• unlimited access with print and download
    $ 37 00
  • read full document, no print or download, expires after 72 hours
    $ 4 99
More info
Unlimited access including download and printing, plus availability for reading and annotating in your in your Udini library.
  • Access to this article in your Udini library for 72 hours from purchase.
  • The article will not be available for download or print.
  • Upgrade to the full version of this document at a reduced price.
  • Your trial access payment is credited when purchasing the full version.
Buy
Continue searching

The impact of globalization on the Nigerian economy

Dissertation
Author: Stanley E. Nnadi
Abstract:
Economic globalization impacts the development and sustainability of the Nigerian economy in many ways, and as a result of that influence, Nigeria had suffered from economic inequality, a massive social underclass, and inadequate development. The research problem addressed the effects of globalization and macroeconomic policies on employment, gender inequality, and poverty trends in Nigeria. The purpose of this study was to examine whether poverty, unemployment, and inequality in Nigeria could be attributed to globalization. The key research questions addressed the reasons for high unemployment, poverty, and inequality in Nigeria and why Nigeria was relatively less integrated in the world trading economy. The mixed methods research combined a qualitative case study coupled with interviews and quantitative analysis of archival economic data (1999-2006), survey questionnaires and secondary data. Multiple regression models were used to test the associations linking globalization with socioeconomic factors and yielded mixed results. Data was triangulated across qualitative and quantitative analyses that included f tests, t tests, and variance inflation control factor. Findings from this study indicated that globalization has significantly affected Nigeria's economic growth through the decline of global foreign direct investment. These results imply that the dominant economic policies of the country need to be changed if the problems of unemployment, poverty, and inequality are to be alleviated. Social changes will result when political leaders respect and respond to the needs of the Nigerian citizens by controlling governmental economic reform and implementing new programs that will ensure their citizens access to better health, education, and opportunities for success. [PUBLICATION ABSTRACT]

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION TO THE STUDY...........................................................1 Introduction..........................................................................................................................1 Statement of the Problem.....................................................................................................4 Purpose of the Study............................................................................................................9 Background of the Problem.................................................................................................9 Assumptions of the Study..................................................................................................12 Limitations of the Study.....................................................................................................13 Operational Definitions of Terms......................................................................................14 Significance of the Study...................................................................................................15 Social Change....................................................................................................................17 Conclusion.........................................................................................................................18

CHAPTER 2: REVIEW OF LITERATURE.....................................................................19 Introduction........................................................................................................................19 Understanding the Economy Debate.................................................................................25 Brief History of Nigeria.....................................................................................................27 Nigerian Government and Political System.......................................................................29 Nigerian Economic and Social System..............................................................................30 Overview of Nigerian Agriculture/Mineral Resources/Trade...........................................32 Theoretical Basis About Globalization and Its Impacts....................................................34 Overview of IMF and World Bank Market Interference...................................................38 Factors Affecting Nigerian Social and Economic Problems.............................................41 Conclusion.........................................................................................................................44

CHAPTER 3: RESEARCH DESIGN METHODOLOGY................................................47 Introduction........................................................................................................................47 Research Design.................................................................................................................47 Research Method...............................................................................................................49 Population and Sample......................................................................................................50 Instrumentation..................................................................................................................52 Reliability and Validity......................................................................................................53 Sources of Information......................................................................................................55 Data Collection Process.....................................................................................................57 Dependent and Independent Variables..............................................................................57 Social and Economic Variables.........................................................................................58 The Economic Variables....................................................................................................59 Statistical Analysis/Hypothesis Testing.............................................................................61 Evaluation Process.............................................................................................................63 Conclusion.........................................................................................................................65

v

CHAPTER 4: ANALYSIS OF FINDINGS.......................................................................66 Introduction........................................................................................................................66 Situational Overview.........................................................................................................67 Research Question 1..........................................................................................................68 Research Question 2..........................................................................................................72 Comparable Statistical Hypothesis Tests...........................................................................80 Research Question 3..........................................................................................................91 Summary............................................................................................................................97

CHAPTER 5: SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS.............98 Introduction........................................................................................................................98 Summary of the Study.......................................................................................................98 Conclusions of the Study.................................................................................................101 Implications of the Study.................................................................................................105 Recommendations for Future Research...........................................................................109 Summary..........................................................................................................................110

