Globalization and Development

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CHAPTER ONE

 

INTRODUCTION

 

1.1   BACKGROUND OF STUDY

Globalization has benefited the advance countries at the expense of the less developed Countries. To the Marxist, this is not surprising as they hold that Globalization is a product of capitalist. They argued that the capitalist system epitomizes exploitation. It involved class conflict and it is a system of equal relation marked by an unequal exchange. It is a system where one group must benefit at the expense of the other. Thus, Globalization being of such a system is bound to be exploitative. Several scholars has traced the origins of globalization in modern times, others trace its history long before the European age of discovery to the new world. Some even trace the origins to the third millennium BCE since the beginning of the 20th century. The pace of globalization has intensified at a rapid rate especially during the post cold war era. The term globalization has being in use since the mid 1980’s and since the mid 1990’s. however the main originator of globalization can be traced to the classical economist that showed that trade can be beneficial to their nation.

Globalization and Development

Globalization developed through the pre-capitalist era to the period of industrial revolution in England and evolved into what we are seeing today. The above quote under severs the government especially in developing countries to know the manner they pursue domestic economic policies. They should gear all the effort towards restructuring their economy to economic change in such a way that they will benefit from globalization.

Apart from being a worldwide processes, which means different things to different people and even different things to the same people. Globalization is also multi-dimension –all. It encompasses all aspects of lie; economic, political, cultural environmental and social to mention but a few cultural contacts. Informational globalization flows between geographical remote locations. Also, political globalization is all about the spread of political sphere of interest to the regions and contrives outside the neighborhood for political actors.

Globalization has its shortcoming and its benefits it has it’s negative and positive aspects globalization promotes treacle and exchange and hence specialization. It brings about a free flow of technology. It transforms the market for corporate control globalization also has its own challenges as great as its benefits are, its cost can also be devastating it constrains the ability of government to control domestic monetary and fiscal; policies. It creates an economy situation whereby developing nations become over-dependent on industrial nations. (Adegbite 2004:60). The above analysis shows that while globalization presents opportunities for nations to improve their economic performance it also possess several risks and challenges. In the light of this, the less development countries should not view globalization as wholly evil and negative. The proper thing to do is to position and reposition themselves and their economic properly in the globalizing world.

Economic development is the ultimate goal of every economy. But there cannot be economic development without economic growth. Economic growth on its part depends on a goal number of factors, namely industrialization. Increased agricultural production through mechanized farming, technological advancement, good governance and human capital resources and also the power integration and management of the above factors by government and other economic agents is necessary for the actualization of economic growth. In the light of this (Nwosu 2000:283) defines industrialization as the encompasses of the totality of relations involving workers, employees (private and public) and the states regulatory and interventionist authority as they mobilize and intensify their efforts at appropriate places throughout the country, on a continuing basis to entrepreneurially   organize to make use of machines or of technology and other inputs and factors of production as well as to make use of and interact meaningfully with the means services opportunities, incentives and other conditions that the entire economic, social, political and cultural environment makes possible or embodies with the aim of more quantities of industrial, agricultural and other capital and consumer goods that are of increasingly higher and higher quantity and newer and newer variety. Given the above facts industrial growth can be seen as the accumulation of industries (occasional by industrialization) capable of sustaining the economy by generating goods and services.

1.2   STATEMENT OF THE PROBLEM

In the current trend of globalization of trade and investment, however, Nigeria is facing a crucial turning point of how to improve significantly the performance of the industry. In terms of production and trade thus, the challenges to the country is how to design strategies and polices relevant to regional and global competition given the small market of the economy especially in the area of industrial product. Further economic development seems to depend upon whether or not Nigeria can establish a preferable industrial structure and participate in horizontal international specialization in the global market.

However, Nigeria is increasingly launching herself into the globalization train expecting to address her current economic problems of unemployment, prices, instability, balance of payment, disequilibrium, poverty, income inequality among others, privatization deregulation of key sectors of the economy financial and trade liberation and means of adapting to globalization in order to fit into the new global system. However, several problems may arise from regional or world agreement at the global level. For instance, the requirement of common polices and strategies on agricultural and industrial development may conflict with the interst of an individual country’s competitive policy given their different levels of industrial development.

The challenges is for Nigeria to use their enormous resources to build a strong consistent self sustaining economy which will be competitive in the world market. It is therefore questionable whether Nigeria has been able to reap the benefits of globalization clue to these weaknesses.

 

1.3   OBJECTIVES OF THE STUDY

The main objective of this research is t evaluate the impact of globalization on Nigeria’s industrial growth.

Other specific objectives are to

  1. Evaluate the effect of foreign direct investment on Nigeria’s Industrial growth
  2. Access the effect of trade openness on Nigeria’s industrial growth.
  3. Access the effect of exchange rate on the Nigerian industrial growth.

1.4   RESEARCH QUESTIONS

  1. To what extent will globalization affect our economy and relation to other countries?
  2. What is the nature of the relationship between globalization and industrial gross domestic product?

iii.     What is the effect of foreign direct investment on Nigerian industrial growth?

  1. What is the effect of exchange rate on Nigeria’s industrial growth?
  2. What is the effect of interest rate on Nigeria’s industrial growth?

 

1.5   STATEMENT OF HYPOTHESIS

Ho1: Trade openness has no significant impact on Nigeria’s industrial growth.

Ho2: Exchange rate has no significant effect on industrial gross domestic product in Nigeria.

Ho3: Foreign direct investment has no significant impact on industrial gross domestic product.

1.6   SIGNIFICANCE OF THE STUDY

The outcome of this research work would be of great importance to the Nigerian policy makers, students for reference purpose and to teachers for further consultations. This research strongly believes that the work enables policy makers to better understand the need to utilize the benefits of globalization and also to proffer means to fight and reduce its cost in the economy.

1.7   LIMITATIONS OF THE STUDY

Some of the constraints encountered in the process of this research work are time and finance which journals found on line and in the library where of an immense help in carrying out this research work.

1.8   ORGANIZATION OF THE STUDY

The study is classified into five chapters with reference at he end of each chapter it include:

  1. Introduction
  2. Review of related literature

iii.     Methodology

  1. Data presentation, Analysis and interpretation.
  2. Summary, conclusion and recommendation

 

 

 

 

 

 

 

 

 

CHAPTER TWO

LITERATURE REVIEW

2.1.  CONCEPTS OF GLOBALIZATION

 

The term “globalization” was coined in the latter half of the century, but the term and its concept did not permeate popular consciousness until the latter half of the 1980’s. There are many records of the globalization in the ancient times. Macro’s polo in his travel and merchandise during the 13th century exhibited some forms of globalization.

