Trade Openness and Employment Growth in Nigeria

Trade Openness and Employment Growth in Nigeria

Author by Dr. Adegbemi Onakoya

Journal/Publisher: Journal Of Capital Development In Behavioural Sciences

Volume/Edition: 6

Language: English

Pages: 178 - 198

Abstract

This study sought to find the impact of trade liberalization on employment growth in Nigeria from 1981-2016 using trade openness as proxy for trade liberalistion. A three-prong estimation approach was adopted. In the first stage, the descriptive statistic were examined in order to understand the nature of the series. The stationarity of the variables were also tested using Augmented Dickey fuller test. The result indicated that all the variables were stationary at first difference which necessitated the deployment of the Johansen co-integration and Vector error correction model for both the long-run and short-run nexus amongst the variables in the second stage. The Toda Yamoto test was also conducted to ascertain the direction of causality. In order to know the ripple effect of the introduction of economic shock, the Impulse Response Function was deployed. In the post-estimation stage, the robustness and validity of regression model is checked using the Heteroscedasticity and the autocorrelation tests. The study found a negative and significant relationship between trade openness and employment growth. The foreign direct investment had significant impact on employment levels. Inflation although significant was negatively related. Both the exchange rate and terms of trade were not significant. The result of Breusch-Godfrey Serial Correlation LM Test revealed the absence of serial correlation. The government should enact the provision of social and economic policies required to protect the country against the adverse effects of lowered trade barriers especially in the labour intensive sector of the economy.

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