REFERENCES................................................................................................................111

APPENDIX A-SAMPLE OF SELF ADMINISTERED QUESTIONNAIRE................115 APPENDIX B-SAMPLE OF FACE-TO-FACE INTERVIEW......................................118 APPENDIX C-SAMPLE OF CONCENT FORM FOR INTERVIEW...........................119 APPENDIX D-SAMPLE OF CONCENT FORM FOR QUESTIONNAIRES..............121 APPENDIX E-INCOME, GROWTH, AND POPULATION COMPARISON..............123

CURRICULUM VITAE..................................................................................................124

CHAPTER 1:

INTRODUCTION TO THE STUDY Introduction The purpose of this study was to examine whether poverty, unemployment, and inequalities in Nigeria can be attributed to globalization, still one of the most debatable issues in the world of trade, politics, inequalities, unemployment, and poverty. Despite the increasing growth in technology, coupled with the world’s changing economic growth and development, poverty still persisted at an alarming level. As the Human Development Report (1995) stated, “In developing countries, one person in three lives in poverty, even basic social services—primary health care, basic education, safe drinking water, and adequate nutrition—are not available to more than one billion people” (p. 8). Nigeria, one of 16 countries that comprise the West African continent, has experienced little progress in reducing poverty, unemployment, and inequalities compared with the other countries in the region. The United Nations Development Program (1995) estimated that 1.3 billion people in the developing countries currently lived on less than $1 a day. These countries were especially vulnerable to all kinds of diseases, starvation, drug trafficking, and commercial sex trades, as well as regional and ethnic poverty wars, all of which often have had origins and consequences for developed countries. The disparities between rich and poor were increasing daily in Nigeria. Since the Nigerian civil war, the country has experienced food insecurity and child malnutrition. Based upon the current conditions in Nigeria, these issues cannot be resolved without

2

intervention on the part of government and other institutional bodies, who must look for sustainable ways to eradicate poverty and social inequalities in Nigeria. Shah (2005) argued that developing countries’ poverty and social inequalities are complicated issues, claiming, “It is not simple enough to say that the poor are poor due to their own (or other governments) bad governance and management” (p. 1). In addition, Shah wrote, “You could quite easily conclude that the poor are poor because the rich are rich and have the power to enforce unequal trade agreements that favor their interests more than the poor” (p. 1). These words were echoed at the 2006 Conference on Population and Development in Nigeria, where poverty was considered a major obstacle to solving population problems. The conference consensus was that the problem of globalization and the structural adjustment of policies initiated by the International Monetary Fund (IMF) and the World Bank contributed to the cause of poverty in developing countries such as Nigeria. The policies of the lending nations that cut life necessities or an educational need of the borrowing country in order to qualify for loans or repayment of loans inevitably increased the burdens on the borrowing country’s economic prosperity. The problem of globalization was not only an economic issue, but also had an impact on politics because people were hungry, not because of overpopulation or a lack of food, but because they were too poor to afford basic foods. The causes of malnutrition in parts of Nigeria today were complex and included both the agro-ecological system and the socioeconomic and demographic characteristics of different areas of the country.

3

Some areas were dry and infertile, and many people were leaving farms and moving to urban areas for industrial jobs. Ironically, the issues of politics and economic conditions in Nigeria have led to some of the problems of poverty and dependency, which often reflected the attitudes of individuals in other developing countries. To address world hunger implied addressing the world’s poverty at the same time (Whelan, 2004). This notion was based upon the fact that providing food to the needy in Nigeria cannot solve the problems of poverty unless the government can find a concrete solution for dealing with the country’s underlying issues of poverty and inequality. As the president of Brazil described at the World Hunger Summit 2004, Terrorism cannot be fought exclusively by military means; we have to develop strategies combining solidarity and firmness that are rigidly within the rule of law; in fact, peace will never rise from poverty and hunger, and the most destructive weapon of mass destruction in the world is poverty (as cited in Whelan, 2004, p. 5).

Despite the argument against globalization, some of the current literature dealing with economics stressed the efficient allocation of society’s scarce resources, but harsh social realities can negate any benefit (Whelan, 2004). Globalization has caused massive plant closings in some parts of Nigeria, while small- and medium-sized enterprises that could not survive as a result of globalization were driven into bankruptcy or reorganization. Professional workers and civil servants were laid off, and human and physical capital stood idle in the name of efficiency or global trade.

