Economic Growth and Human Development Effect of Globalization in Nigeria: Evidence in the Democratic Era

The paper empirically investigates the effect of globalization on economic growth and human development in Nigeria in the new democratic era (1999 – 2011). Using annual time series data sourced from the International Monetary Fund (IMF) WEO database, National Bureau of Statistics (NBS), the Central Bank of Nigeria (CBN) Statistical Bulletin, the Central Intelligence Agency (CIA) World Fact Book and the United Nations Development Programme (UNDP) annual human development report, and employing multiple linear regression model, it examines three channels through which globalization affects economic growth and human development – trade openness, financial openness and migration channel. The analysis indicated that the effect of globalization on economic growth has been more significant than its effect on human development, and that trade and financial openness have had significant negative effects on economic growth and human development, while net migration rate has had positive effect on economic growth and human development within the sample period, although, the effect on human development was statistically insignificant. Emanating from the findings, we proffered that caution should be exercised in embracing and implementing economic liberalization policies which are the hallmark of globalization, and to mitigate its negative effects on economic growth and human development. Recommendations for policy include diversification of the country’s export items/commodities and markets, political will to revive the nation’s real sector industrial, agriculture, and so on), strengthening of the nation’s financial, education, health and other institutions, etc. Keywords: Globalization, Economic Growth, Human Development, Openness, Migration

Import Competition and Unemployment in Nigeria

The paper examines the effect of import competition on unemployment in Nigeria during the period from 1981 to 2017. The ARDL (Bounds) test approach to cointegration and error correction modeling was employed for the analysis. The study finds significant negative short run effect and significant positive long run effect of import competition on unemployment in the country. These suggest that import competition reduces unemployment in the short run, but worsens the unemployment problem in the long run. The Okun’s law is also validated as the study finds inverse relationship between real GDP and unemployment in the short- and long-run, implying that economic growth reduce unemployment in the country. The short run Phillips curve is validated as trade-off is found to exist between inflation and unemployment in the short run. This relationship is sustained in the long, thus invalidating the long run Phillips curve which proposes no trade-off between inflation and unemployment. The effect of government final consumption expenditure on unemployment is found to be negative in the short run, but positive in the long run. The level of investment in the economy is found to have been inadequate to create jobs as the effect of capital formation is found to be statistically not significant. Based on the empirical evidence, the study recommends efforts by the government to set the economy on a sustainable growth path, keep inflation at levels compactible with investment and growth, invest massively in and encourage private sector participation in the productive sectors of the economy to boost output quality and quantity so as to reduce import dependence and enhance product competitiveness in both domestic and  foreign markets, and reduction of government final consumption expenditure while increasing expenditure in capital projects with the potentials for job creation in the long run

Is Monetary Expansion Always and Everywhere, Detrimental to Capital Inflows? Some Policy Lessons for Nigeria.

The paper employs error correction methodology to investigate the effect of monetary expansion on the flow of FDI into the economies of Nigeria, Ghana, Argentina, Australia, China, the U.S. and the U.K. using annual time series data covering the period from the 1980s to 2010/2011, sourced from the World Bank’s World Development Indicators. The empirical evidence indicates that monetary expansion has negative, but insignificant effect on FDI inflows in middle-income countries of Nigeria, Ghana and Argentina, and positive effect on FDI inflows in high income countries of Australia, China, the U.K. and the U.S., though the effect in U.K. and U.S. is statistically insignificant. With the exception of Ghana and Australia, the paper also finds that economic growth has positive effect on net FDI inflows, though insignificant for the U.K economy.  The paper argues that monetary expansion is not always and everywhere detrimental to FDI inflows, but that the effect depends on several factors such as the source of the expansion, level of development of the financial system, economic growth, etc. The paper recommends inter alia that the middle- income countries channel efforts at developing their financial systems and the growth-linked sectors of their economies so as to attract more FDI, and assuage the negative effects of excessive FDI inflows, ultimately enhancing the growth of the economy

Foreign Financial Resources Inflows and Stock Market Development: Empirical Evidence from Nigeria and Ghana.

