THE IMPACT OF TRADE LIBERLISATION ON EMPLOYMENT GROWTH IN NIGERIA
BACKGROUND OF THE STUDY
The issue of employment is very germane to any economy; this is why one of
the main macro-economic objectives of any country is to attain full employment. The issue of employment is paramount to Africa and Nigeria in particular, where high-level poverty is obvious with rising unemployment rates. However, in order to combat the problem of poverty, Oni (2006) argued that reducing the level of unemployment will increase the income level in the economy and thereby reduce the level of poverty. To increase the level of employment, some scholars have argued that the flow of goods and services (trade flows) could propel employment generation,especially in developing countries.
According to Pieper(2006), growth in employment has a feedback on economic growth, such that an increase in
labour incomes would expand domestic demand, which in turn would lead to sustainable GDP growth and
reducing risks of excessive reliance on uncertain foreign markets. Given this fact, trade can absorb Nigeria’s surplus
labour and this can go long way in alleviating poverty for the majority of the poor Nigerians.
Economists have long been interested in factors which cause different countries to grow at different rates and achieve
different levels of wealth. One of such factors is foreign trade. Nigeria is basically an open economy with international
transactions constituting a significant proportion of her aggregate output. To a large extent, Nigeria’s economic
development depends on the prospects of her import and export trade with other nations. Foreign trade provides both
foreign exchange earnings and market stimulus for accelerated economic growth (Obadan, 2004). Nigeria’s relatively
large domestic market can support growth but alone cannot deliver sustained growth at the rates needed to make a
visible impact on unemployment and poverty reduction. Hence Nigeria has continued to rely on foreign market as well (World Bank, 2002).
Many economists generally agree that openness to international trade accelerate development. The more rapid
growth may be a transition effect rather than a shift to a different steady states growth rates, clearly, the tradition
takes a couple of decades or more so, that is, it is reasonable to speak of foreign trade openness accelerating growth
rather than merely leading to a sudden onetime adjustment in net income (Dollar and Kraay, 2001).
Nigeria is characterized with a ‘dualistic’ labour market in which the minority of workers have regular formal sector
jobs, while majority works in the informal sector, with a large pool of surplus labour. This is seen from its rapidly
increasing labour force.The impact of trade liberalisation on employment growth in Nigerian economy; considering the
vision of the country, the welfare of its people and its economic position in the world today, tend to be a special area of interest for the academic world and for policy makers.
THE IMPACT OF TRADE LIBERLISATION ON EMPLOYMENT GROWTH IN NIGERIA