s government has adopted.
iv. The study would also be a useful tool for students and scholars who wish to learn more about the effect of trade liberalisation on the industrial sector or the Nigerian economy.
1.6 Scope and Limitations of the Study
This study will focus on overseas trade rather than internal distributive trade. It will cover a fourteen-year period (14 years), spanning 1991 to 2005.
This time period was chosen because to its significance in the Nigerian economy. The oil boom of the 1970s, the subsequent economic downturn, and the implementation of the Structural Adjustment Programme (SAP), which is part of the trade liberalisation agenda.
The study is hampered by time and the reluctance of government personnel in command of pertinent material to make it available for analysis. The lack of up-to-date information will significantly impede the investigation.
1.7 Organisation of the Study
This study will be divided into five pieces.
The first chapter, which is the introductory section, will describe the study’s background, the explanation of the research topic, and the study’s objectives.
Chapter two will include the literature review and theoretical foundation. The methodology analysis, which comprises the characteristics and basic aspects of the research study, will be discussed in Chapter 3.
Chapter four will address data presentation, analysis, and interpretation, while chapter five will wrap up the research process by discussing the summary, conclusion, and suggestions.
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