Trade Liberation and the Manufacturing Sector in Nigeria 2000-2009
Chapter One
Objective of the study
The objectives of the study are;
- To determine the effects of trade liberalization on productivity of manufacturing firms in Nigeria.
- To examine the influence of productivity on firms‟ export participation in the manufacturing industry in Nigeria
- To evaluate the effect of trade liberalization on the competitiveness of manufacturing firms in Nigeria.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Theoretical Literature
Theory of Production
Production refers to the process by which inputs are transformed into outputs. In economics, inputs may generally be considered to include labour, capital, and intermediate inputs. Firms make choices on various combinations of these inputs to produce outputs conditional on their technical production possibilities (Jehle & Reny, 2011). The quantity produced by a firm as well as how it may be produced is based on the production technology. The production technology specifies the feasible set of outputs that are obtainable with a given choice of inputs. Usually, the production function is used when describing the production technology.
Brown and De-cani (1962) elucidated that the productivity of a single factor and/or the productivity relating to all factors can be assessed from the production function. The single factor productivity is often in terms of partial productivity indices of factors including labour, capital, and intermediate materials input indices. In literature, there are two concepts of single factor productivity that can be derived from the production function; marginal productivity and average productivity (Besanko & Braeutigam, 2010). The marginal productivity measure refers to the change in output resulting from an addition of one unit in the use of an input. It therefore represents the slope or rate of change in the production function as a result of an incremental change in the usage of a particular input while holding other inputs constant (Debertin, 2012). In practice, amongst the single factor productivity analysis, the simple ratio of output to factor inputs (average) is a prevalent indicator to measure productivity at the industry 28 level. These ratios show the amount of output attributable to a unit of labour, capital and intermediate materials and if they rise, then the productivity of that factor (labour, capital or intermediate material) has increased. The inverse of these productivity ratios indicates for a firm the units of the factor used in producing one unit of its output. Increase in any of the partial productivity ratios implies high productivity, meaning that a large amount of output is produced with less of a particular input. Most often, partial productivity for firms relate to output secured for a given amount of labour. In this case, productivity also denoted to as output-labour ratio, refers to physical volume of output attained per worker or per man-hour. Changes in outputlabour ratio represent changes in the efficiency of labour as a factor input. The outputlabour ratio would be influenced by among other factors, the skill of the work force, capital-labour substitution, and technical improvements. Technological conditions may however change over time, an occurrence known as technological progress, and the production function may then shift. In this case, either greater output can be obtained with the same input set or the same output can be obtained with lesser inputs.
Theory of Exports
The theory of exports draws from the theory of profit maximization behavior where firms aim to maximize their residual income over and above normal profits. Firms select optimal combinations of factor inputs to produce output. A firm looks at the goods markets and decides what quantity of the final good to supply for every possible price, implying that a firm makes its scale decision given its costs and market price of the good. Assuming the case where the firm produces for both the domestic and foreign markets and that the firm faces perfect competitive markets for its output and factor inputs, it‟s revenues would be derived from the sales in both the domestic and foreign markets. The firm‟s production irrespective of the market where the goods would be sold negatively depends on factor input prices.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to trade liberation and the manufacturing sector in Nigeria 2000-2009
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on trade liberation and the manufacturing sector in Nigeria 2000-2009. 200 staffs of CBN in Oyo state selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was on trade liberation and the manufacturing sector in Nigeria 2000-2009. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of trade liberation and the manufacturing sector in Nigeria 2000-2009.
Summary
This study was on trade liberation and the manufacturing sector in Nigeria 2000-2009. Three objectives were raised which included: 1. To determine the effects of trade liberalization on productivity of manufacturing firms in Nigeria, to examine the influence of productivity on firms‟ export participation in the manufacturing industry in Nigeria and to evaluate the effect of trade liberalization on the competitiveness of manufacturing firms in Nigeria. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staffs of CBN, Oyo. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made accountants, administrative staff, customer care officers staffs and HRM were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
The study has established that the export component of trade liberalization is beneficial to Nigeria in terms of improving productivity in the manufacturing industry. In all the sub-sectors, further increase to export penetration led to growth in total factor productivity of firms. Hence, trade liberalization measures towards increasing access to foreign markets are vital to ensuring increased productivity in the manufacturing industry in Nigeria. The study concludes that while productivity does not influence the decision by a firm to export, for those firms already participating in foreign markets, productivity increases their export sales. This is indicated by the results that found no significant influence of labour productivity on the probability of exporting, but a positive and significant effect of labour productivity on the share of exports in total sales of exporters. Therefore, higher productivity in firms already participating in international trade increases exports of manufactured goods in Nigeria. The study established that trade liberalization leads to a more competitive domestic market through its effect in curtailing prices and excess profits of domestic firms but, such may not cut across all sub-sectors of the manufacturing industry. This is because more import penetration only decreased the price-cost margins of firms in the Foods, Beverages and Tobacco sub-sector. In the Non-Metallic Mineral Products and Woods, Wood Products and Furniture sub-sectors the effect of import penetration on the price cost margins of firms was not significant. Thus, trade liberalization only increases competitiveness of the firms in some sub-sectors of the manufacturing industry.
Recommendation
Government should embark on programmes and policies to promote local production and discourage importation of certain essential products for trade to have the desired impact on the performance of the two sectors and promote economic growth in Nigeria
References
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- African Development Bank (2011). Regional Integration Strategy Paper for West Africa 2011 – 2015, Retrieved 12th February, 2017 from https://www.afdb.org/fileadmin/uploads/afdb/Documents/PolicyDocuments/RISP%20for%20West%20Africa%20-%20REV%202.pdf
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- Amiti, M. and Konings, J. (2007). Trade Liberalization, Intermediate Inputs, and Productivity. American Economic Review, 97(5): 1611-1638. 143
- Analogbei, F. C. O. (2000). “Trade Reforms and Productivity in Nigeria”. A paper presented at the Ninth Conference of the Zonal Research Units of the CBN entitled Productivity and Capacity Building in Nigeria, pp. 159 – 85.