 

Debates about globalization are one of the reasons that there is undoubtedly no topic today more difficult to get one’s head around, let alone to master than globalization. However of far greater importance is the shear magnitude. Diversity and complexity of the process of globalization which involves almost everyone, everything and every place, in innumerable ways. (The concept of globality refers to the condition {In this case omnipresent} resulting from the process of globalization (Schoite 2004:102-103).

 

Contemporary globalization can be viewed as just the latest phase of a long term process and if we accept the existence of many world system located in different parts of our planet. Globalization does not tend itself to easy conceptualization and like other concepts in social Science; it is not amendable to single, simple and straight definition which explain its various connotations by scholars of different persuasions as internalization, universalization, liberalization, liberalization etc.

According to Dibin Ibrahim, globalization is not a single phenomenon  but rather a syndrome of processes and  activities which embody a  set of ideas and a policy framework organized around the globalization of labour and power (Ibrahim 2003:13) In similar Trade Aina submits that any meaningful relevant understanding of globalization must go beyond the myths and ideologies of globalization to the confrontation with the diverse  but actual processes  how they  unfold, their relationship with themselves and other social and economic relations and dynamics such an understanding  must also recognize not only the complex but varied history of the process being studied  but it must reset a monolithic understanding such as their increased competitiveness  and efficiency in the utilization of procure proactive resource and major improvements in social development. Liberalization in the 19th century is often called “The first era of globalization” a period characterized by rapid growth in international trade and investment between European imperial power, their colonies and later the United States. The first era of globalization began to break down at the beginning with the first world later collapsed during the bold standard crisis in the late 1920’s and early 1930’s. Countries that engaged in that era of globalization e.g European core, some European periphery and various European American and Ocean offshoots, prospered. Also inequality between those states fell as goods. Capital and labour flowed freely between nations.

According to George Ritzer (2010:20) globalization in the world war 11 has been driven by advances in technology which have reduced the cost of trade and trade negotiations round, originally under the auspices of General Agreements on Trade and Tariff (GATI) which led to series of agreements to remove restrictions on free Trade. The Uruguay around (1984 to 1995) led to a treaty to create the world Trade organization (WTO) to mediate trade disputes. It is also been globalised as a result of the liberalization of financial market, development in technology and activities of global institutions since as the World Bank, IMF and WTO. Other bi and trilateral trade agreements including sections of Europeans macitrich treaty and the North American free Trade Agreement (NAFFA) have also been signed in pursuit of the goal of reducing tariff and barriers to trade.

 

2.1.1 MEANING/DEFINITION OF GLOBALIZATION:

According to Essein (2006) globalization is associated with growing internalization of production and marketing of goods and services and increasing production and commercial activities. This implies that globalization involves locating production activities by companies not only on their own soil but the shores of foreign countries.

 

Dembele (1998) put it that Globalization tends to consolidate the existing international division of labour which contains African  to a role of supplier of raw materials  and commodities  and consumer manufactures goods from developed countries, worse of all globalization will considerably, undermine and eliminate the role of the African state in defining the priorities of national development.

O’ Neil (1997:19) in defining globalization approached it from its micro-economic character sees it as the process by which enterprises (related or unrelated) become interdependent and inter-linked globally through strategic alliances and international network. He                       further explain that this will happen when the foreign branches engage domestic firms in competition for local resource and markets, may also take the form of foreign direct investment undertaken in strategic  alliances with domestic firms.

 

Encyclopedia  of informal Education (2000) “globalization has become  a key ideal for business theory and practice and  entered academic debate” While being a complex and multifaceted array of phenomena, it is yet the most widely used and misused words in the field of international relation today and appear to have many meaning. Oxford Dictionary of Economic 2nd Edition (2002) defines globalization as the process by which the whole world becomes a single market. This means that goods and services, capital and labour are traded on a worldwide basis, and information and the results of research flow readily between countries.

Furthermore Asobie (2001:53) defines globalization as the process of both vertical and horizontal integration involving increasing volume and variety of transnational transaction in goods and service, international capital flows, human migration and through rapid and widespread diffusion of technology.

 

 

 

2.2   CHALLENGES OF GLOBALIZATION

Nigeria of independence in 1960 was largely a product and net exporter of primary product. The six major agricultural products then were cocoa, rubber, palm oil, and groundnut, cotton and palm kernel. Although, there existed mining and quarrying activities, these were of negligible percentage and never counted for the economy as a whole. In other words agricultural product and raw materials constituted the sole foreign exchange earner for the country. Specifically, the Nigerian state as an exporter of agriculture goods had 69.4% of its total GDP for the year 1963/1964 comprising the six afford mentioned agricultural commodities (Olaloku 1979.8).

 

The trend of having agriculture as the main foreign exchange  earner for Nigeria stopped in the early 1970’s when the country was suddenly awash with petrol dollar arising from the quadruple increase in the price  of oil in the world market. From 1972 onward, oil gained ascendancy over all other commodities as the world’s largest contributor to GDP, and also as a major foreign exchange earner. There was substantial increase in oil production accompanied by a sharp increase in the global market price of high grade crude oil from low prince $3.8 per barrel in January 1974. This 1981 when the price of crude oil  attained a high level of $38.77 per barrel with the same period, total revenue from oil rose corresponding from 1 billion to 4 billon while external reserves  increased from #180 million to #37 billion in 1975 (Osaghae 1998;98) the increase in  national wealth resulted in the government of the day embarking on rapid expansion of the public sector and squandering of the wealth on expanding distributive instead of productive capacity and on increased dependence on external goods and inputs composed a total of  89.1% of Nigeria’s export as against agriculture which has plummeted in its contribution to export to 6.8% in the  same year. The facts of the matter is that Nigeria commodity pattern has since the advent of oil, been a mono-cultural one, with the product being the only one the country depends upon for its foreign exchange earnings a situation that has constrained the face of its developmental efforts.

Thus it can be unequivocally asserted that Nigeria’s development impotence as often perceptively advanced by scholars of radical persuasion, but also to its own weak domestic economic structure. Therefore the necessity for the country to diversify its economic base in order to confront the challenges of contemporary globalization process and remain relevant in the scheme of world events.

The challenges posed by globalization for Nigeria are multifarious. These are considered in the same manner that we articulated the forces that propel it. First for the country to fully integrate into the world economy and in order to harness the benefits of such integration, it must embark on serious technological revolution as Usman (1999:56) pungently remarks the pervasiveness of technological such that a country ignores it at its own peril. In order to ensure technological revolution, the country’s technological base must be developed. Science and technology should be made a formidable part of the key strategic area of its development effort. The need to fundamentally transform the nation’s education, health, agriculture and industrial development has therefore become an imperatic demand in contemporary global economy. Information technology and the ability to use it are very critical, while computers and other electronic gadgets are already in place and so no need to be reinvented. There is the need to ensure that the enabling environment for their uses is provided. Adequate basic infrastructure such as power supply and telecommunication must exist regularly and uninterruptedly.

