IMPACT OF GLOBALIZATION ON NIGERIA ECONOMIC GROWTH (1981-2015)

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Globalization or one global village which brought along with it the concept of “free-trade”, has greatly affected Nigeria economic growth over the years. Nigeria, which is the most populous nation on the African continent, is highly endowed with a lot of human and natural resources, which if adequately harnessed, can turn around not only its economy but the entire economy of Africa. Regrettably, this has not been possible because Nigeria has allowed herself to be used as a dumping ground for all sorts of imported goods from the foreign industrial countries and the Asian Tigers.

Consequently, this has had an unpleasant impact on capacity utilization of various sub-sectors of the Nigerian manufacturing sector, the creation of employment opportunities; the level of poverty in the country, the rate of social vices in the society and the outflow of the country’s foreign exchange at the detriment of the country in particular and Africa, at large.  It has been found out that the impact of globalization on Nigeria and its contributions to the country’s economy, creation of job opportunities and the level of economic growth through the infusion of foreign capital and advanced technology is inevitable (Sagagi, 2004). Globalization is seen to have restricted Africa to merely a producer of raw materials and consumer of manufactured goods (Dembele, 1998), thereby eliminating its role in defining its priorities of national growth (Fatokun, 2004).

However, it is a thing of concern that even the crude oil which Nigeria produces, is refined abroad and imported back to the country to meet-up local consumption because the country’s refineries have over the years been operating below capacity utilization.  The economic crises in Nigeria are so obvious that made Academic Staff Union of Universities (ASUU) in 2002 to believe that the country’s economy has been taken over by the forces of globalization. Even though, Nigeria has all the requisite resources, both human and natural, to turn round its economy and by extension the entire economy of Africa, its over- reliance on the “global-economic-order” has turned it into a good source of development for both the developed economies of Europe and Americas and the emerging economic powerhouses of Asia at the expense of itself and the continent of Africa (Ajayi, 1990). The situation becomes more aggravated due to Nigerians’ preferences for foreign goods (Fatokun, 2004).

Globalization has been defined variously by many authors according to their belief and environments Shenkar and Luo (2004, cited in Adesina, 2010) refer to globalization as “the growing economic interdependencies of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, as well as through the rapid and widespread diffusion of technology and information.” Globalization involves both monetary and economic integration; the transfer of policies across borders; the transmission of knowledge; cultural stability; the reproduction, relations, and discourses of power; it is a global process, a concept, a revolution, and an establishment of the global market free from socio-political control. It has helped to liberalize national economics by creating a global market place in which all nations must participate directly or indirectly: This undoubtedly led to growing activities and power of international financial investors mainly presented by multi-national corporations (Jaja, 2010).

Therefore, Nigerian Government can take all necessary measures to harness natural and human resources towards the development of the socio-infrastructure of the economy at large; investing on the growth of the industrial sector of the country to make the country less dependent on importation from the developed nation of the world; which has seen Nigeria as a dumping ground for their product. Essentially the information technology and knowledge management of the present socio-economic conditions of Nigeria suggest that the country has a long way to go in the global competition for economic growth and development. Nigerian economy is not only dependent on rent from oil but also over-enthusiastic in terms of importation of both industrial and consumer goods and refined petroleum products. With deteriorating infrastructures in the health, education, transportation, water supply, electricity and the problem of “brain drain” Nigeria’s future seems to be bleak in the global village (Abubakar, 2001).

In fact, some writers characterize globalization as the third phase of colonization, the second phase being neo- colonialism. On this view, Western countries are employing globalization to extend and strengthen the fundamentally exploitative relations established between colonial powers and the colonized over the past 400 years (Mulinge and Munyae, 2001). Given this fact, this research work aims at establishing the actual impact of globalization on Nigeria economy over the period under review.

1.2 Statement of Problem

Iyayi (2004) posits that globalization “has been used rather loosely to stand for a variety of things: the shrinking of the world into a global village, the awesome changes brought about or mandated by the revolution in information technology, the collapse of boundaries between different worlds, expanding connectivity of all forms of interaction.”

The difference in the socio-economic development across nations is attributed much to the development of the concept of globalization (Ogede, 2004). Many economist and policy makers had argued that globalization; particularly the increased mobility of international financial capital has undermined the ability of countries to engage in independent macroeconomic policies whether fiscal or monetary. The implication of this is that government lack the ability to insulate their economies from the adverse effect of trade liberalization (Krieler and Jhevile, 2002).  They further argued that trade imbalance is as the result of countries shifting their own unemployment problems elsewhere. Globalization reduces the ability of macroeconomic policy to stabilize the economy at an acceptable level of employment.

Globalization did not emerge on the world stage from the blues. It is nothing but part of the systematic movement orchestrated by the industrialized countries to emasculate weak economies of the world for their capricious enjoyment. The emergence of nation states in Europe and its attendant wars, the formation of international organizations, the subjection of Africa’s to inhuman slavery, the colonization of the continent and the present epoch of unprecedented scientific revolution are just part of the trends to bring the globe under one currency.

In conclusion, globalization has become a threat to the poor rather than an opportunity for global action to eradicate poverty (Obadina, 1998). Arguing further, Obadina contends that globalization is the same notion used to justify slavery and colonization. It is usually anchored on the believed that the developed nations should be free to exercise their strength without moral or legal limitation that protects the weak.

Research Questions

Based on the problems so identified, the research aims at addressing the following contending questions

Is there any long-run relationship between globalization and Nigeria economic growth? To what extent does globalization impact on Nigeria economic growth? Is there any observed causal relationship between globalization and Nigeria economic growth? Objectives of Study

The objective of this study is to evaluate; the significant relationship between globalization and economic growth. Specifically, the objectives of this study include.

To empirically investigate if there is long-run relationship between globalization and Nigeria economic growth. To empirically examine if there is any observed causal relationship between globalization and Nigeria economic growth. To empirically examine the extent globalization impact on the economic growth of Nigeria

1.5       Statement of Hypothesis

H0: There is no long-run relationship between globalization and Nigeria economic growth.

H1: There is long-run relationship between globalization and Nigeria economic growth.

H0: There is no observed causal relationship between globalization and Nigeria economic growth.

H1: There is observed causal relationship between globalization and Nigeria economic growth.

H0:  Globalization has not impacted significantly on Nigeria economic growth within sample period.

H1: Globalization has impacted significantly on Nigeria economic growth within sample period.

1.6      Significance of Study

The impact of globalization on the sustainable growth of any nation cannot be over-emphasized; since human capital is all about human resources of any country. This work will be of great importance to the general public, government and its agencies.

Also, it will be of great importance to the ministry of education, ministry of health, ministry of foreign affair, finance minister among others. Above all, it will be a foundation for economist, students and researchers who have interest on globalization and its impacts on Nigeria economic growth.

1.7    Scope and Limitation of Study

This research will analyse the impact of globalization on Nigeria economy, taking a good analysis on various ways and means put by the government of Nigeria and its agencies to adapt to globalization as well as absorbing the negative consequences of globalization of the world since 1981-2015. The data for the work shall be restricted to all secondary data released from by the Central Bank of Nigeria (CBN) and Federal Bureau of Statistics (FBS).

The researcher encountered a number of constraints in the course of this work to include; data sourcing or data inconsistency due to poor nature of information management in Nigeria. Other constraints are; time factor, financial constraints and host of other constraints that prevent the researcher to present a better work than this.

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