4

Statement of the Problem The research problem addressed in this study was the impact of globalization and macroeconomic policies on employment, gender inequality, and poverty trends in Nigeria. The country’s resources were not being used efficiently when there remained large amounts of unused industrial capacity and millions of unemployed workers in the country, especially graduating students. Modern capitalism appeared totally incapable of mobilizing these untapped human and material resources because the majority of corporations were seeking lower capital wages and high profit margins. Morgan, Weigel, and Debaufre (1998) argued

For a primary connectedness that needs to be preserved in moral development, faith and commitment to justice seem to lie beyond and motivate moral reasoning . . . . We are all motivated by something to reason and act morally in the world. However, it is the same thing that causes us to create ethical systems in our society (p. 18).

The impacts of globalization have deterred the corporation and society from understanding human dignity and moral obligations. It will be only by individuals validating their own human dignity, through the process of taking their moral development and its causes seriously, that they can hope to achieve a world where individual dignity is universally valued (Morgan et al., 1998). The poor in Nigeria often believed that because they were of a particular neighborhood or ethnic group, or of a particular educational background, they were powerless to climb out of their poverty. Subsequently, answers were needed to the question of whether overpopulation caused poverty or vice versa and whether people were poor because they had too many children, or they had large numbers of children in response to being poor. Although there

5

may have been definitive answers to these social questions, the relationship between poverty and population was obvious. Overpopulation, especially in Nigeria and other developing countries, has doubled, while in developed countries that needed a larger labor force and had adequate resources; increased population has brought prosperity (Morgan et al., 1998). In contrast, the increase in population has strained other developing countries that have not had the capacity and technological know-how to increase productivity. In Nigeria, one thing that characterized absolute poverty was the lack of certain basic resources to ensure a decent life. People needed decent food, shelter, clean water, adequate sanitation, good health care, and good education. Absolute poverty was not a tidy problem, and it did not have simple answers. However, it was a disease that crippled the affected country and other developing countries. Nigeria was facing problems of increasing population growth, inequality, and failure to liberalize trade, all of which were embedded in the increasingly complex multidimensional international framework of globalization. Nigeria’s government should have allowed the domestic businesses to integrate in the world trading economy, lowering tariff levels, simplifying the tariff and eliminating export taxes, and lifting some of the import restrictions. Katz (1993) described the many difficulties faced by developed countries and stated that the majority of developed countries, including the United States, should increase aid donations, coupled with debt wipeout or restructuring, to allow poor countries in Africa and other developing nations to sustain economic freedom and

6

growth. Politics and governance also contributed to the social problems of poverty, especially in African countries where bribery and corruption were rampant. For example, the recent election in Nigeria was marked by corruption and bribery, and those elements eliminated individuals’ democracy and the right to freely elect individuals of their choice. Leaders of developed countries and financial institutions such as the World Bank and the IMF must pressure the leaders of developing countries, especially those in Africa, to use the revenue received from mineral resources to alleviate the needs of their citizens. The significance of this study could provide insight into the history of global impoverishment marked by the collapse of productive systems in the developing world. This global poverty originally started within developing countries and has since extended its grip to every major region of the world (Whelan, 2004). Beams (1998) found “Globalization of production did not play a significant role in enabling the employers to win any of these disputes between the employers and the workers” (p. 5). The changing economic factors throughout the world played a significant role in changing the attitudes of trade unions and workers who are reluctant to demand for better living conditions from fear of losing their jobs. This gave opportunities for their employers to exploit those reluctant workers (Beams). There were two questions: "What is the rationale for companies to globalize their productive means" and "Are there any advantages for the workers or the companies?" Beams (1998) argued

7

The ideology of globalization has played a role. It has encouraged the idea that multinationals are too powerful to be hit by ‘old fashioned’ forms of workers’ struggles and the abandonment of these forms of struggle has handed victory to the multinationals. (p. 5)

