The impact of globalization on economic growth of Nigeria was examined. The study employed OLS estimation techniquesof time series data for a period of 30 years (1985 to 2015). The study revealed that Globalization and Foreign Direct Investment have a positive and significant impact on Gross Domestic Product of Nigeria. The study further showed that Exchange Rate (EXR) has a positive and insignificant effect on the economic growth of Nigeria during the period of study. The study recommended that strategic macroeconomic policies should be instituted in order to encourage Foreign Direct Investment from abroad because of its significant capacity to enhance the growth of the Nigerian economic growth.
- Background to the Study
Globalization has posed to remain one of the most controversial topics of our time. Some observers and theories of globalization have variously argued that the rapid increase in cross-border economics, social, technological and cultural exchanges is either criticizing, destructive or feeble (Adeboye, 2012).
Globalisation involves the opening up of national economies to global markets (Rupali, 2008). Following the advent of globalisation, the world has become a much smaller place where interaction between different countries has led to a situation where a country’s economy and development are not only in the hands of the ruling government, but is highly influence by international organizations where international rules and legislations reigns (Agugua, 2012). This naturally and simultaneously results in the simultaneous reduction in the role of the State to shape national policies.
Many Socialists define globalisation as a primarily economic phenomenon, which involves increasing interaction and integration of national economic systems. This leads in turn to growth in international trade, investment and capital flows (Adeolu, 2007). Moreover, there is a rapid increase in cross-border social, cultural and technological exchanges because of the phenomenon of globalization. Globalisation affects virtually all the industries of which the banking industry is not an exception.
According to Okeke (2008), globalization is a trend away from the distinct national economic unit and towards one huge global market, it refers to a shift towards a more integrated and interdependent world economy.This has made international business easy which known as business across the boarder.
Globalization according to Ohubunwa (1999) can be seen as an evolution which is systematically restricting interactive phases among nations by tracking down barriers in the areas of culture, commerce, communication and several other field of endeavour. This is evident from its push of free market economics, liberal democracy, good governance, gender quality and environmental sustainability among other holistic values for the people of member state.
Business organizations are considered as a global market which is administered by one set of business management policies.As a result the main outcome of globalization on business due to this is the easy and speedy transfer of services, goods, labour and capital all across the world without any hindrance from local and natural regulations.
Tendon (2014) globalization seeks to remove all national barriers to the free movement of international capital and this process is accelerated and facilitated by the supersonic transformation information’s technology.
Edwin Madunagu (1992) sees globalization as the rapid expansion of capitalism; he believes that the rapid expansion through giant multinational companies of capitalism to several areas in the world, including area where it has to be resisted or put in check side by side with the expansions is the phenomenal development of computer technology, telecommunication and transportation. The latter serve as the main vehicle of the former. Globalization is the globalization of capitalism, not the globalization of post-capitalism as the imperial intellectual and their slaves in the under developed countries would have us believe (Madunagu, 1999)
Globalization is about growing differentiation and functional integration in world economy. It is about growing interdependence across the globe, it is about the nation state coming for under pressure from surge of transnational phenomenon about to emergence of global mass culture driven by mass advertising and technical advances in mass communication. (Ake, 2014)
- Statement of the Problem
In the current trend of globalization of trade and investment, however, Nigeria is facing a crucial turning point of how to improve significantly, the performance of the industry, in terms of production and trade. Thus, the challenges to the country are now to design strategies and policies relevant to regional and global competition given the small market of the economy. Business organization is facing a problem in inadequate infrastructure and outdated equipment. Most of the technological used by the business organizations are outdated and as such will not function well. Future economic development seems to depend upon whether or not Nigeria can establish a preferable industrial structure and participate in horizontal specialization in the global market.
However, Nigeria is increasingly launching herself into globalization train, expecting to address her current economic problems of unemployment, prices, instability, balance of payments, disequilibrium, poverty, income inequality, among others, privatization, deregulation of keys sectors of the economic, financial and trade liberalization and means of adapting to globalization in order to fit into the new global system. However, several problems may arise from regional or world agreement at the global level.
