ABSTRACT
This research work
Globalization and its impact on the growth of the Nigerian economy from periods
of 1986 to 2008 is basically to determine the impact of globalization on the
Gross Domestic Product of the Nigerian economy as well the impact of financial
integration on the Nigerian economy. It was found out in recent years that the
Nigerian economy has developed economically wise due to globalization. Globalization
being a process of interconnections between countries of the world has turned
out to have a positive effect on the Nigerian economy most especially in the
telecommunication and industrial sectors of the Nigerian economy.
This work shows the
impact and those variables responsible for the impact. From evaluation and analysis of result, this
work shows that only Foreign Direct Investment proved to have a positive impact
on the Nigerian economy through globalization and hence it should be given lots
of concern. Other variables used alongside Foreign Direct Investment, in
judging this impact were Real Interest rate, Openness and Real Exchange Rate.
Also necessary
recommendations were made at the concluding part of this work (chapter five) to
help boost the economic growth and development of Nigeria based on the indices
used if properly applied and implemented.
TABLE
OF CONTENTS
Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of contents
CHAPTER ONE
INTRODUCTION
1.1. Background of the
study
1.2. Statement of the
study
1.3. Objectives of the
study
1.4. Statement of
hypotheses
1.5. Significance of
the study
1.6. Scope and
limitations of the study
CHAPTER TWO
LITERATURE REVIEW.
Theoretical Literature.
2.1. Globalization as a
concept
2.1.2. Strands of
thought of Globalization.
2.1.3. Forces of
Globalization.
2.1.4. Globalization in
the context of finance and capital flows and Foreign Direct Investment.
2.1.5. Challenges of
globalization for Nigeria.
2.2 Empirical
Literature
2.3. Limitations of the
previous study
CHAPTER THREE
RESEARCH METHODOLOGY
3.1. Model
specification
3.2 Methods of
evaluation.
3.2.1. Statistical
Tests (First order tests)
3.2.2 Econometric Tests
(Second order tests)
3.2.3. Economic Apriori
Criteria.
3.3. Data required and
source/ Software package.
CHAPTER FOUR
PRESENTATION AND
ANALYSIS OF RESULT
4.1. Presentation of
regression result
4.2. Result
interpretation
4.2.1. Evaluation based
on Economic Criteria
4.2.2. Statistical test
(First order test)
4.2.3. Econometric test
(Second order test)
CHAPTER FIVE
SUMMARY, POLICY
RECOMMENDATION AND CONCLUSION
5.1. Summary
5.2. Policy
Recommendation
5.3 Conclusion.
Bibliography
Appendix
CHAPTER
ONE
1.1
BACKGROUND
OF THE STUDY
Generally,
globalization can be viewed as the integration of national economics through trade,
capital flows and the accompanying convergence of economic policies. It is the
process whereby political, social, economic and cultural relations increasingly
take on a global scale and which has a profound consequence for individual’s
local experience and everyday lives (Bilton, 1997). The definition above
implies that globalization operates both at global and local levels and
therefore impacts on the economy and politics of a country as well as the
culture and well being of the citizens.
Globalization is rooted
in multinational trading and investments arrangements and the opening up of
trade, through liberalization of the financial sector as well as the economy as
a whole. The reasoning behind this policy thrust is that the promotion of trade
enriches the wealth of nations. For instance, trade liberalization under the
Uruguay round of multilateral trade agreement of 1995 was estimated to have
provided over 100billion U.S dollars a year in net benefits accruing mainly to
those countries that have removed trade barriers (Hausters, Gerd, 2000).
Financial integration as a part of globalization therefore envisages the free
flow of loanable funds, openness of capital flows when combined with sound
domestic policies, allow countries access to be much larger pool of capital.
High capital flows leads to enhanced investment and economic growth,
particularly when the inflows are in foreign direct investments, as against
potentially volatile short term portfolio flows.
Furthermore, Foreign
Direct Investment not only complements domestic savings but also enhances the
depth and efficiency of the domestic financial markets and the absorption of
foreign technologies. However, the monetary and fiscal policy framework of the
nation must be appropriate for the economy to benefit financial globalization
(Yusuf, 2001).
Globalization is not a
new phenomenon, as it has progressed throughout the course of history dating
back to the late 19th century. The history, was however, conquered
and the speed slowed down until the new era of global integration facilitated
by the removal of trade barriers and capital flows as well as the advancement
in communications and computer technologies which have made easy the collection
and processing of data needed for decision making. Consequently, the world
exports of goods and services have more than tripled between 1983 and 2005.
These changes have also stimulated demand for cross border finance, against the
background of financial liberalization in many countries, promoted a pool of
global liquidity to meet such demand.
Globalization have no
doubt increased opportunities for accessing capital funds for both domestic and
foreign sources more cheaply and on better terms. This is because financial
sector liberalization and product innovations have in many countries been
helped by technological advances. This in turn enhances financial
intermediation and creates a more competitive market environment for financial
institutions.