Beams (1998) provided a theoretical explanation relative to Marxist theoretical thought, stating, “The defense of these interests requires a struggle for the political independence of the working class, on an internationalist program, aimed at the conquest of power” (p. 6). Whelan (2004) provided a different perspective of the growth of inequality in society and how the news media cannot cover some of the problems depicted by the UN, arguing that The growing international prevalence of slum communities and neglected human potential they symbolize is a grotesque expression of the failure of a system driven by the profit motive, rather than by the requirement to satisfy elemental human needs. It points to the necessity to replace the anarchy of the capitalist free market with a national system of socialist planning. (p. 5)

The issue of domestic and global poverty was too complex to absorb. Regardless of all the technological advances and other revolutionary changes, poverty has remained the pivotal problem facing society today. The situation existed not only in developing countries, but also extended to industrialized countries. However, it has forced some bodies of government, including the United Nations and other international organizations, to start focusing on the problems of poverty and the ways to eradicate global poverty (Wignaraja, 1996). Marx’s theory of a capitalist society offered a better overall framework for understanding the processes of globalization than the theories of Weber and Durkheim. Marx’s conceptualization clearly defined the mode of economic production that present- day societies should adopt because economic production should be “expressed in

8

relationships between men which are independent of any particular individual and not subject to individual wills and purposes” (Beams, 1998, p. 40). While Marx and Weber agreed on many aspects of capitalism, they disagreed on its origins. Marx saw capitalism as the last evolutionary step in which owners of production would have the advantage over those who supply the labor needed for production. Weber maintained that capitalism arose from individuals’ desires to measure God’s favor in economic terms, which gave rise to the Protestant work ethic (Beams, 1998). The doctrines of these classical thinkers proved that the economic systems and structures applicable in their time were not far different from what exists today. What has occurred over the decades was actually a continued rise in the underclass in both developed and developing countries: the working poor with impoverished children, new immigrants flooding from one country to another, the aged, single-family heads of households, inner-city decline caused by unemployment and the outsourcing of jobs to other countries, the HIV/AIDS epidemic, commercial sex, and increasing global poverty (Beams, 1998).

9

Purpose of the Study The primary purpose of this study was to examine whether poverty, unemployment, and inequalities in Nigeria can be attributed to globalization. The study considered three research questions: 1. How did social issues affect the economic development of Nigeria? 2. What caused high unemployment, poverty, and inequalities in Nigerian society? 3. Why was Nigeria relatively less integrated in the world trading economy? Background of the Problem The early 1980s were characterized by global recession and high interest rates that resulted in some developing countries, including Nigeria, facing serious difficulties in maintaining a sustainable economic growth. The wealth distribution across African countries and regions as well as the incidence of poverty increased and varied. These variations were attributed to many factors, such as differences in the size of the economic population, education, availability of mineral resources, availability of employment, and the number of people in the family household. Subsequently, understanding all of the factors in determining the spatial variations of poverty provided valuable insights for the designs and execution of poverty-alleviation policies. Additionally, it helped to provide some information pertaining to the important questions about the poor and the growth or redistribution of societal wealth within the region.

10

Zhang and Wan (2005), who studied the variations in income distribution in urban poverty in China, indicated, “The unbalanced growth and economic reform have enlarged the differences in the development levels among the Chinese provinces” (p. 1). The incidence of urban poverty varies by a much larger magnitude, ranging from 0.68 to 13.5%. Interestingly, the variations do not coincide with the spatial pattern of average income, with some of the more affluent provinces recording higher poverty rates than the poor ones (p. 1).

Global wealth distribution was necessary, especially in Nigeria and other parts of developing countries, to alleviate the problems of poverty, inequality, and sustainable societal needs. Democratization could not be separated from the development of the economy. Understanding the consequences of poverty, inequality, and lack of employment, some of the developing countries’ governments should put aside politics and find significant means to liberalize their economy and wealth distribution among different stakeholders. It was suggested that the latest wave of poverty and inequality in society could eliminate large groups of population, especially in Nigeria and other developing countries. For example, there was crisis in the Niger Delta, in the southern part of Nigeria, where the community has seized or stopped all foreign companies from harvesting the oil in the region because of maltreatment, poverty, and unequal distribution of wealth from the government. Because of the decomposition-of-studies results performed by Zhang and Wan (2005), it was ascertained that while the rich provinces did not seem to suffer particularly from high inequality, distribution in the poorest provinces tended to be more adverse for the poor. Another major problem associated with poverty and inequality in Nigeria was

