Globalization and the Nigerian Manufacturing Sector

Abstract

This study examined the impact of globalization on the manufacturing sector of Nigeria. In line with the objectives of the study, secondary data were obtained from World Bank Development Indicators (WDI) database covering the period of 1980 to 2013. The degree of openness, foreign direct investment, exchange rate and inflation rate were used to capture the causal relationship between globalization and the manufacturing sector of Nigeria, the impact of globalization on the manufacturing sector of Nigeria as well as the opportunities, challenges and risks of globalization and their implications for sustainable development in Nigeria. The study employs Vector Auto-Regression (VAR) model for this purpose. Findings showed that the results of the study significantly support the theoretical expectation that when a country interacts more with others, it raises the general production level and hence, manufacturing output. This implies that a positive relationship exists between globalization and the manufacturing sector of Nigeria. The study recommends that the Nigerian government should ensure continuous openness of its economy in a beneficial way and as well put up measures to stem up the confidence of investors in the activities of the manufacturing output. Also, it should ensure that the rate of inflation and exchange are steady in a manner that would encourage people to involve in the activities of the manufacturing sector.