The challenge however, is whether developing countries can take advantage of the liberalization process while at the same time avoiding or minimizing the disruptive consequences of globalization on their societies and economics. As no nation can survive on its own, this challenge translates into these countries objectively accessing their macroeconomic strengths and weaknesses with a view to optimizing available opportunities despite these threats.
Thus, this research will look into the aforementioned problems in the bid to finding solutions.
- Research Questions
For the purpose of valid and reliable result, the following research questions are to be asked.
- To what extent has globalization enhanced economic growth of Nigeria?
- What problems and prospects are open to Nigeria with the unfolding globalization free enterprises market place?
- Is globalization a sufficient factor in solving the problems of the business organizations?
- What impact has globalization on the Nigerian economy?
- What extent has globalization achieved its expected results?
- Objective of the Study
The main objectiveof this study is to examine the impactof globalization on economic growth in Nigeria. The specific objectives are:
- To know the extent in which globalization has influenced the Nigerian economic growth.
- To access the effect of trade openness on Nigeria’s economic growth.
- To access the effect of exchange rate on the Nigerian economic growth.
- To find out the extent globalization has affected business organization.
- To proffer suitable recommendations that would aid the globalization process to generate desired result.
- Hypotheses of the study
The hypothesis stated below was formulated based on the problem and objectives of the subject matter stated above:
H01: Globalization has made no significant Impact on the Nigerian economy.
H02: Exchange rate has no significant effect on gross domestic product in Nigeria.
H03: Foreign direct investment has no significant Impact on gross domestic product.
- Significance of the Study
The significance of this study would be beneficial to the business organization on which the study is carried out on and other researcher. This research work will be useful to managers and students in formulating and strategizing ways to solving problems. Also, scholars, institutions libraries and for further researchers will be beneficial. It would be significant to the government, significant to the public, significant to the student and policy matters.
- Scope and Limitation of the Study
The scope of the study will cover a profound area of globalization as regards to its impact on business organizations from the period 1985-2015. The researcher sees how Nigerian economy survive to meet up with the increased speed of globalization and other threat posed.
According to Tendon (1998), globalization seeks to remove all national barriers to the free movement of international capital. This makes globalization providing for a more free trade amongst boarders but also affects the developing countries negatively, therefore the researcher modify ways in which the domestic business in the developing countries stand up to the competition posed by globalization. This topic as a study will basically involve the use of materials such as textbooks, journals, information from the internet, libraries and personal interview.
- Limitations of the Study
In the course of carrying out this research some inherent factors posed as limitations to this study:
- Time: Since it is carried out in a short period of semester, coupled with other class work and loads there would be limited time to go for the research.
- Lack of Correspondent: Problems of meeting with the respondent.
- Unavailable Resources (Finance): Lack of resource funds would hinder the project work from moving faster.
- Definition of terms
There are identifiable terms in the study which the researcher would like to define:
- Globalization: This is the close integration of countries and people of the world and the break down of artificial barriers to the flow of goods, services capital, knowledge and people across the national boarders.
- Business Organisation: It is an economically oriented organization which carry out its objectives which are geared towards project making.
- Communism: A theory or system of social organization based on the holding of all properly in common, actual ownership been ascribed to the countries as a whole or to the state.
- Culture: The quality in a person or society that arises from a concern of what is regarded as excellent in arts, letters, manners, scholarly excellent in arts, letters, manners, scholarly pursuits etc.
- Economy: The management of the resources of a community country especially with a view of its productivity.
- Global Village: The world, especially considered as the home of one nations and people living interpedently.
- Increased Competition: Following the rate at which globalization to meet up with globalization which is speeding and breaking bounds, therefore leaving room for increased competition on the business and economy that are striving to meet up with pace.
- Technology: The branch of knowledge that deals with the creation and use of technical means and their interaction with life, society and the environment drawing upon such subjects as industrial arts, engineering , applied science and pure science.
- Economic Growth: This is related to quantitative sustained increase in the country per capital output or income accompanied by expression in its labor force consumption, capital and volume of trade.
- Foreign Direct Investment: It includesmanagers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra company loans.
- Openness: Theory which favors trade liberalization or neutrality policy between nations.