11

the HIV/AIDS epidemic, a major socioeconomic problem that was affecting every underclass person, especially in Africa and other developing countries. Recent studies have indicated that the millennium goals established by the United Nations Development Program (UNDP) for 2015 will never be achieved if the HIV/AIDS epidemic cannot be controlled. Nigerian health agencies have tried to control the spread, but many social customs and taboos prevented effective contraception practices. In fact, both developing and developed countries were facing the social problem of parents who die, leaving hundreds of orphans, many of whom are infected with the virus (UNDP, 2001). Subsequently, when the life expectancy gap between the rich and poor countries was exceedingly great, the prohibitive cost of health care prevented its being accessed. In Nigeria, it was assumed that the weak health system and lack of development had allowed preventable infectious diseases to claim the lives of thousands of people since the AIDS crisis began being reported. According to the General Assembly of the United Nations on HIV/AIDS in 2001, the consensus of every nation was to care for, support, and treat individuals infected with AIDS and to make every effort to provide in a progressive and sustainable manner the highest attainable standard of treatment, including the prevention and treatment of opportunistic infections and effective use of quality controlled anti-retroviral therapy (UNDP, 2001). The Nigerian government and other developing countries have criticized neo- liberalism and structural adjustment policies that have been instituted by the IMF and the World Bank as part of the problems facing the nation. The structural adjustment policies

12

established by these agencies makes it impossible for countries to meet citizens’ demands or expectations for good health, education, clean water, shelter, and other necessities to combat poverty. The striking, heartbreaking question was, how can the IMF and World Bank’s imposition of keeping inflation down to minimum levels prompt some of these developing countries to ignore the important needs of its citizens, even to the point of refusing to accept grants from some donor countries and charitable foundations to help fight against poverty and other needs (UNDP, 2001). Conversely, it was assumed that the negative impacts of structuring adjustment policies have undermined the social fabrics of developing countries such as Nigeria by ensuring the security of loans that benefited international lenders and others involved in business transactions. IMF and World Bank have ignored the economic aspects of the problems that faced these developing nations. In addition, these agencies did not address public welfare and the suffering of the individuals in these developing countries. Assumptions of the Study It was assumed that developing countries benefited from participation in the global economy through higher economic growth and living standards, and thus reduced poverty. In addition, increased openness to trade created opportunities for new investments and jobs, and promoted more efficient use of resources and high productivity. However, some of the respondents believed that globalization has exploited people in developing countries, caused massive disruptions and produced few benefits. The research involved the analysis of data that had already been collected and compiled

13

for this project. The data were focused directly on the research questions. The reasonable assumption pertaining to this research was that the data would be comprehensive and would capture the relevant records and information needed to complete the project. Another assumption was that the participants for the interview answered truthfully. Participation was solicited, but participants agreed to participate. Limitations of the Study The study was confined to Nigeria and there was limited time to conduct the study. As suggested, the major development factors that affected a country’s economic conditions were difficult to forecast; thus, even when patterns were identified, there was no guarantee that these patterns still affect the future development of that country’s societal problems. Ironically, even with these limitations in mind, general inferences can still be drawn to other developing countries on the African continent with similar features. Understanding the relationship between the social and economic variables for development can lead to more tangible efforts of Nigerian government policy-makers in eliminating the negatives and promoting the positives of each variable, which could result in more competition. Furthermore, the participants for interview refused to allow the researcher to tape the answers of the interview because of fear from law enforcement. Some of the participants were influenced by the Nigerian culture and operating philosophy. This limited the variables that can influence the results. In addition, as a result of costs and time, this study was limited to one urban area instead of the rural area. It is recommended that any future studies about the issues of poverty, inequality, and

14

unemployment in Nigeria as a result of globalization should be directed or embarked in a rural area. Operational Definitions of Terms For the purposes of this study, the following definitions were used. Economic issues: Factors that affect the development and economic growth of a country. Madura (2003) emphasized that the indicators of a country’s growth and stability were dependent on several economic factors, including inflation, gross domestic product (GDP), public debt, financial viability, net international reserves, and level of unemployment within the country, all of which were investigated. Globalization: The term has been defined in many ways, but it meant different things to different people and nations. Globalization in this paper was global economic integration or economic globalization (hereafter simply globalization), which referred to the process by which an increasing share of the economic activity in the world is taking place between people from different countries rather than within a country. Thus, it encompassed international trade (exports and imports), foreign direct investment where a firm or an individual in one country owned or controlled a firm in another country, portfolio investments—the sale of stocks, bonds, and other financial instruments to buyers in another country—and immigration. It also occurred as a result of improvements in technology and decreased transportation costs, and was partly due to a deliberate choice by many national governments to increase their integration with the global economy. Thus, globalization was an aggregate outcome that resulted from the choice of many individual countries to increase integration with the global economy. Furthermore,

