BACKGROUND OF THE STUDY
Aside from the fact that trade is inevitable in any
economy and because countries are not equally endowed, trade is required as the
engine of growth (Robinson, 1999).This is for the major reason why the
importance of trade to a nation like Nigeria cannot be overemphasized .This is
because, it has realized that most of the Nigeria's investment funds are
directly influenced by the outcome of its source of investment funds depends on
its export trade.
Therefore, if trade fails to perform these important roles,
serious macroeconomic problem could result. The problems among others include;
huge external debt, balance of payment deficit and chronic inflationary
pressure (Giddens, 1996).
Niger economy is being referred to as a developing
economy rather than developed when compared its level of development with that
of other countries that they took off at same time.
However, trade liberalization implies free trade as its
origin is classical in nature and it calls for perfect competition, under which
a small price taking country will gain by eliminating or reducing tariffs and
thus trade almost freely. Trade liberalization increase variably of goods and
raises productivity by providing less expensive or higher quickly intermediate
goods via free trade.
Trade liberalization as earlier mentioned implies free
trade which can only occur in an open economy .An open economy encourages an
open trading environment and it is also associated with a transfer of know-how,
which can occur in a process that we can describes as Osmosis .Observation has
proved that what (J.S.Mill, 1996) said a hundred years ago is still
substantially true as regards the above arguments.
Fit is hardly possible to over rate the value in the
present low state of human improvement of placing human beings in contact with
person's dissimilar to themselves and with those which they are familiar with.
Trade liberalization basically entails the opening up of
the domestic economy to the rest of the world through trade and careful
planning by policy makers. The reasons behind the innovation of trade policy
are wide and diverse ranging from anti-station, poor economic performance;
information to World Bank pressure (DMBUSCH, 1992).The policy helps to faster a
transition for economic growth and enhancement of domestic for a country .Among
the policy's many advantage, it has risen and this is visible in most developing
countries of the World.
However, the World Bank(1992) supported structural
Adjustment Programme, introduced in Nigeria the third quarter of 1986,made the
manufacturing sector pivotal to structural change and the growth of the
Nigerian economy .Since the introduction of SAP ,Given the low level of
industrialization and the SAP ,induced underutilization of industrial capacity
in Nigeria economy, trade liberalization under the guise of globalization has
translated into the restriction of Nigeria primary commodities is externally
determined .This thus put Nigeria into a powerless situation where she lack
direct control over the crisis in her economy because her hands are tied by the
terms and dictates of globalization.
In light of the forgoing description of the manufacturing
sector for the past two decades. Nigeria was qualifies as country experiencing
deindustrialization. There is thus the inevitable need to determine whether a
manufacturing sector operating in the types of Nigeria economy is equipped and
can operate favorably as well as cope with the rigorous and dictates of
1.2 STATEMENT OF
One of the greatest problems facing the trade
liberalization on manufacturing sector is the problem of capacity utilization
in the manufacturing sector. The problem become more pronounced and aggravated
by the structural Adjustment Programme (SAP) and more recently. The
manufacturing sector is on the verge of collapse with thousands of workers
being thrown out of job .Again, Nigeria had also become a dumping ground for
all kinds of foreign products. There is thus the inevitable need to turn the
search light on globalization and all that accompanied it and examine the
impact on the Nigeria manufacturing sector. This is with a view to examine
whether it is beneficial or not and to suggest how Nigeria's interest can be
protected under the global agenda or arrangement if Nigeria must continue to
participate in it.
The influence of trade policy on a country's economic wellbeing
is one of the most widely debated topics in economics, yet the question on how
trade liberalization restrictiveness should be received and its impact on the
manufacturing sector has received little attention in the past. In most
economies especially developing countries actual system of trade interaction are
pervasive and highly complex. The poses a challenges for analysis and policy
makers' alike. In the face of a
beroildenning array of tariffs and quantitative restriction, it can be
extremely difficult to assess the time orientation of a country's policy change
that encourages trade on some product line and discourages it in others.
It is difficult to evaluate proposals for trade
liberalization that part of a stabilization package or to assess the progress
made in moving towards a less restriction trade especially in the area of
manufactured goods. It is therefore intention of this study to provide a
coherent exposition of the major trade policy changes in Nigeria over the
period of 1970 2004 and use a model that come close to the complexity of a real
world structure to indicate the trade liberalization episodes in Nigeria and
its impact on the manufacturing sectors during this periods.
The manufacturing sectors have an important implication
for development strategies and policies as it helps to decides whether the
policies should be discourages and adopt the new policy that is being advocate
This research work will seek to find answers to the
i. What role does trade liberalization play
on the manufacturing sector of Nigeria economy?
ii. What are
the problems facing trade liberalization?
iii. What are
the impacts of government policy on trade liberalization?
iv. What are the views of trade
liberalization on manufacturing sector?
1.4 OBJECTIVES OF THE STUDY
The general objective of this research work is to examine
the impact of Trade Liberalization on manufacturing sector in Nigeria.
i. To examine the determinant of growth on trade in Nigeria.
ii. To examine the extent to which trade liberalization has
contributed to manufacturing sector performance.
iii. To analyze the features of the major trade
policy changes have occurred between 1991 to 2005 period in Nigeria.
examine the rate of growth in the manufacturing sector during the
1.5 SIGNIFICANCE OF THE STUDY
The study would contribute to existing literature on
trade liberalization especially its justification. The study would evaluate the
importance of trade liberalization by examining its impact on the growth
process of the economy. The study IS significant
in the following ways:
i. It would help to take a stand on the controversial role
of trade liberalization in the manufacturing sector of developing countries
with special focus on Nigeria
ii. The research would help to identify the
factors hindering trade relations with other countries.
iii . It would also help to evaluate the
performance of different trade policies Nigeria government has adopted
iv. The research would also be an invaluable
tool for students and researchers that want to know more about the effect of
trade liberalization on the manufacturing sector or Nigerian economy
1.6 SCOPE AND LIMITATION OF THE
This study will focus on external trade and not internal
distributive trade. It will cover a period of fourteen years (14years) which is
between the periods of 1991- 2005.
This period is chosen because it is significant in the
Nigeria economy. It is oil boom of 1970s, the subsequent recession in the
economy and the introduction of the Structural Adjustment Programme (SAP) where
is part of the trade liberalization policy.
The study is constrained by time couple with reluctance
on the part of government officials in charge of relevant information in making
them available for analysis. The inadequacy of up-to date information will
greatly impede the study.
1.7 ORGANIZATION OF THE STUDY
This study shall be divided into five sections.
In chapter one, which is the introductory part; the
background of the study, the statement of the research problem and the
objectives of the study shall be discussed.
Chapter two will deal with the literature review and
theoretical framework. The methodology analysis, which includes the
characteristics and basic elements of the research study, shall be examined in
Data presentation, analysis and interpretation will be
covered in chapter four while the concluding part of the research work will be
chapter five where in a nutshell the summary, the conclusion and the
recommendations would be discussed.