Project Abstract

<p> &nbsp;<i>This study investigates the relationship between<br>international trade flows and employment in Nigeria for the period 1981 to<br>2006. Using time series estimation technique, we found no significant link<br>between trade flows and employment in Nigeria both in the short-run and<br>long-run. However, external factors such as FDI, real effective exchange rate,<br>SAP and internal factors such as political stability, labour regulation and<br>real wage are more important factors in explaining employment rate in Nigeria.<br>Like explanations of these outcomes are probably due to the country trading<br>majorly in primary products which are largely uncompetitive and the<br>non-diversification of the productive base of the economy such as the<br>overdependence on oil exports. An effective and result-oriented employment<br>effect from trade is likely to be aided by fortifying appropriate and enabling<br>environment institutional regulatory measures to enhance the diversification<br>and competitiveness of Nigeria’s trade, the removal of impediments to labour<br>market participations and labour market interventions such as putting effective<br>social commitments to principles of competition and diversification</i> <br></p>

Project Overview

<p> </p><div><p><b>INTRODUCTION</b></p><p><b>1.1. &nbsp; Background<br>to the Study</b></p><p>Nigeria is characterized with a ‘dualistic’ (dual) labour market in<br>which the minority of workers has regular formal sector jobs, while majority<br>works in informal sector, with a large pool of surplus labour. This is seen<br>from its rapidly increasing labour force. For instance, the labour force<br>increased from 25.7 million persons in 1980 to 33.9 million persons in 1990 and<br>further increased to 45 million and 52.7 million persons in 2000 and 2006<br>respectively(CBN,1993). In addition to this, statistical evidences from the<br>government show that the absolute number of total employment in the country has<br>been steadily increasing since 1980. For instance, total employment increased<br>steadily from 18.6 million in 1980 to 22.1 million in 1990, which further rose<br>to 27.5 million in 2000 and later to 34.4 million in 2006.</p><p>However, in spite of the country’s large pool of surplus labour, rapidly<br>growing labour force and increasing employment, the share of employed workers<br>in total labour force has been declining since 1980, coupled with this, in the<br>last two decade, the trend has been below 70%, which is an indication of high<br>unemployment as more than 30% of its active population are unemployed. For</p><p>8</p></div><div><i><br></i><p></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>instance, in 1980, the participation rate was 69%, however, the share of<br>employed in total labour force is given as 72.4% which is indicative that about<br>27.6% of the labour force are unemployed in this period. However, in 1990,<br>while the participation rate increased to 71%, share of employment in total<br>labour force declined to 65.2% (CBN, 1993). In 2000, both the share of<br>employment in total labour force and participation rate further declined to<br>61.1% and 70% respectively. However, in 2006, share of employment in total<br>labour force marginally rose to 61.5% while the participation rate marginally<br>fell 69%. In the same vein, 27.6% of the labour force was unemployed in 1980<br>and this rose to 34.8% in 1990 and further rose to 38.9% and 38.5% in 2000 and<br>2006, respectively. These trends are indicative of a huge employment problem as<br>the economy’s capacity to absorb its rising labour force is low as more than<br>30% of its active population is unemployed.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>In addition, imports value increased from U$1058.9 million in 1970 to<br>US$16646.4 million in 1980 but fell to US$5687.9 million in 1990. However, it<br>rose again in 2000 to US$9647 million and rose further to US$33398.1 million in<br>2006(CBN, 2007). This trend is not surprising as Nigeria is highly dependant on<br>imports for most of its raw materials inputs (Oyejide, 1986) and the employment<br>effect of these imports might be positive if a significant portion of imports<br>serves as inputs for labour intensive industries. However, this trend has given<br>rise to debates in developing countries where concerns have been expressed over<br>the loss</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>9</i></p><p><i><br></i></p></div><p><i><br><br></i></p><div><i><br></i><p></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>of jobs due to import competition (Ghose, 2003) and deindustrialization<br>(Pierper, 1998) as result of increased imports. It is on this basis that the<br>study seeks to determine the specific effect of imports on employment in<br>Nigeria.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>In terms of Nigeria’s exports, prior to 1970, Nigeria export was largely<br>dominated by non-oil products (Osuntogun et al. 1997, Oyejide 1986). However,<br>since the oil boom of 1973/74, the bulk of Nigerian exports have been mainly<br>oil export, while the share of non-oil exports in total exports has continued<br>to remain under 5.5% for about the last 2 decades and these non-oil exports<br>have been growing very slowly over time (CBN, 1993). In 1970, non-oil exports<br>accounted for as high as 42.4% of total exports but gradually started fading<br>out and by 1980; it has declined to 3.9%. This further declined to 3.0% in 1990<br>and by 2000; it was as low as 1.3% before slightly increasing 2.3% in 2006(NBS,<br>2006). This occurrence has transformed the country from a net exporter of<br>agricultural produce in the 1960s and early 1970s to a large scale importer of<br>the same commodity (Oyejide, 1986) and the consequent decline in agriculture<br>shows that Nigeria is not fully engaging its surplus labour in food production<br>and other agricultural production. In addition, the oil export which dominates<br>the exports basket of the country typically generates little employment, most<br>especially since a large quantity of the crude oil is exported in unprocessed<br>form.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>10</i></p><p><i><br></i></p></div><p><i><br><br></i></p><div><i><br></i><p></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>However, government has tried to reverse this trend through the<br>implementation of policies to diversify the country’s export base away from oil<br>so as to promote stronger export performance. Such export policy includes export<br>promotion strategies in which incentives were given for the promotion of<br>non-oil exports particularly agriculture and labour intensive manufactures<br>(Kareem O.I. 2007). As noted by Carneiro and Arbache (2003) and Rama (2003),<br>export promotion improves employment level in countries embracing the<br>strategies. Therefore, there had been an ongoing argument between government<br>and public, while the former opined that her export promotion policies have<br>increased the level of employment, majority of the people believe that<br>unemployment is on the rise; it is against this backdrop that we consider it<br>interesting to determine whether the flow of exports have brought any<br>significant effect on employment in Nigeria.