The downside of those
benefits is that international capital flows could be very volatile and thereby
pass serious threat to financial and macroeconomic stability. On the other
hand, reversal of capital flows as witnessed during the Mexican crisis of 1994
to 1995 and the Asian and Russian crisis of 1997 to 1998 could endanger the
financial stability of the individual countries particularly where banks are
weak and poorly regulated. The contagion effect could as well threaten the
stability of the internationally financial system. There is also the risk that
during the period of boom and burst, asset prices may overshoot economic
fundamentals, thereby saddling banks with non- performing loan backed by
collaterals that have lost much of their values.
Globalization influences
the financial sector in different and complex ways. Typically, capital flows,
exchange rate crisis and inflationary pressures are some of the major avenues
through which the impact of globalization can quickly be transmitted into the
domestic economy. The implication of globalization for monetary policy can be
seen through two channels. First, volatile short term capital flows and
exchange rate movement which are associated with globalization can cause an
increase in the uncertainties surrounding the outcome of monetary policies.
Secondly, globalization forces policy makers to undertake structural
adjustments or reform which changes the conditions under which monetary policy
targets, strategies and instruments. It is generally believed that the more discretionary
monetary and fiscal policies are constrained, the more open an economy becomes.
Globalization also
compels government to exercise greater fixed discipline and to ensure sound
institutional and political frameworks. In order words, it does act as a force
for stability by limiting the scope for countries to pursue policies that are
consistent with medium term financial stability. High fiscal deficit and
unsound financial policies that lead to inflationary pressures, current account
deficits and/or high real interest rate, attracts the attention of
international investors and capital market operators. Thus, the room for fiscal
rascality or unsustainable policies is much reduced in a globalized world.
Specifically, monetary
and exchange rate policies have undergone changes in line with broad economic
objectives. From independence up till 1986, the conduct of monetary policies
was mainly by direct control, which involved the impositions of ceilings on
aggregate bank credit expansion, sectoral allocation of credit, administrative
control of interest rate, prescription of cash reserve requirement, exchange
rate controls and the mandatory holding for government securities. The
financial market during this period was mainly underdeveloped, repressed with a
limited money market instruments and fixed and inflexible interest rate. A fully
developed economy is that which have passed the various stages of development.
This development will be achieved more rapidly if foreign investors have access
to the domestic markets.
1.2
STATEMENT
OF THE PROBLEM
There are problems
associated with the development of the Nigerian economy in her different
sectors based on the impact of globalization. These problems may be economic
problems based on the rate of instability, policy barriers to capital flows,
inappropriate economic policies and political instabilities. There may also be
problems like market liquidity. In using liquidity as a measure of stock market
development, it seems that the Nigerian capital market is illiquid to an extent
and it has contributed very little to the growth of the Nigerian economy
(Ibrahim, 2002).
Therefore, this
research work shall answer the following questions
1.
Does globalization produce a rapid flow
of foreign capital for the Nigerian economy?
2.
Does globalization significantly improve
management techniques for firms operating in Nigeria?
3.
To what extent has globalization brought
about an advancement of new technologies in the Nigerian economy?
4.
Has globalization resulted in inequality
between Nigeria and the western nations?
1.3
OBJECTIVES OF THE STUDY
Specifically, the
objectives of this study can be written as
1.
To verify the impact of globalization on
Nigerian economy.
2.
To verify the impact of financial
integration on Nigerian economy.
1.4
STATEMENT
OF HYPOTHESIS
In view of the above
mentioned objectives, the hypothesis of this research would be
Ho: Globalization has
no significant impact on the Nigerian economy.
H1: Globalization has a
significant impact on the Nigerian economy.
Ho: Financial integration
has no positive impact on Nigerian GDP.
H1: Financial
integration has positive impact on Nigerian GDP.
1.5
SIGNIFICANCE
OF THE STUDY
The economic relevance
of studying the impact of globalization on the economic growth in Nigeria needs
not to be over emphasized. This study is very imperative given the recent
efforts by monetary authorities in Nigeria to re-launch the banking sub-sector
to glorious heights. Globalization has brought about the rapid change in the
Nigerian economy that seeks to increase their share of financial and direct
investment in the international market. Globalization has by no doubt increased
opportunities by accessing capital funds from both domestic and financial
sources. More so, investors can now tailor their portfolio risk to their preferences.
This study is of great
importance to
·
Academic
institutions; globalization has played an important
role in the improvement of learning techniques. These techniques includes the
use of electronic gadgets such as computer, printers, laptops etc. which
facilitate learning processes as well as creating basis for understanding new technological processes
that will aid student academically.
·
Firms;
through the help of globalization, there has been easy and accessible
communication network which facilitate production, distribution of goods and
services both domestically and internationally, as well as attracting new
investors.
·
Government;
in terms of governance, globalization has improved our system majorly in areas
of budget. With the help of globalization, revenue collected and expenditure
made are accounted for with little or no errors.
1.6
SCOPE
AND LIMITATIONS OF THE STUDY
This study covers the
impact of globalization on the growth of the Nigerian economy from the period
of 1986-2008.
This research work was
limited by:
v Insufficient
fund.
v Limited
time to carry out research.
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