15

as a result of integration and liberalization of their economy, that may have resulted in increase of their foreign trade and investments. While globalization has increased opportunities for economic growth and development in some areas, there has been an increase in the poverty and inequality in Nigeria and other developing countries. As illustrated by Thorbecke & Charumilind (2002), social variables whose factors affect the social well-being of the population included political risk, education level, and crime. These areas of social variables are investigated. Social Issues: The period of globalization has been characterized by an integration of the economies of the world through trade and financial flows, technology and information exchanges, and movement of people. In this stage of business, Nigeria experienced both minimal influence and maximum consequences. Globalization was not benefiting the majority of Africans or even people in other developing countries. Significance of the Study This research was of significance to the domain of individual poverty, inequality, unemployment, and the poor. The concept of globalization was relatively new to developing countries such as Nigeria. The handful of developing countries that has chosen to embrace the concept and implementation of trade liberation has welcomed both the pros and cons associated with globalization. Therefore, this paper explored the effects of globalization on poverty, inequality, and unemployment in Nigerian society. This study was of significance for both the urban and rural poor women, young unemployed graduates, and poor in the society who did not have access to employment and were constrained by various factors, including inequality in accessing education,

16

training, and productive resources within the country, household responsibilities, and gender stereotypes that have prevented a lot of women from seeking employment. In fact, where women were employed, they faced discrimination, sexual harassment or abuse, and lacked the advantages of benefits within a company. The results of this research would create opportunities and means for the poor people who were most affected by actions at the country level, in addition, fostering broad-based economic growth, because of the multidimensional character of poverty, strong economic growth required a sound macroeconomic framework with policies that will promote low inflation, realistic and stable exchange rates, reasonable fiscal deficits, effective integration into the global economy. The results of this study would bring transparency, and help the policy-makers in Nigeria confront issues of social and economic inequality, social strife and corruption, which were obstacles to poverty reduction. The results of this study would still fill a gap in the existing research by educating developing countries various forms of livelihood diversification, especially in the rural areas. Based on results of the interviews, the majority of the households were poor because of lack of education or training. Understanding livelihood diversification, as explained to the respondents during the course of the interview conversation, would enable households to find new ways to increase their income and reduce regional inequality, freedom of choice and reversibility of the poverty outcome. The rural poor people should diversify their livelihood to survive in a global changing world and

Full document contains 136 pages
Abstract: Economic globalization impacts the development and sustainability of the Nigerian economy in many ways, and as a result of that influence, Nigeria had suffered from economic inequality, a massive social underclass, and inadequate development. The research problem addressed the effects of globalization and macroeconomic policies on employment, gender inequality, and poverty trends in Nigeria. The purpose of this study was to examine whether poverty, unemployment, and inequality in Nigeria could be attributed to globalization. The key research questions addressed the reasons for high unemployment, poverty, and inequality in Nigeria and why Nigeria was relatively less integrated in the world trading economy. The mixed methods research combined a qualitative case study coupled with interviews and quantitative analysis of archival economic data (1999-2006), survey questionnaires and secondary data. Multiple regression models were used to test the associations linking globalization with socioeconomic factors and yielded mixed results. Data was triangulated across qualitative and quantitative analyses that included f tests, t tests, and variance inflation control factor. Findings from this study indicated that globalization has significantly affected Nigeria's economic growth through the decline of global foreign direct investment. These results imply that the dominant economic policies of the country need to be changed if the problems of unemployment, poverty, and inequality are to be alleviated. Social changes will result when political leaders respect and respond to the needs of the Nigerian citizens by controlling governmental economic reform and implementing new programs that will ensure their citizens access to better health, education, and opportunities for success. [PUBLICATION ABSTRACT]