Similarly, industrialization including manufacturing and fabrications should be re-invigorated, while agriculture should be expositioned with mechanized farming fully embraced to enhance agricultural productivity.

The second challenges relate to economic liberalization. The liberalization policy of the Asia Tigers tremendously enhances their development. This entails liberalizing the economy. Internationalizing of capital, opening new markets and attracting new investments. This poses a great challenges to Nigeria. We agree with Usman that the Nigeria economy must not only be diversified, but also built on sound economic policies including those that will necessarily ensure increased domestic savings, continued  reform of the domestic financial sector, opening up to domestic capital inflows, while simultaneously  protecting the country from the huge destabilizing effects of short term speculative capital inflows and together with other developing countries, continue to champion the necessity for the reforms of  the global financial system that ensures shared prosperity and a greater inducement to the development of the weaker countries (Usman 1999:58).

 

 

2.2.1 FEATURES OF GLOBALIZATION

        The hall mark of globalization is thus, the promotion of the free market, individual, initiative, private enterprise ruthless competition and capitalism into a credo-the logic of the survival of the fittest becomes once again as in the 17th, 18th and early 19th centuries of the physiocrats, Adam Smithsonian and the  utilitarian economists. The weak people, the poor countries and their government are blamed for their lack competitiveness. The inexorable mix between competition and co-operation and between the public sector and the private sector in economic activities is downplayed.

The emphasis on competition and the market goes pari-passu with the credo to limit the economic role of the state and its government through the policy of privatization, deregulation and liberalization.

In the poor developing countries especially in Africa, this policy is the harbinger as well as the off shoot of the  structural Adjustment programme (SAP), imposed on the poor countries since the late 1980’s on the insistence of the international monetary fund (IMF) and the world Bank. One of the objectives of SAP with its measures and recurrency devaluations was to promote the development of the respective poor economics and to integrate them into the global economy.

Under the visible hands of president Ronald Reagan of the United State, and of Prime Minister Margaret Thatcher of Britain, the credo of less government but more market intervention in economic affairs became dominant and globalized Government meddling in economic affaires was said to spoil the market, distort competition, promote inefficiency, corruption and waste. Thus under the on-going economic globalization, many African governments are currently in whole sale privatization of State-owned and state controlled parastatals, companies and institutions including educational Institutions (Wikipedia the free encyclopedia 2007) privatization is alleged to be designed to achieve a diminished role of the state in the economy, so as to achieve greater economic efficiency through increased private participation and to raise revenue so as to reduce or repay the countries external or internal debts, lastly (2010:56), a debtor country is considered credible and entitled o economic  assistance, debt forgiveness or debt relief from its creditors only if it pursues policy in accordance with what the market believes to be sound, that is policies which create the enabling environment for the private sector and for the efficient operation of the market economy as certified by the “Traid”  and their agents- the IMF and the world Bank.

According to Aluko (2003) globalization further enjoins budgetary austerity. Currency devaluation and the loss of national economic sovereignty and control over fiscal and monetary policies of a compliant country, the central Bank, the ministry of finance and the annual budgets of the compliant country are re-organized and supervised by the IMF and the World bank, often with or without the consent of the nation’s government. A country that does not conform to the IMF/World bank performance targets as prescribed by the Traid, is blacklisted and has its debt-noose tightened. Good governance, incorruptibility, multiparty system of government, sustenance of democracy and human rights are additional attributes of globalization, even when the very nature of the economic and the political solution imposed by globalization on the country provides the practice of genuine democratization of the promotion of human rights and human dignity the result is that very few of the government of the globalized countries particularly  in Africa, meet the criterion of instituting or practicing true democracy.

Globalization has the tendency to destabilized the nation’s public finances by prescribing drastic reduction in the activities of the government, the dismissal, retrenchment and premature retirement of public employees, a drastic cut  in social programmes a ceiling on wages, increase in the prices of public utilities, the deregulation of the banking system and the liberalization of capital movements, including interests, profits and dividends, most of which the Traid because of the flight of capital from the poor countries for safe-keeping in the Triad. The receding influence and the reduced social commitment of the government which is an offshoot of globalization, increase unemployment, reduce social welfare services and reduces the standard of living of the lower levels of the population, thus increasing the number of those living below the poverty level in almost every developing country. In the attempt to react to the problems of increasing properly in most of the poor countries particularly in Africa, globalization has carried along with it, recent programmes of poverty alleviation as a social safety-net. Social emergently funds are established by government often at the promptings of the IMF/Work Bank to provide mechanism for managing alleviating or reducing poverty and attenuating social unrest caused by globalization itself.

2.3 GLOBALIZATION AND WORLD ECONOMICS

        Globalization as defined and as currently in operation has universal consequences not restricted to only Africa globalization has certainly brought some progress and new opportunities, technologies improved communication networks, new products and new opportunities. In the last 20years, the world infant mortality rate has reduced by more than  half, people on the average live about 20year longer and all time social political and military problems have been resolved or are being resolved globally in some parts of the world. Including Africa. On the other hands, more than half of the people in the developing, poor countries still lack access to basic health and education. Safe drinking water and adequate nutrition. Despite the increase global wealth, one out of three person in the world today lives in poverty has been increase in Africa.

Thus, Globalization is a two edged sword. It has brought benefit and misery. It has concentrated wealth in the hands of a diminishing few   while denying access to such wealth to an increasing many. For instance when a public monopoly is sold, it simply creates a private monopoly. Monopolies are not usually very economically efficient. Party because, they lack the stimulus of competition. Thus to promote economy efficiency privatization must be accompanied by an adequate legal and political framework which means more government rather than less which globalization decries (Aluko. 2003:41-42).

2.4 GLOBALIZATION AND THE NIGERIA ECONOMY

        Some of the essential instrument used by the west to useless our economy are privatization, deregulation and the controversial University autonomy. These are impetus of sapping our national resources for the manner and methodology of  their implementation  does not tally with the economic principles upon which Nigeria was based. Thus is turn has greater effect on the natural savvy. For instance, privatization even Margaret Thatcher who happened to be the fore runner of the privatization a pet project she initiated in 1979, has not closely understood the concept in its absolute term. The Nigerian economy has basically agrarian the relative share of agriculture including livestock forestry and fishing in the GDP, which was 65% in 1960/1961 declined sharpling to about 32% per annual in the 1990s. This inspire of the fact that the sector still constitute the source of employment and livehood for about three quarters of the population. up till the early 1980s the economy, the Naira was competing strongly with other foreign currencies by mid 1980s; the economy started declining  as foreign reserves becomes almost exhausted also foreign debt started accumulating at an alarming rate while the Naira lost its value relative to other currencies, obstfeld and Tarylor (2001:96).