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i><b>1.2. Statement of the Problem</b></i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>The problem of unemployment is a serious deficiency to any economy; this<br>is why one of the main macroeconomic objectives of any country is to attain<br>full employment. The issue of employment is paramount to Africa and Nigeria in<br>particular, where high-level poverty is obvious with rising unemployment rates.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>However, in order to combat the problem of poverty, Oni (2006) argued<br>that reducing the level of unemployment will increase the income level in the<br>economy and thereby reduce the level of poverty. To increase the level of employment,<br>some</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>11</i></p><p><i><br></i></p></div><p><i><br><br></i></p><div><i><br></i><p></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>scholars<br>have argued that the flows of goods and services (trade flows) could propel<br>employment generation, especially in developing countries.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>Based on the above problems this research intends to answer the<br>following question:</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>· &nbsp; &nbsp; &nbsp; <br>To what extent can International Trade flows<br>generate employment in Nigeria?</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>· &nbsp; &nbsp; &nbsp; <br>How would Nigeria’s Trade help in enhancing job<br>creation to its people?</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i><b>1.3. Objectives of the Study</b></i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>The broad<br>objective of this study is to evaluate the effects of trade flows on employment<br>generation in Nigeria. Specifically, to examine;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>i. &nbsp; &nbsp; &nbsp; The<br>impact of both export and import growth rates on employment generation,</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>ii. &nbsp; &nbsp;<br>Whether the relationship between<br>trade flows and employment is a long run or short run or both, and</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>iii. Then<br>recommend appropriate policies.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i><b>1.4. Significance of the Study</b></i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>The<br>research intends to examine primarily how trade flows affect employment in<br>Nigeria. Thus the study will be of paramount significance and will contribute<br>to the</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>12</i></p><p><i><br></i></p></div><p><i><br><br></i></p><div><i><br></i><p></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>literature on international trade flows and employment in many folds.<br>Firstly, the study will provide empirical evidence which will serve as research<br>ingredient in this particular area. Secondly, it will assist government in<br>policy formulation on the area of international trade and employment.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>Thirdly, the research will serve as a catalyst for managing and<br>improving employment issues by the labour union in the country. Fourthly,<br>Nigeria’s historical, trade and economic linkages serve as justification to<br>evaluate her trade patterns and labour market impacts.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>In sum, this study will contribute to a better understanding of the<br>employment effects of trade flows in Nigeria. It will also contribute to<br>existing knowledge in terms of the scope of the study, inclusion of relevant variables,<br>and a rigorous and encompassing methodology that will bridge the gaps in the<br>literature. Therefore, it is very important to examine how trade flows affect<br>employment in Nigeria.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i><b>1.5. Research Questions of the Study</b></i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>This study intends to provide<br>answers to these questions:</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>1. &nbsp;<br>To what extent is the growth rate<br>of aggregate employment attributable to export growth rate?</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>13</i></p><p><i><br></i></p></div><p><i><br><br></i></p><div><i><br></i><p></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>To what<br>extent is the growth rate of aggregate employment attributable to imports<br>growth rate?</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>2. &nbsp; &nbsp;<br>Does a long or short run relationship<br>or both exist between trade flows and employment?</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>3. &nbsp; &nbsp;<br>To what extent is Nigeria’s total<br>employment growth rate attributed to domestic factors and external factors?</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i><b>1.6. Research Hypotheses of the Study</b></i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>The study’s working null<br>hypotheses are:</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>Ho1: There is no significance relationship between exports growth rate and<br>aggregate employment rate.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>Ho2: There is no significance relationship between imports growth rate and<br>aggregate employment rate.</i></p><p><i><br></i></p><p><i><b>1.7. Scope of the Study</b></i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>This study will establish the link between trade flow and employment in<br>Nigeria for the period 1981 to 2006 for which data is available.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i><b>1.8. Limitations of the study</b></i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>The study would have been more accurately analyzed, but a research work<br>of this nature cannot be exhaustive and complete. This short fall is attributed<br>to time and material constraint involved in making the research. Inadequacy of<br>literature about employment also limits the research project.</i></p><p><i><br></i></p><p><i>&nbsp;</i></p><p><i><br></i></p><p><i>14</i></p><p><i><br></i></p></div><p><i><br><br></i></p><p>In addition, other limitation exist as there is massive informal trans-border<br>trade by Nigerian Shippers(Importers/Exporters) which are not formally<br>recorded, thereby making it difficult to measure the exact cargo volume that<br>suppose to come into the country, which the study should capture. But the<br>researcher was able to searched relevant literature and gather relevant<br>information for this study.</p><p><b>1.9. Scheme of Chapters</b></p><p>This research work is divided into five (5) chapters, chapter one deals<br>with general introduction. Chapter two reviews both the theoretical and the<br>empirical literature.</p><p>Chapter<br>three contains the methodology of the study. In chapter four a detailed<br>background of the study covering the trends in trade and employment in Nigeria<br>is critically analyzed, also data will be presented, and given economic<br>interpretations. Chapter five summarizes the study’s findings, provides<br>appropriate recommendations and concludes the study</p> <br><p></p>