Employment and International Trade Flows In Nigeria: VECM ANALYSIS

Abstract

The study attempts to rationalize the impact of international trade flows on employment generation in Nigeria within the framework of the vector error correction model. The study found that the volume of international trade has no significant positive impact on employment generation in Nigeria. Indeed, the recent empirical evidence is that of a significant negative employment effect of total trade volume in Nigeria. This could be as a result of the SAP-induced trade liberalization forced on the country by the IMF and World Bank as a pre-condition for loan procurement and possible debt cancellation. Besides, the employment effect of trade liberalization is insignificant and negative as well in this study. It is therefore imperative for Nigeria to make her export competitive by broadening the horizons of production and reduce her volume of importation in order to make the negative trade balance positive.

Key words: Employment, unemployment, VECM, trade theories, Nigeria