On the other hand, globalization has affected the Nigeria economy greatly. Despite various challenges faced by the Nigerian economy during the time when Nigeria was still agrarian economy many changes has occurred by the integration of globalization into our economy globalization has affected our language, our culture religion and most importantly the way e dress the Nigerian economy  has experience a rapid change in its economy. For instance, it is through the integration of globalization that our industrial sector was able to   adapt to various industrial policy that has helped the economy to depending on the export of its product and not depending totally on.

2.5 GLOBALIZATION AND WORLD ECONOMIC

        Globalization as defined and as currently in operation has universal consequences not restricted to only Africa globalization has certainly  brought some progress and new opportunities, technologies improved communication networks, new products and new opportunities in the last 20 years. The world infect mortality rate has reduced by more than half. People on the average live about 20 years longer and all time social, political and military problems have been resolved or are being resolved globally, in some parts of the world including Africa. On the other hand, more than half of the people in the developing, poor countries still lack access to basic health and education, safe drinking water and adequate nutrition, Despite the increasing global wealth, one out of three persons in the world today lives in poverty has been increasing in Africa.

This, Globalization is a two-edged sword. It has brought benefit and misery, it has concentrated wealth in the hands of a diminishing few while denying access to such wealth to an increasing many for instance, when a public monopoly sold, it  simply creates a private monopoly. Monopolus are not usually very economically efficient, partly because they lack the stimulus of competition, thus to promote economic efficiency, privatization must be accompanied by an adequate legal and political framework which means more government rather than less which globalization decries (ALUKO 2003;41-42).

2.6 GLOBALIZATION AND THE NIGERIA ECONOMY

        Some of the essential instrument used by west to uselessour economy are privatization, deregulation and the controversial university autonomy. These are impetus of sapping our national resources for the manner and methodology of their implementation does not tally with the economic principles upon which Nigeria was based. This in turn has grater effect on the national sarry. For instance privatization even Margaret Thatcher who happened to be the force runner of the privatization a pet project she initiated in 1979, had not  closely understood the concept in its absolute  term. The Nigeria economy has basically agrarian the relative share of agriculture including Livestock, forestry and fishing in the GDDP which was 65% in 1960%/1961 declined sharply to about 32% per annum in the 1990s. This inspire of the fact that the sector still constitute the source of employment and live hood for about three quarters of the population. Up tell the early 1980s, The economy started decaling as foreign reserves becomes almost exhausted also foreign debt started accumulating at an alarming rate while the Nair lost its value relative to other currencies, Obstfelf and Tarylor (2001:96).

On the other hand globalization has affected the Nigeria economy greatly. Despite various challenges faced by the Nigerian Economy during the time when Nigeria was still agrarians economy. Many changes has occurred by the integration of globalization into our economy. Globalization has affected our language, our culture, religion and most importantly the way we dress. The Nigerian economy has experience a raid changes in its economy. For instance, it is through the integration of globalization that our industrial policy that has helped the economy to depend on the export of its produce and no depending totally on the importation of goods which affected our economy from the beginning before the advert of globalization tour economy.

2.7 GLOBALIZATION AND PUBLIC ENTERPRISES

        Where as selling up a public enterprise may bring the government a high one time income, the government will invariably lose the annual profits and the other combinative positive effects that such an enterprise could generate in the long run. If the public enterprises is sold to foreign investos, part of the profits and dividends is usually transferred abroad while control by the country over the economy diminishes. A more relevant question is whether economic efficiency is all that a government should pursue at the expenses of the social welfare of the people, particularly if healthcare, education, public utilities or transportation are private and the poor segments of the population loss access to the benefits from such utility services (ALUKO, 2003.42).

2.8 EMPIRICAL REVIEW

        Some empirical literature has been carried out by some great thinkers to help simplify the researchers work on the field of investigation on the impact of globalization on the industrial growth of Nigeria.

Fisher; (1994- 2001) sees globalization with many important dimensions-economic and social, political and environmental, cultural and religious which affect everyone in some way. He said this during the globalization conference held in Cameroun. He went on further elaborating that a nation can attract capital flows only though sound  macro-economic policies better government, legal and financial reforms privatization, price liberalization and infrastructural development.

Also Bill Clinton, former president of U.S.A sees Globalization as a fact and not a policy option. He says USA is a product of globalization whichwas achieved through the use of monetary and fiscal polices.

Based on the findings of Borda. E and Kim (1998) there was a relatively high digress of co-integration over the periods of 1980 to 1994 and 1983 to 1998 between the United Kingdom and france. This was due to the degree of long run co-integration of real interest rates.

Folasfade and Ola (2000) analyzed the impact of trade liberalization and technological acquisition on the industrial sector in Nigeria; theory employing a model that measure the exert of technological development on the dependent variable, while size of the firm, export volume, age of the firm, capacity-utilization, trade liberalization and infrastructure were used as  explanatory variable. Their conclusion was that liberalization has forced most firms to undertake some technological acquisition as a result of widespread access to capital equipment as a strategy for survival, through some firms had to fold up hence raising the economic efficiency of others due to the enlarged resources released to them.

The finding of Ninsin (2000) suggest that 13 percent of   firms surveyed has already set up offshore production in the near future. A study conducted by Anyanwu (2002) showed that manufacturing capacity utilization rate has fallen from an average of 70 percent from the period of 1990 to 30 percent in 1996-1998 owning to infrastructural decline failures and other problems inherent in the aiming. Velunently therefore infrastructural failures and decline have been part of sector and economic performance which has significant effects on nation’s GDP growth.

Egwakhide (1997) presents a review of studies on Nigeria’s import substitution. Industrialization evidence from the study shows that we implementation of this model of development aggravated the problem of balance of payments as its increasingly  relied on foreign inputs, technological inputs and expertise for production. It is inferred from the study , wile it was early for Nigeria to achieve the early stage of import substitution industrialization. It was exceedingly difficult to proceed to the  more difficult stage of producing capital goods.

Adebayo (2002) in his view of globalization and industrialization process posits that those who win are those who trade in goods and services characterized by increasing returns. The pace and structure of globalization and industrialization are usually dictated by the winners. While in the past, globalization and industrialization process were dictated by colonialism and gunboat diplomacy, in recent years, it is driven by more sub-tee ideology propagated by the international financial instructions and the World Trade Organization (WTO). However, much of the financial flow over 60 percents speculative rather than developmental. Thus, in this regard, Globalization has always led to the de-industrialization of losers at the expense of winners.

Ayodele and falojun (2003) on their work attempt to examine the structure of the Nigeria Industrial sector. In their analysis it was observed that industrialization is central to economic growth and development. This is because the excess labour resource in the country are expected to be absorbed by the desired positive development in the process of Industrialization.

