International Trade Flows and Employment in Nigeria: A Trend Analysis from 1981-2006

Description

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Abstract

This study investigates the relationship between international trade flows and employment in Nigeria for the period 1981 to 2006.

Using time series estimation technique, we found no significant link between trade flows and employment in Nigeria both in the short-run and long- run.

However, external factors such as FDI, real effective exchange rate, SAP and internal factors such as political stability, labour regulation and real wage are more important factors in explaining employment rate in Nigeria.

Like explanations of these outcomes are probably due to the country trading majorly in primary products which are largely uncompetitive and the non- diversification of the productive base of the economy such as the overdependence on oil exports.

An effective and result-oriented employment effect from trade is likely to be aided by fortifying appropriate and enabling environment institutional regulatory measures to enhance the diversification and competitiveness of Nigeria’s trade,

Introduction

Nigeria is characterized with a ‘dualistic’ (dual) labour market in which the minority of workers has regular formal sector jobs, while majority works in informal sector, with a large pool of surplus labour.

This is seen from its rapidly increasing labour force. For instance, the labour force increased from 25.7 million persons in 1980 to 33.9 million persons in 1990 and further increased to 45 million and 52.7 million persons in 2000 and 2006 respectively(CBN,1993).

In addition to this, statistical evidences from the government show that the absolute number of total employment in the country has been steadily increasing since 1980.

For instance, total employment increased steadily from 18.6 million in 1980 to 22.1 million in 1990, which further rose to 27.5 million in 2000 and later to 34.4 million in 2006.

However, in spite of the country’s large pool of surplus labour, rapidly growing labour force and increasing employment, the share of employed workers in total labour force has been declining since 1980.

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