Trade Policy and Performance of Export Manufacturing Industries in Nigeria.

ABSTRACT 

This study examines the impact of trade policy and performance of export manufacturing industries in Nigeria. It adopts time series data on a number of policy variables to determine their impacts on the manufacture exports as well as their significance or otherwise in stimulating export in Nigeria. In specific term, it also (a) identify the major determinants of manufacture exports in Nigeria, (b) determine the causal relationship existing between manufacture exports and trade policy (i) Openness, (ii) exchange rate, (iii) average tariff rates and (iv) capacity utilization in Nigeria. (c) determine the effect of trade policies on performance of the manufacturing industries of Nigerian economy pre – structural adjusted programme (SAP) and lastly to determine the effect of trade policies on performance of the manufacturing industries on Nigerian economy post structural adjustment programme (SAP). Empirical analysis of the data from 1970 to 2014 using co-integration analysis, ordinary least square (OLS), Vector autoregressive (VAR) model, unit root tests, cross correlation, Engle Granger co-integration test; Johansen’s test for co integration and granger co-integration test, have produced interesting results. Specifically, all the results have ultimately confirmed that there is, indeed a long-run and significant relationship among manufacture exports, trade openness, exchange rate, average tariff rates and capacity utilization. However, in the short-run, manufacture exports in Nigeria respond to current trade openness, current exchange rate and the first and third lags of itself. Finally, the results show that there is a long run co-integrating relationship between the variables. This implies that in the long run, trade policies have impact on manufactured exports in Nigeria. In conclusion it is also recommended that there is urgent need to diversify the economy away from single commodity oil; given the uncertainties in the world oil market, adopt policies that will ensure greater market access for the country’s manufacture exports as well as boosting their competitiveness at the international market. These could be achieved through the adoption of trade and exchange rate liberalization policies that are devoid of control and regulations and lastly, policy option to moderate import liberalization in order to reap the benefit of a positively related and significant exchange rate variable with manufacture exports within the framework of market determined exchange rate.

TABLE OF CONTENT

DECLARATION A.....................................................................................................i

DECLARATION B....................................................................................................ii

LIST OF TABLES ....................................................................................................ix

LIST OF FIGURES...................................................................................................xi

ABSTRACT.............................................................................................................xii

CHAPTER ONE ........................................................................................................1

1.0 INTRODUCTION................................................................................................1

1.1. Background of the Study.....................................................................................4

1.1.1. Historical Perspective of Manufacture Export Performance trends following trade liberalization in Africa:.................

1.1.2 Trade Liberalization and Manufactured Export

1.1.3 Evolution, Composition and Ownership of Nigeria's Manufacturing Industries. ................................................................. .

1.1.4 Nigeria's Manufacturing Industries Performance and Structural Changes .................................................................................. .

1.2 Problem Statement .............................................................................................24

1.3 Objective of the Study........................................................................................26

1.4 Research Hypothesis..........................................................................................27

1.5 Scope of the Study..............................................................................................27

1.5.1 Geographical Scope.........................................................................................27

1.5.2 Content Scope .................................................................................................27

1.5.3 Theoretical Scope............................................................................................28

1.5.4 Time Scope......................................................................................................28

1.6 Significance of the Study ...................................................................................28

1.7 Justification of the Study.................................................................................29

CHAPTER TWO......................................................................................................36

REVIEW OF RELATED LITERATURE.....................................................................36

2.1. Theoretical Review of Trade policy and Manufacture Export Performance. 36

2.2 Empirical Work on Trade Policy and Industrialization in Nigeria. .................48

2.3 Empirical Work on Trade policy and Manufacture Export Performance ........51

2:4 Methodological Reviews of Trade policy and Manufacture Export Performance ................................................................62

CHAPTER THREE..................................................................................................71

METHODOLOGY...................................................................................................71

3.0 Introduction ........................................................................................................71

3.1 Research Design................................................. .

3.2 Sources of Data ..................................................................................................71

3.3. Model Specification ..........................................................................................74

3.4 Co-integration Analysis for Impact of Trade Policy on Aggregate Performance

of the Manufacturing industry of the Nigerian Economy. Error! Bookmark not defined.

3.5 Ordinary Least Square (OLS) for Trend of Manufactured Export Performance ................................................................................ .

3.6 Vector Autoregressive (VAR) Model for Determinants of Manufactured Export....................................................................... .

3.7 Granger Test for Relationship between Manufacture Exports and Trade Openness, Exchange Rate, Average Tariff Rates and Capacity Utilization. ....

3.8 Engle Granger Co-integration Test To analyze the Effect of Trade Policies on Performance of the Manufacturing SubSector of Nigerian Economy Pre – Structural Adjusted Programme (SAP) and Post Structural Adjustment Programme (SAP)................ .

3.9 Johansen’s Test for Co-integration ....................

CHAPTER FOUR....................................................................................................86

PRESENTATION, ANALYSIS AND INTERPRETATION OF RESULTS .........86

4.0 Introduction ....................................................................................................86

4.1. Objective 1 – Determine the sTrend of Manufactured Export in Nigeria................................

4.2. Objective II: Determinants of Manufacturing Exports and trade policy in Nigeria.......................................................................86

4.2.1 Cross Correlation.............................................................................................93

4.2.2 Ordinary Least Square Estimates....................................................................94

4.3.3 Vector Autoregressive Models (VAR).............................................................96

4.3 Objective III: Establishing the Causal Relationship between Manufactured Exports and trade policy...........................................

4.4 Objective IV: Determine the effect of Trade Policies on Manufacturing Exports in Nigeria.................................................................

4.4.1 Determine the effect of Trade Policies on Manufacturing Exports in Nigeria-The Pre-SAP Period ..........................................

4.4.2 Determine the effect Trade Policies on Manufacturing Exports in Nigeria - The Post-SAP Period..............................

4.4.3 Determine the effect of Trade Policies on Manufacturing Exports in Nigeria for the Period 1970-2014...........................................

4.5 Diagnostic Tests...............................................................................................112

4.6 Discussion of Findings.....................................................................................112

CHAPTER FIVE....................................................................................................117

SUMMARY, CONCLUSION, CONTRIBUTION TO KNOWLEDGE AND

SUGGESTIONS.....................................................................................................117

5.0 Introduction ......................................................................................................117

5.1 Summary ..........................................................................................................117

5.2 Conclusions......................................................................................................120

5.3 Recommendations..........................................................................................120

5.4 Contributions to Knowledge ............................................................................123

5.5 Suggestions for Further Research ....................................................................124

REFERENCES.......................................................................................................125

APPENDICES........................................................................................................137

Appendix 1 Results................................................................................................137

Appendix 2: Proposed Budget................................................................................193

Appendix 3: Time Frame .......................................................................................194

Appendix 4: Curriculum Vitae...............................................................................195