The study further addresses a major research issue on the extent to which Nigeria is ready for effective Industrialization within  the ongoing globalization process. Following from this, the study came up with certain facts which are apparent from the implications of the implementation of SAP policies. These include the unit able political economy, the weak base for competition at the international market for manufactured  products which had been further eroded by excessive cost of production and poor quality  of its products and the gross erosion  of the naira value due to the depreciating exchange  rate- the study concluded that the imperative for emerging the industrial transformation  in Nigeria lies in detecting  the cause of these anomalies and subsequently eliminating them in order to create a conclusive industrial environment.

Onyeonru (2003) in his study “globalization and industrial performance” aimed to verify if the globalization project was associated with a process of de-industrialization. The methodology used in carrying out his objectives was radical organization theory outlined by Burell and Morgan. It was selected for its usefulness for explaining the relationship between the economic crisis and macro socio-economic element of globalization. The food beverages and tobacco industry was selected as the case study. The finding of his research theory are that the globalization activities in the structural adjustment programme (SAP) period accounted for the depreciation in the value of the Naira. The steep devaluation in the naira during the SAP period introduced high rate of inflation, which adversely affects industrial operations, especially in the manufacturing sector. The conclusion of  his study is that globalization programmes have been associated with a period of de-industrialization.

Stigliz (1998) in his study, “globalization and its discontents”  averted that globalization has a large potentials for the world economy and can be of hugs benefit to under developed  countries and even a viable plan for the development of under developed economics of the world suggesting various  reforms of the international economic and financial institution and a fundamental transformation of the governance process of especially under develop countries as a necessary condition for a positive impact of globalization on the development process of under developed  countries.

The methodology used was united nation data report. He found out that the reforms mentioned above are contingent on the developed economics that are satisfied with the ways and manner globalization is being  conducted and have being active  sustaining it. He conclude that the artificial construction of the world economy by the industrialized countries is meant to serve the purpose of economic and political dominance of the group of industrialized countries, over the countries, but they need to establish a convergence among them in order to minimize the likely effect of undermining each other.

2.6 EFFECT OF GLOBALIZATION NIGERIA INDUSTRY

The enhancement of industrial development has been a major policy focus in Nigeria since the 1970s. The favourable policy stance of the federal government toward the industrial sector might have been informed by the obvious positive relationship between industrialization and general development of the Nigeria economy. In this regard the federal government adopted various measures to encourage investment in the sector. The statement of fiscal and monetary policy objective in the 1960s and 1970s emphasized the need to protest the infant (import substitution) industries. However, these strategies appear not to have created the necessary foundation for an industrial revolution  in the society.

For instance, a review of import substitution industrialization  by Egwuikhide (1992) shows that Nigeria’s  import substitution programmed exacerbated the foreign exchange problems; while the production techniques of the protected industries were capital intensive with low absorption capacity . In the 1980s the economy took a different turn, partly due to decling oil revenues, inconsistent and macro economic policies and intensive primitive accumulation. All austerity and stabilization measure put in place failed to reverse the declining trend (Ekpo 1995) Depending economic problems predicated the adoption of the structural adjustment programme (SAP) from July 1986 of which trade liberalization has a major element. It was expected that a liberalized trade regime that a liberalized trade regime would stimulate industrial output expansion and enhance a better performance of the economy (frased et al 2003) however contrary to expectations that towards SAP policies would shift production and trade towards outward orientation. The industrial sector seems not to have made any significant contribution to export earnings.

According to Madunagu (1991) 1040 (2000) and Obaseki (1999) that globalization have led to the creation of parasitic economic relationship and has systematically  pushed Nigeria into economic crisi as industrial operating in Nigeria cannot compete with industries in advanced countries of the world most especially Europe and America.

 

2.7 BENEFITS OF GLOBALIZATION

Globalization enables greater trade and competition between different economics, leading to lower princes, greater efficiency and higher economic growth. It provided economic independence and  triggers competitition  stimulating globalization to  elevate the lung standard of people in the nation that offer themselves to the world trade  I have moved from a world  where the big  eat the small to a world where fast eat the slow” as observed  by Klaus Chewas of the Dawob world economics forum all Economic analysis must  agree that the living standard of  people have  considerably  improved through the market growth with the  development in technology and their introduction in the  global markets, there is not only a steady  increasing demands but also it has led to greater utilization.

Another factor which is often considered as a positive outcome of globalization is the lower inflation. This is because the market rivalry stops the business from increasing  prices unless guaranteed by productivity technological advancement and productctivity expansion are to other benefit of globalization because since 1970s growing international rivalry has trigger the industries to improve greatly.

Globalization has rapidly improved the social and economic status of women in the developing world. The explanation is based on the fact that in a competitive globalized world the role of women becomes ever more valuable.

Also Globalization helps in breaking the regressive taboos responsible for discriminating against people in basis of gender race or religious beliefs. It is an antic lose to the intolerant fundamentalism that appears to oppress millions of the world poorest globalization offers hope for the world’s poorest, hope that one day they may enjoy the fruits of the west’s liberal tradition.       

 

CHAPTER THREE

METHODOLOGY

3.1   PREVIEW

Having reviewed the related literatures this chapter clarified and details the procedures, techniques, the collection and analysis of data used for this work.

3.2  RESEARCH DESIGN

        Research Design has to do with the development of strategies for finding out something (Anyanwu 2000). This study percents a relationship between globalization and the industrial growth in the Nigeria Economy as postulated in the theoretical and empirical analysis.

However, casual research design is adopted to investigate the impact and effect of the relationship between the time serves value of the problem of research inters spanning from 1986-2014. In other words the data used in the study was a secondly data whereas ordinary least square (OLS) was employed to determine the relationship between the dependent and independent variable under investigation.

 

 

 

3.2 MODEL SPECIFICATION

        A model was stated a multiple regression equation establishing the relationship between the dependent and independent variable. Thus the model expression is stated thus;

Y = F (EXCH, FDI, INT,OPN)

Y = bo+b1 X1+b2 X2+B3 X3+B4 X4+Ut

IND = bo + b1 EXCH + b2 FDI + b3 INT+ b4 OPN +Ut

Where;

IND = Industrial GDP

EXCH = Exchange Rate

FDI = Foreign Direct Investment

INT = Interest Rate

OPN = Openness

bo = Intercept

b1– b4 = partial slope coefficient of estimated parameters

Ut = error term/stochastic variables.

 

 

3.2.1 THE A PRIORI THEORETICAL EXPECTATION.

        The theoretical expectations which are set by economic theory concern the sign and size of the coefficient. Given the above equation, the a priori expectations are as follows.

The parameter b1 is expected to have a positive sign which shows a direct relationship between exchange Rate and Industrial GDP.