This study empirically investigates the effects of the inflows of foreign financial resources into Nigeria’s and Ghana’s economies, on the development of the countries’ stock exchanges. Using annual time series data covering the period – 1988 to 2011 for Nigeria, and 1991 to 2011 for Ghana, adopting market capitalisation–GDP ratio (MCR) as proxy for stock market development, and employing multiple linear regression technique, the study finds that with the exception of external debt-GDP ratio (EXDTR), the ratios of  inflows of other foreign financial resources (foreign direct investment (FDI), foreign portfolio investment (FPI), personal remittances received (PRR), official development assistance and aid (ODAA)) to GDP, were positively related to MCR, although the relationship between ODAA-GDP ratio and MCR in Nigeria was statistically insignificant within the sample period. On the other hand, FDI-GDP, PRR-GDP and EXDT-GDP ratios were observed to be significantly, negatively related to MCR in Ghana, while ODAA-GDP ratio was positively related to it, indicating that, of all the forms of foreign finances considered, ODAA has been the most relevant in the development of Ghana’s stock exchange. Policy recommendations of the paper include the creation of conducive macroeconomic, socio-political environment required to attract more foreign direct and portfolio investments, as well as enhance the profitability of quoted firms whose securities are listed on the exchange, keeping external public debt at manageable levels, encouraging more firms to get listed the stock exchanges, reducing the cost of stock exchange transactions, proper regulations of the activities of market players, etc. Keywords: Foreign Finance Inflows, Nigerian Stock Exchange, Ghana Stock Exchange, Stock Market Development

Do Government Expenditure and Debt Affect Stock Market Development in Nigeria? An Empirical Investigation

Each year, stock market players in Nigeria look forward to the passage and implementation of the annual budget to stimulate and boost transactions in the market. However there appears to be a dis-connect between government spending and value of transactions therein. The effect of government debt (domestic and external) on the development of the stock market has also been an issue of concern to stakeholders. This paper employs the methodology of cointegration and error correction mechanism to investigate the effect of government expenditure and government debt on value of transactions on the trading floors of the Nigerian Stock Exchange (proxy for stock market development) using annual time series data sourced from the Central Bank of Nigeria Statistical Bulletin. The empirical evidence indicates inter alia that the short-run and long-run effects of federal government recurrent expenditure, domestic debt and external debt on value of transactions on the Nigerian Stock Exchange are statistically insignificant. Government capital expenditure is observed to have had significant negative short-run and long-run effects on value of transactions on the stock market. The implications of the findings and policy options to enhance the value of transactions on Nigeria’s stock market are discussed. Keywords: Government Debt, Government Expenditure, Stock Market Development, Nigerian Stock Exchang

Asymmetric Effects of Money Supply Growth on Economic Growth in Nigeria

The study employs the Shin-Greenwood-Yin nonlinear autoregressive distributed lag (NARDL) approach to cointegrating and error correction modeling to examine the asymmetric effects of broad money growth on economic growth in Nigeria. Annual time series data spanning the period from 1981-2016 are used for the analysis. The study finds asymmetric relationship between the variables in the short run as positive change in broad money growth is found affect economic growth positively and significantly, while negative change is found to have negative, but more sizable and more significant effect on growth. The study also finds no significant effect of positive change in broad money growth on economic growth in the long run. Negative change in broad money growth positively and significantly affects economic growth in the long run. Further evidence from the study are that growth in government financial consumption expenditure positively affects economic growth in the short- and long-run, while inflation adversely affect growth in both time horizons. Based on the evidence, it is recommended that to achieve long run growth, growth of money supply and inflation should be controlled, and government final consumption expenditure should be increased to boost economic activities.&nbsp

Effects of Economic Openness and Inflation on Commercial Banks’ Profitability: Panel Data Evidence from Nigeria, Post-Banking Sector Consolidation (2005-2012).

