Revista de Economía y Negocios

Globalization and the Manufacturing Sector in Nigeria

Abstract

Boma Cookey

One of the arguments for the globalization is that it will efficient allocate resources in the world scale and especially make available capital and technology to the developing economies for industrialization and ultimately socio-economic development in the developing countries. Hence, the study took as its objective to examines the relationship between globalization and manufacturing sector development in Nigerian economy. To achieve this, the study adopted the ex-post experimental research design approach and annual time series data from 19986 to 2019. Overall globalization index, economic globalization index, trade openness and foreign direct investment were used as globalization variables, while Nigerian manufacturing sector output contribution to GDP served as proxy and indicator of manufacturing sector development. The analytical method followed the Paseran, Shin and Smith ARDL approach. The unit root test shows that all the variables, apart from FDI are integrated of order 1, that is, I(1) series, while FDI is I(0). Bound cointegration test revealed that there is a stable long run relationship among the variables. Estimate of the ARDL model shows that overall globalization, economic globalization, trade openness and exchange rate variations had negative and significant impact on manufacturing output growth in the long run. FDI had positive, but insignificant effect on manufacturing sector development in Nigerian economy during the period under review. Based on these findings, the study, therefore recommended that, the government should adopt proactive trade policies to protect and give competitive advantage to the domestic manufacturers in the domestic regional and markets.