The parameter b2 is expected to have a positive sign to show a direct relationship between FDI and industrial GDP.

The parameter b3 is expected to have a positive sign which shows a direct relationship between interest Rate and the Industrial GDP.

The parameter b4 is expected to have a positive sign to also show direct relationship between the openness and the dependent variable.

3.3 SOURCES OF DATA

The data on exchange rate, foreign Direct investment, interest  Rate and Industrial across Domestic product were  sources from central Bank of Nigeria (CBN) Bulletin and Annual Report and openness was sourced by import-export/GDP.

Osuji (2009:2) Optioned that the idea is to establish a structural relationship between the variable of interest and to these we require data, range from the period of 1986-2012 (29 years) for proper findings and analysis.

3.4 METHOD DATA ANALYSIS

        To determine the direction of causal relationship between the various variables, the Ordinary Least Square (OLS) technique will be used to estimate above equations. According to Gujarati (1995) the reasons for using OLS are many. Firstly, the parameter estimates obtained by OLS are optimal in nature. Secondly, the computation proce­dure is fairly simple as compared with other econometrics techniques. Thirdly, the OLS has been used in a wide range of economics relationship with fairly satisfactory results. Lastly, the technique is simpler to under­stand.

  • Individual Test (T-Test)
– a/2
a/2
Rejection Region
Rejection Region

The t-test shows the individual impact of the independent variables and its usefulness to the model. A two-tailed test is conducted at 5% level of significance, under n-k degrees of freedom. Where n is the number of observations and k is the number of samples.

 

 

 

Decision Rule

  • If t-calculated is greater than t-tabulated, reject the null hypothesis (H0) and accept the alternative hypothesis (H1).
  • If t-calculated is less than t-tabulated, accept the null hypothesis (H0) and reject the alternative hypothesis (H1
  • Joint Test (F-Test)
O
Acceptance Region

a

Acceptance Region

a

Rejection Region

Acceptance

Region

The F-test is used to test overall significance of the regression model. It provides the impact of the dependent variable on the dependent variable. Graphically,

 

 

 

 

 

 

Decision Rule

  • If f-calculated is greater than f-tabulated reject the null hypothesis (H0) and accept the alternative hypothesis (H1) on the ground that the result is significant.
  • If f-calculated is less than f-tabulated accept the null hypothesis (H0) on the ground that the result is insignificant.
  • R² (COEFFICIENT OF DETERMINATION) AND ADJUSTED R² TEST (MULTIPLE COEFFICIENT OF DETERMINATION)

This test is carried out to the strength of the independent variables in explaining the changes in the dependent variables. Gujarati ( 2004: 217) has noted that changes in the adjusted R² should be treated as another summary statistic. The R² is reported as the multiple coefficient of determination adjusted to take into account the degree of freedom associated with the sum of square.

  • TEST FOR AUTO CORRELATION

This is to test whether the errors corresponding to different observations are uncorrelated. The test will adopt the Durbin-Watson statistic because of the presence of the lagged dependent variables as are of the regressors, which indicates that the model is an autoregressive model (Gujarati, 2004).

 Decision Rule

If DW value closer to zero, there is positive autocorrelation.

If DW value closer to four, there is negative autocorrelation.

If DW value closer to zero, there is no positive autocorrelation.

  • MULTICOLLINEARITY TEST

Multicollinearity is the situation in which there exists linear relationship or near linear relationship among explanatory variables in a regression model. The variance inflation factor is used to test if the explanatory variable is highly correlated. Multicollinearity is a problem which arises in multiple regressions, when the explanatory variable is not itself independent. It makes it impossible to fit significant coefficient to explanatory variables, which are related to one another.

Decision Rule

If VIF (ai)> 10: there is significant multicollinearity.

If VIF (ai) < 10: there is no significant multicollinearity

  • Decision Rule for Condition Index (CI)

If C.I (âi) £ 10: There is low multicollinearity

If C.I (âi) ³ 30: There is severe multicollinearity

If 10 £ C.I (âi) £ 30: There is moderate multicollinearity

Where i = 1, 2, 3…….n

 

 

 

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS

4.1   DATA PRESENTATION

Data on industrial gross domestic product (IND), exchange rate (EXCH) foreign Direct investment (FDI), interest rate (INT) and openness (OPN) in Nigeria from 1986 to 2014.

Table 4.1

YEAR IND EXCH FDI INT OPN
1986 14470.80 4.60 9313.6 12.50 53
1987 18226.40 4.0 9993.6 9.25 86
1988 16392.90 4.5 11339.2 10.50 93
1989 34477.30 7.4 10899.6 16.50 121
1990 41200.30 8.0 10436.1 25.3 156
1991 98596.70 9.9 12243.5 20.0 212
1992 11559.40 17.3 20512.7 24 350
1993 136677.70 22.1 66787.0 8 384
1994 274755.30 21.9 70714.6 31.6 369
1995 282305.90 21.9 119391.6 20.5 1706
1996 283563.10 21.9 122600.9 20.2 1872
1997 893884.70 21.9 12833.8 19.8 2087
1998 1293225.60 21.9 152409.6 17.8 1589
1999 1215912.20 92.7 154188.6 18.2 2052
2000 882034.00 106.72 157535.4 20.3 2931
2001 1179551.20 111.94 162343.4 23.4 3226
2002 2359313.30 120.9 166631.6 24.8 3257
2003 1874083.90 129.4 178478.0 20.7 5169
2004 2042716.40 133.5 249220.6 19.2 6590
2005 3037706.30 132.1 269844.7 18.0 10047
2006 4160083.70 128.7 302843.3 16.9 10479
2007 6094891.30 125.8 364008.5 16.9 12295
2008 7488743.50 130.8 49456.7 15.5 15157
2009 8085380.00 147.6 49429.4 18.4 13855
2010 9941325.2 148.7 51036.60 176 16765
2011 7972490.00 156.20 56813.40 16.0 17173
2012 1571905.00 156.0 60109.00 16.8 17882
2013 8321461.00 158.0 63814.50 16.7 18902
2014 9168011.00 158.0 71238.60 16.6 20132

 

Source: Central Bank of Nigeria Statistical Bulletin (2014)

 

The table 4.1 above showed the various variables used in this research work which include, industrial gross domestic (IND), exchange rate (EXCH), foreign direct investment, interest rate and openness. The data from 1986 to 2014.

IND in 1986 was stated at N14470.80m and it increased to N98596.70m in 1991. It grew continuously and was stipulated N873884.70m in 1997 and N1293225m in 1998. In 2002, IND was N2359313.30m and it fell to N1874083.90m in 2003. From 2005 to 2009, it grew by N5047673.7m. N83214161.00m and  N9068011.00m in 2013 and 2014 respectively.

