The analysis of the impact of unemployment and inflation on balance of payment in nigeria (1980-2010)

Project Abstract

The balance of payments is a crucial indicator of a country's economic health, reflecting its international trade and financial transactions. This study aims to analyze the impact of unemployment and inflation on the balance of payment in Nigeria from 1980 to 2010. Nigeria, as a developing country, has been facing challenges in maintaining a favorable balance of payments due to various economic factors. Unemployment and inflation are two significant macroeconomic variables that have a direct influence on the balance of payments. The study utilizes quantitative research methods and secondary data from various sources, including the Central Bank of Nigeria, National Bureau of Statistics, and World Bank. The research employs regression analysis to examine the relationship between unemployment, inflation, and the balance of payments in Nigeria over the three-decade period. The analysis includes both descriptive statistics and regression results to provide a comprehensive understanding of the dynamics between these variables. The findings of the study reveal that there is a significant negative relationship between unemployment and the balance of payments in Nigeria. High unemployment rates contribute to lower export levels, as domestic demand for goods and services decreases. This results in a trade deficit and puts pressure on the balance of payments. Additionally, inflation has a detrimental impact on the balance of payments, as rising prices reduce the competitiveness of exports and lead to a deterioration in the trade balance. The study also identifies various policy implications based on the research findings. Addressing unemployment through job creation programs and skill development initiatives can help boost exports and improve the balance of payments situation. Controlling inflation through effective monetary policy measures is essential to ensure price stability and enhance export competitiveness. Furthermore, promoting export-oriented industries and diversifying the economy can reduce the reliance on imports and strengthen the external sector. Overall, this research contributes to the existing literature on the relationship between unemployment, inflation, and the balance of payments in a developing country context. The findings underscore the importance of addressing these macroeconomic challenges to achieve a sustainable balance of payments position and foster economic growth in Nigeria.

Project Overview

<p> </p><div><p><strong>1. O &nbsp;INTRODUCTION</strong></p><p><strong>1.1</strong>&nbsp; &nbsp; &nbsp;<strong>BACKGROUND</strong></p><p>The major goals of macro-economic policy are: to achieve full employment in other words maintain a low and stable level of unemployment. To maintain a relative stable level of price payment position at a fixed stable exchange rate of growth.</p><p>Practically, inflation which is a persistence increase in general price level is one of the macro-economic problems facing Nigeria today. According to Ewa Udu and Agu G.A it began in Nigeria during and after the Nigeria civil war (that is from 1965-1970).Before the war, there was noticeable increase in the price of so many commodities such as a bag of 50cups of rice that cast #14.00 rises to #43.00 immediately after the civil war in 1970. Also there was an increase in the price of other goods and since 1979 the rate of inflation in Nigeria has been increasing.</p></div><h3></h3><br> <br><p></p>