THE IMPACT OF GLOBALIZATION ON ECONOMIC GROWTH IN NIGERIA

CHAPTER ONE

INTRODUCTION

  • BACKGROUND OF STUDY

The linkage of national economies through international trade in service, primary and manufactured goods and through foreign direct investment is known as globalization (Loto 2011). The drive for globalization has resulted in greater economic growth globally through the opening of borders to international trade. This increase in world output is often associated with detriments effects in relation to the stability of the national economy and also positive and negative effects on the standards of living and quality of life within a nation (Nwaba 1999).

The advent of structural adjustment programs (SAP) in collaboration with the international monetary fund (IMF) and the world bank led to economic system export-led growth strategy and stability of the economy (Aluko 2003) .Nigeria as an economy cannot develop in isolation therefore efforts must be geared towards removing factors that hinder effective integration of Nigeria into the global economy and improving benefits derivable from globalization.

Globalization is the integration of national economies through trade and financial interactions (Omar 2002).The phenomenon of globalization has accelerated tremendously in the past two decades as results of rapid advances in science and technology. Technology has revolutionized communication and has made access to information and people quicker, cheaper and easier (Matti 2002).

Theories on economic growth (both neo-classical and endogenous growth models) converge on the fact that technology is the driving force of economic growth. There are two broad schools of globalization; the proponents and the opponents. The proponent of globalization believes that globalization is the best thing that could happen to the world. The proponents argue that globalization removes all domestic barriers to freedom of capital and finance, promotes real choices and opportunities to choose market, to access required or appropriate technology for production in order to realize economic potentials. The opponents of globalization see the assertions of the proponents as evil. The opponents argue that globalization favors the developed economies over the developing economies.

1.2    STATEMENT OF RESEARCH PROBLEM

Developing economies like Nigeria have positively benefitted from globalization and in return has enabled the economy to enjoy higher growth rate (Khor 2001). Since globalization entails trade and financial liberalization, it therefore implies that there is free and unrestricted movement of trade, finance and investment across the international borders. Both domestic and foreign liberalization imply globalization as it brings domestic markets abroad and the removal of administrative barriers to international movement of goods, services, labour and capital increase among nations there leading to foreign direct investment (Rivera-Batiz and Romer, 1999). Thus in spite of the openness of the economy, external trade performance has been encouraging but to what extent has it benefitted Nigeria?

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