EXCH increased from 4.60 in 1986 to 99 in 1991. In 2006, it was stipulated at 128.7 and it dropped to 125.8 in 2007. And in 2009 it grew to 147.6. in 2010, it was estimated at 148.7 and increased to 158 in 2014.

FDI was estimated at N10436.1m in 1990 and N66787m in 1993. It grew at an increasing rate and as at 1997. It was estimated to be N126331.8m. FDI increased from N157535.1m to N163343.4m form 2000 to 201. In 2008, FDI stood at N49456.7 and N51036.60 in 2010, N6109m in 2012.

Interest rate measured in percentage basis. In 1992 interest rate measured in percentage basis. In 1992, interest rate in Nigeria was measured at 248%and 205% in 1994. In 1997, interest rate was stated at 17.5% and it decreased to 16.9% in 2006 and also decreased to 155.% in 2008. It increased to 18.4% in 2009 and 16.7% in 2013.

Openness was valued at N350bn in 1991. N1706bn in 1995 and N2052bn in 1999. It grew steadly and stood at N6590bn in 2004, N13855bn in 2009, N16765bn in 2010, N17134bn in 2001 and N20132 in 2014.

 

 

4.2   DATA ANALYSIS

Estimated regression line =

IND=    9397.951+ 9640.72EXCH – 4.600 FD + 1034.25INT + 353.54 OPN

Std err =              11808.090           4.323        67746.122      102.479

T-values =              0.816               1.064         0.153           3.450

VIF =                             6.957               1.591         1.153           6.476

C.I=                       2.553               3.669         10.428          13.49

F(4,24) = 28.197, Durbin – Watson (DW) =1.786

R2 (coefficient of determination) = 0.825

R2 (Adjusted coefficient of determination) = 0.795

4.2.1        INTERPRETATION OF REGRESSION COEFFICIENTS

Industrial Gross Domestic Product (IND) is equal to 9397.95 units when exchange rate, foreign direct investment interest rate and openness are held constant.

The coefficient of exchange rate is 9640.72. this shows that there exist a positive relationship between EXCH and IND. Other things being equal if EXCH increases by one Unit; IND will increase by 9640.72 units. This result is in line with the prior expectation.

The coefficient of interest rate is 10347.249. This indicates a positive relationship between INT and IND. A unit rise in INT will increase by 10347.249 units other things being equal. This result is also not in line with the a priori expectation and it can be attributed lack of proper implementation of monetary policy of authorities.

The coefficient of openness is 353.536. This indicated a positive relationship between OPN and IND. A one unit rise in OP witll increase IND by 353.536 units other things being equal. This result is in line with the a prior expectation.

4.3   TEST OF HYPOTHESES

4.3.1 INDIVIDUAL TEST (T-TEST)

The t-test is used to test the significance of individual parameter estimates. A two-trailed test is employed with n-k degree of freedom at 5% level of significance.

Decision rule

If t-calculated > t-tabulated, reject Ho

If t-calculated < t-tabulated, accept Ho

T-tabulated = tn-k, 0.05

2

T28-5, 0.05 = 2.069

Test of hypothesis one

Ho:   Exchange rate has no significant impact on industrial gross domestic product in Nigeria.

H1:    Exchange rate has a significant impact on industrial gross domestic product in Nigeria.

T-calculated  (EXCH) =  a1  =   9640.72        =0.816

S.ECa7   11808.090

t-cal (EXCH) = 0.816

t-tab = 2.069                     t-cal < t-tab

Rejection region
Rejection region
Acceptance region
-2.069-0.816       0.816   2.069

 

 

 

 

 

Interpretation

Since t-calculated (0.816) is less than t-calculated (2.069) accept the null hypothesis and conclude that exchange rate has no significant impact on industrial gross domestic product on Nigeria. This result can be traced to political instability and poor governance in the economy.

 

TEST OF HYPOTHESIS TWO

Ho2:  Foreign direct investment has no significant impact on indusial gross domestic product in Nigeria.

Hi2:   Foreign direct investment has significant impact on industrial gross domestic product in Nigeria

 

T-calculated  (FDI) =     a2   =    4.600 = 1.064

S.E(a2)      4.323

t-tabulated = 2.069

t-cal < t-tab

Rejection region
Acceptance region
-2.069  -1.064    1.064   2.069
Rejection region

 

 

 

 

 

 

Interpretation

Since t-calculated (1.064) (absolute value) is les than t-tabulated (2.069), accept the null hypothesis and conclude that foreign direct investment has no significant impact on industrial gross domestic products in Nigeria. This result can be traded to price decline in crude oil and substantial losses in terms of trade.

TEST OF HYPOTHESIS THREE

Ho3:  interest rate has no significant impact on industrial gross domestic product

Hi:    interest rate has significant impact on industrial gross domestic product

t-calculated  (INT) =     a3   =    10347.249     = 1.064

S.E(a3)      67746.122

t-tabulated = 2.069

t-cal < t-tab

Rejection region
Acceptance region
-2.069  -1.153    1.153   2.069
Rejection region

 

 

 

 

 

 

 

Interpretation

Since t-calculated (0.153) is less than t-tabulated (2.069) accept the null hypothesis and conclude that interest rate has no significant impact on industrial gross domestic product in Nigeria. This can be as a result of macroeconomic failures and poor management of resources in the economy.

TEST OF HYPOTHESIS FOUR

Ho4:  Openness has no significant impact on industrial gross domestic product in Nigeria.

Ho:   Openness has significant impact on industrial gross domestic product in Nigeria.

t-calculated  (OPN) =     a4   =    353.536       = 3.450

S.E(a4)      102.476

t-tabulated = 2.069

Rejection region
Acceptance region
-3.450 – 2.069    2.069   3.450

t-cal > t-tab

Rejection region

 

 

 

 

 

 

Interpretation

Since t-calculated (3.450) is greater than t-tabulated (2.069) reject the null hypothesis and conclude that openness has a significant impact on industrial gross domestic product in Nigeria.

 

4.3.2        JOINT TEST (F-TEST)

This test shows the overall performances of he regression model. it shows if the explanatory variables jointly have a significant impact on the dependent variable

This test is conducted at 5% level of significance

Decision rule

If f calculated > f-tabulated, reject Ho if otherwise accept Ho

Hypothesis testing

Ho:   Exchange rate, foreign direct investment interest rate and openness jointly have no significant impact on industrial gross domestic product in Nigeria.

Hi:    Exchange rate, foreign direct investment interest rate and openness jointly have a significant impact on industrial gross domestic product in Nigeria.

