June 2010 Page 1
Globalization and the Nigerian Manufacturing Sector
Erumebor Rume Wilson
Student at the Department of Economics, Delta State University, Abraka, Delta State, Nigeria
There have been gains and benefits from increasedborder transaction and massive flow ofinvestment, technology and information amongcountries. Many other countries have however been faced with enormous challenges of partakingin the benefits of globalization. Such challengesinclude structural deficiencies, inefficient andinappropriate economic policies and high existenceof corruption in the country amongst others. Allthese internal problems reduce their strength andcapacity to successfully compete in the globaltrend rather they tend to reap the negative effectsof globalization.
According to the WorldDevelopment Indicators (2007), “globalization hascreated opportunities and challenges for developing countries. While the experience ofChina, India, Indonesia, Thailand and some other countries have demonstrated that integration intothe global economy is necessary for long termgrowth and poverty reduction, concerns have beenexpressed over equality of opportunity andunequal distribution of benefits”. Globalization is adual sided phenomenon which has been beneficialto many countries and has not helped matters inthe same or many other countries especially thedeveloping countries. This is so because mostdeveloping countries have very weak capacities totake advantages of global markets as they are stillgrappling with the provision of basic necessitiessuch as roads, railways, food, and water amongothers. In the absence and inadequacy of thesebasic necessities, it becomes difficult to fully utilizethe opportunities and benefits of globalization inthe developing countries even in Nigeria.By integrating the world into a global economythrough trade liberalization, commercialization andprivatization, globalization in one aspectundermine growth in the manufacturing sector inNigeria as it exposes local firms and industries tocompetition from global corporation who oftenhave better financing, technology, advertising andmarket reach. With increasing breakdown ofbarriers in developing countries including Nigeriaas a result of globalization, industrialized nationshave therefore taken advantages of tradeliberalization thereby seeking market to dump their cheap manufactured goods and rendering the localindustries inefficient leading to slow growth rate,low capacity utilization and low output of the localindustries as the demand for goods produced inthe country decline due to cheap imported goodsand high cost of production faced by theindustries. With globalization, Nigeria keptimporting everything at the expense of her owndomestic industries. These problems havetherefore caused firms to leave their industriesrendering many Nigerians unemployed.Trade liberalization, a major policy thrust in theStructural Adjustment Programme (SAP) in 1986 inNigeria led to the exposure of infant localindustries in Nigeria to unfavourable competitionwith Multi-National Corporation (MNCs). The localindustries do not have what it takes to competewith these multi-national corporations which havestronger financial base, produce better andcheaper products and have a strong and efficientmanagerial capacity. Trade liberalization focusedexclusively on import liberalization withoutsufficient attention to improving export marketsaccess and establishing a competitive exchangerate to ensure that the resources freed-up in the