The paper employs panel data estimation techniques to investigate the effects of economic openness (trade and financial openness) and inflation on commercial banks’ profitability in Nigeria. Using panel data for the period 2005 to 2012 on a sample of 14 commercial banks in the country, the empirical analysis based on the random effect model selected on the basis of Hausman test result indicates that the impact of financial openness on commercial banks’ profitability was positive and significant while the impact of trade openness was also positive, but statistically insignificant. Inflation and bank size were also observed to have had insignificant impact on banks’ profitability in the study period. Further evidence from the analysis is that financial openness and inflation adversely affected commercial banks’ profitability in the heat of the global financial crisis (2007-2010), marked by the downward trends in return on asset of most of the banks within the period. These findings suggest inter alia that economic openness could enhance the profitability of commercial banks if the banks could take advantage of the opportunities it offers. The paper therefore recommends greater integration of the country’s economy with the global market, active participation of Nigerian banks in trade finance and merchant banking, establishment of foreign branches of the commercial banks in other countries particularly in countries with fast growing economies, quality asset management, some restriction in cross-border capital flows and lowering the rate of inflation particular in periods of global financial crisis, etc. to enhance the profitability of the commercial banks. Keywords: Financial Openness, Trade Openness, Inflation, Commercial Banks’ Profitability, Panel Data Estimation, Nigeria

Oil Price Volatility and Business Cycles in Nigeria

The effect of oil price volatility on the business cycle (measured as fluctuations in real GDP) in Nigeria is investigated, while controlling for effects of other variables such as inflation, exchange rate, money supply, trade openness and foreign direct investment. Volatility in real GDP and oil price is generated through the EGARCH process. The ARDL approach to cointegration and error correction modeling is employed for analysis of data covering the period from 1970 to 2015. The study finds positive and significant short-run effect of oil price volatility on real GDP volatility, and no significant long-run effect. The short-run and long-run effects of other variables on business cycle (real GDP volatility) in Nigeria are not statistically significant. This suggests that short-run fluctuations in real GDP are engendered mainly by oil price volatility. This could be attributed to the precarious dependence of the country on oil export. The paper recommends channeling of efforts by the government towards diversifying the productive base and exports of the country as measure to reduce volatility in the real GDP

DOES STOCK MARKET DEVELOPMENT PLAY ANY ROLE IN THE EFFECT OF FDI ON ECONOMIC GROWTH IN NIGERIA? AN EMPIRICAL INVESTIGATION

The objective of the paper is to investigate whether stock market development plays any role in the effect of foreign direct investment (FDI) on economic growth in Nigeria. Using annual time series data that span the period from 1981 to 2014, and employing the fully modified ordinary least squares (FMOLS) estimation technique, the empirical evidence indicates that FDI, domestic investment and stock market development positively and significantly affect economic growth, but the effect of the interaction between stock market development and FDI on economic growth is negative and significant, indicating that the Nigerian bourse is not yet fully developed to engender positive growth effect of FDI. The study further finds that government consumption expenditure and trade openness adversely affect the growth of the country’s real GDP per capita. Recommendations of the paper include efforts by the government to design and implement programmes and policies aimed at enhancing the attractiveness of the country to foreign and local investors, efforts by capital market regulators to enhance stock market efficiency, reduction of government consumption expenditures and import control

DOES CORRUPTION AFFECT THE EFFECT OF FOREIGN AID ON ECONOMIC GROWTH IN NIGERIA? AN EMPIRICAL INVESTIGATION

The influence of corruption on the effect of foreign aid on economic growth is investigated using Nigeria’s data spanning the period from 1994 to 2014. The ordinary least squares (OLS) estimation technique is used to estimate a multiple linear regression model for the investigation. The analysis shows that the effects of official development assistance and aid on real GDP is positive and statistically significant, and that corruption does not affect the effect of aid on growth. The study however finds that government final consumption expenditure and exchange rate are positively related to real GDP, while trade openness is observed to be negatively related to it. In light of the empirical evidence, the paper recommends for policy consideration, effort by the government to enhance the attractiveness of the country to foreign aid especially by intensifying the fight against corruption; increase in government final consumption expenditure; imposition of restriction on importation, especially on those that commodities that can be produced locally; government intervention in the foreign exchange market to avoid harmful appreciation of the currency, etc, to enhance the growth of the nation’s economy