Can Economic Growth, Foreign Direct Investment And Exports Provide The Desired Panacea To The Problem Of Unemployment In Nigeria?

Abstract

Employment generation has over the years been widely celebrated as a major key to socio-economic progress. In recent times, reduction in unemployment has been identified as a chief indicator of economic development. Unfortunately, the problem of unemployment has plagued Nigeria over the years and it has become highly pronounced in recent times. This study seeks to find out if the unemployment problem in Nigeria can be solved through economic growth, exports and foreign direct investment. The study employs contemporary econometric techniques of cointegration and Granger causality tests within error correction modelling framework to analyse the relationship among unemployment, economic growth, exports and foreign direct investment. The study also utilises the VAR techniques of variance decomposition and impulse response functions. The study is based on annual time series data from 1984 to 2010 obtained from the Central Bank of Nigeria (CBN). The results of the study indicate, among other things, that economic growth, exports and foreign direct  investment do not provide the desired solution to the problem of unemployment in Nigeria both in the short-run and long-run. Thus adequate mechanism should be put in place to ensure that economic growth, foreign direct investment and exports bring about optimum employment generation.

KEY WORDS: Unemployment, Economic Growth, Foreign Direct Investment, Error Correction Modelling, Exports, Nigeria