Level off significance = 0.05

f-calculated = 28.197 (regression result)

f-tabulated = f4, 24, 0.05 = 2.78

f-cal (28.177) > f-tab (2.78)

 

Rejection region
Acceptance region
2.78                28.197

 

 

 

 

 

 

Interpretation

Since the f-calculated (28.197) is greater than the f-tabulated (2.78), reject the null hypothesis and conclude that Exchange rate, foreign direct investment interest rate and openness jointly have a significant impact on industrial gross domestic product. This shows that the model is adequate and plausible.

4.3.3        TEST OF GOODNESS OF FIT

From the regression result , the coefficient of determination value is 0.825 (82.5%) and the adjusted coefficient of determination value is 0.795(79.5%). This indicates that exchange rate, foreign direct investment, interest rate and openness explains approximately 80% variations in industrial gross domestic product while the remaining 20% is being accounted for by factors not included in the model 80% shows a good fit for the model.

 

4.3.4        TEST FOR AUTOCORRELATION

The test for autocorrelation is conducted using the Durbin Watson statistics. From the regression result, Durbin Watson value is 1.786. this value is closer to 2 which indicates the absence of positive of positive autocorrelation in the model.

4.3.5        TEST FORMULTICOLLINEARITY

The test for multicollinearity is conducted using variance inflation factor (VIF)

Decision rule

If VIF (ai) > 10: High multicollinearity

If VIF (ai) < 10: Low multicollinearity

I=1, 2, 3…………… n

  • For EXCH

VIF (EXCH) = 6.957

6.957 < 10

Interpretation: there is low multicollinearity

  • For FDI

VIF (FDI) = 1.591

1.591 < 10

Interpretation: there is low multicollinearity

  • For INT

VIF (INT) = 1.153

1.153 < 10

Interpretation: there is low multicollinearity

  • For OPN

VIF (OPN) = 6.476

6.476 < 10

Interpretation: There is low multicollinearity

4.4 DISCUSSION OF FINDINGS

The study analyzed the impact of globalization on the industrial sector in Nigeria. The study spanned from 1986 to 2004. The findings of the study reveal that.

Exchange rate has a positive relationship with industrial gross domestic product. Other things being equal; if EXCH rises by one unit, IND will rise by 9640.72 units. This result is in line with the prior expectation. Foreign direct investment has a negative relationship with industrial gross domestic product. A one unit rise in FDI will decrease. IND by 4.600 unit other things held constant. This can be seen as a result of economic distortion in the economy and corruption interest rate has a positive relationship with industrial gross domestic product. A one unit increase in INT will increase IND by 10347.249 units. This result is inconsistent with the a prior expectation and it can be traced to lack a proper implementation a monetary policy. Openness has a positive relationship with industrial gross domestic product. A unit rise in OPN will increase IND by 353.536 units other things being equal. This result is in line the prior expectation.

The test was used to text for the individual significance of the parameter estimates. It was showed that; openness has a significant impact on industrial gross domestic product while; exchange rate, foreign direct investment and interest rate individually had no significance on industrial gross domestic product in Nigeria. This can be attributed to political instability, macroeconomic failures, poor resources management and substantial losses. In the term of trade

The joint test revealed that exchange rate, foreign direct investment, interest rate and openness jointly have a significant impact on indusial gross domestic product at 5% level of significance. This shows that the model is adequate and fit for policy making and forecasting.

The adjusted coefficient value of 0.80 shows that exchange rate, foreign direct investment, interest rate and openness explains 80% of variations in industrial gross domestic product while the remaining 20% variation is being explained by factors not included in the model. 80% shows a good fit for the model.

The Durbin-Watson value of 1.786 which is closer to two than zero indicates the absence of positive autocorrelation in the model while the multicollinearity test shows that there is no multicollinearity test shows that there is no multicollinearity among the explanatory variable.

 

 

CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATION

5.1   SUMMARY OF FINDINGS

The study investigated the impact of globalization on the Nigerian industrial sector from 1986 to 2014. The findings of the study reveal that;

Exchange rate has a positive relationship with industrial gross domestic product. A one unit increase in EXCH will increase IND by 9640.72 units. Foreign direct investment has a negative relationship with industrial gross domestic product. A one unit rise in FDI will reduce IND by 4.600 units. Interest rate has a positive relationship with industrial gross domestic product. A one unit rise in INT will increase IND by 10347.249 units. Also, openness has a positive relationship with industrial gross domestic product. A one unit rise in OPN will increase IND by 353.536 units other things being equal.

The individual test shows that, only openness has a significant impact on industrial gross domestic product which exchange rate, foreign direct investment and interest respectively has no significant impact on industrial gross domestic product at 5% level of significance.

The joint test conducted at 5% level of significance showed that exchange rate, foreign direct investment, interest rate and openness jointly have a significant impact on industrial gross domestic product in Nigeria.

The test of goodness of fit of the model was conducted using the coefficient of determination. It was revealed that exchange rate, foreign direct investment, interest rate and openness explains 80% variations in industrial gross domestic product while the remaining 20% were explained by factors not included in the model. The test for autocorrelation was conducted using Durbin-Watson statistics it showed that there is no positive autocorrelation in the model and also, the multicollinarity test showed that there is no multicollinarity among the explanatory variables.

5.2   CONCLUSION

Economic globalization can play an important role in encouraging development of institutions so that financial markets can effectively perform the crucial function of getting capital to its most productive uses which is a key to generating growth and reducing poverty. However, as we have seen although financial globalization can be a strong force for good, it can also go very wrong if a country does not always work to encourage economic development because if often leads to devastating financial crisis. The issue is thus not whether globalization is inherently good or bad but whether it can be done right. The increased likelihood that countries will experience financial crisis when they open up their financial market to orign capital explains why there is no clear cut relationship between globalization and economic growth. Bad polices are the reasons that development does not occur and why globalization often leads to harmful financial crises. Instead of rejecting globalization, we can greatly improve the environment for economic growth if we develop policies that promote successful economic development and globalization

5.3   RECOMMENDATIONS

In the light of the findings, the following recommendation are made

  1. Government should cultivate a healthy economic environment in order to attract long-term foreign investment and allowing domestic markets to operate in stability, protecting the investor’s rights and obligations.
  2. Nigerian government should ensure continuous openness of its economy in a beneficial way and as well put up measures to stem up the confidence of investors in the activities of the industrial sector output.
  3. Government should ensure that the rate of exchange is steady in a manner that would encourage people to involve in economic activities.
  4. Government should double its spending effort on infrastructure (such as power generation, portable water and good road networks) base of the economy to encourage influx of expatriates to invest in Nigeria.
  5. Government should property establish and sustain overtime and generate production externalities that could spearhead industrialization, economic growth and development for a virile and prosperous economic future for the undeveloped countries a=of the world, which will inadvertently strengthen their status within the confluence of globalization.
  6. Government should ensure that both financial and capital markets in Nigerian are strengthened and interest rate regulated in order for potential investors to have confidence in the source of start-up capital.

 

 

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