Effects Of Globalization On The Nigeria’s Economy: Prospect For Development And Underdevelopment
This research work examines the effects of globalization on the Nigeria economy, it prospect for development and underdevelopment. Globalization is an inevitable phenomenon in human history that’s been bringing the world closer through the exchange of goods and products, information, knowledge and culture. In the last few decades the pace of global integration has become even faster due to the advancement of technology. Nigeria is not an exception in this globalization process. The main driving forces of this process are technology, policy and competition and it subordinates domestic economies to global market conditions and practices. Developed nations are the beneficiaries of globalization as their share of world trade and finance has been expanded at the expense of developing countries. This study examines the negative effects of globalization on Nigeria by focusing on its impact on science and technology and the environment. It argues that although globalization presents many opportunities, it also exposes developing countries like Nigeria to many new challenges. The study also suggests ways by which the negative effects of globalization can be addressed.
1.1 Background of the Study
The concept of globalization is global and dominant in the world today. It did not emerge spontaneously rather it was created by the dominant social forces in the world to serve their specific interest. It has been largely driven by the interest and needs of the developed world.
Globalization is a technology driven process, which breaks down national borders to ensure an unrestricted movement of capital technology and serves across national boundaries. The Transnational Corporations (TNCs), International Finance Institutions e.g. America, are seen and regarded as purveyors of contemporary globalization.
They view globalization as “a process of freeing economic”, particularly that trade between countries can take place more easily. According to them, globalization is a natural and inevitable part of historical change, which will eventually increase wealth and prosperity for all countries and peoples and subsequently enhance world economy (Okokie, 2003). But the activities and operations of these international organizations are marked by uneven distribution of opportunities, constraints and disadvantages.
Hence, the excessive inequalities and power imbalance among the members’ states raise serious doubts about the prospect of the process benefiting all equally. This apprehension is underscored in a UNDP (1996:56) Human Development Report, which describes the process as a “two edged sword with winners and losers”. The inequitable distribution of wealth and power in the system is reflected in the inability of the weak, (developing countries) as losers, to influence the world’s economic and political affairs. The technological advanced powerful industrial economies (developed countries) occupy key positions in the global institutions and they are largely responsible for major decisions in the system, excluding the weak. Consequently, it is a system in which the strong (developed countries) exercises their power without any regard for the rest of the world while the weak, in their powerlessness are compelled to endure or suffer what they must.
Basically, writers from developing economies argue and maintain that contemporary globalization which has as its principle instruments, the reformed Bretton woods institutions, the world Trade Organization (WTO) and the G8 (Group of Eight”, consisting of eight large world economic powers namely: Canada, France, Germany, Italy, Russia, United Kingdom, Japan and United States) is rather reproducing negative consequences in the development efforts of peripheral capitalist economies. Specifically, they noted that the three general policy measures of globalization, viz privatization, deregulation, trade and financial liberation have rather left developing economies prostrate i.e.
These three general policies of globalization have rather left developing economies weak and fall suddenly and very big at the middle of its difficult and complicated situation instead of salvaging it. Hence, real income for most Africans and indeed Nigeria is lower than they were three decades ago; health prospects are poorer and human poverty index is becoming more elastic (Okokie, 2003). It is however, relevant to note that since Nigeria is a third world Nation and was at a certain time in her history colonized by Britain, her domestic economy was incorporated into the global capitalist system to her own detriments, at a time when her economy was not prepared for such an advancement.
The growing trends in trade and capital flows were also interconnected. The expanding demand for food and raw materials in Europe and North America Encouraged Foreign Direct Investment (FDI) in primary sector activities.
Thus, commodity exports accounted for over 60% of international trade at both the beginning and the end of the phase and 550/0 of the stock of FID in 1914. Complementary portfolio investment flow financed infrastructure projects, particularly railway construction in the primary produces exporting nations even through such investments were intended to facilitate the exploitation of these nations, and not to assist them in their development efforts. Because many of the leading core industrial and trading nations were also labour scarce economies, the emerging growth opportunities attracted substantial inflows of unskilled workers particularly from the poorer European nations, (Alfred, 2001).
The growth of transnational linkages in the 19th century increased technologies and communication networks. The incorporation of the underdeveloped nations into the global network attained greater dimension because it introduced a new global interdependence into international political economy. European merchants establish trading networks that spanned the globe. European established colonies, slave plantations, and trading outpost in tropical regions to grow or obtain goods unavailable in Europe, such as sugar, tobacco, coffee and spices. This brought about industrialization in Europe and North America that drastically increased the volume and economic importance of international trade (Microsoft Encarta Encyclopedia, 2002).
Globalization as a process is not a new phenomenon. However, the character and basic features have continued to facilitate at a particular historical epoch with the prevailing mode of production, exchange relations and societal propensities and preferment. Thus, globalization as a process was prevalent form the empire, kingdoms, and chiefdoms days to the moderns’ state system and has over the years propelled international relations (Owugah, 2003). As noted by ChakravarthiRaghayan in Third World Resurgence (1999) “the current talk since late 1980s and early 1990s of globalization and integration is really an effort of transnational corporations (TNCs) to expand their activities to the developing countries. And just as the term multinational corporations based in one home country, with management and control, if not all shareholders from that country, but having branches, subsidiaries and production units in other countries, the world ‘globalization’ is being used to wrap together and hide the reality of the current stages of the activities of the TNC, mainly the attempt at Trans-nationalization of the world, and more so that of the developing countries (Raghayan, 1996).
Nigerian being one of the weakest economies in the globalize system: due to lack of advanced technology, political instability, high rate of unemployment etc, the process therefore poses a great challenge to the Nigerian state economically. The strategies employ by the institutions of globalization as earlier stated in this introduction poses a serious threat, not only to the economic development of Nigeria, but also to the overall development of the country, politically, socially and culturally.
1.2 Statement of the Problem
One of the problems of Nigeria is how to develop economically to a point where she can participate effectively in the global market. With the call for integration of African countries of which Nigeria is one into the “Global Village” and application of all developmental strategies (policies) such as: privatization, Trade Liberalization, Devaluation of Currency, Structural Adjustment Programme (SAP) to name but a few, suggested by the IMF, World Bank and other agency of Globalization, it is expected that the economy of Nigeria will witness rapid development but the reverse is the case.
The statement of problem is: what has made Nigeria’s economy underdeveloped after subscribing positively to becoming a member of the global village and has applied all developmental policies suggested by IMF and world bank such as privatization, trade liberalization, democracy, devaluation of currency etc, as strategies of Economic Development, or could it be true that “Globalization is a means through which developed Nations further underdeveloped the developing Nations?
1.3 Objective of the Study
The objectives of the study are:
- To examine the benefits of globalization to Nigeria’s economy.
- To evaluate the agents of globalization.
- To determine role of Nigeria on a global stage.
- To determine how Nigeria can achieve higher development in today’s rapidly globalizing world.
- Show the impact globalization has had on Nigerian economy.
1.4 Research Question
- Is globalization the yardstick for economic development in Nigeria?
- Has globalization any negative effects in Nigeria?
- Could there be other avenue for economic development in Nigeria outside the processes of globalization?
- What are the benefits of globalization to the Nigeria’s economy?
- Can globalization be seen as positive or negative for Economic Development of Nigeria?
- What is the role of Nigerian in a global world? iii). Is Nigeria better off or worse off with globalization?
1.5 Significance of the Study
The economic relevance of studying the effect of globalization on the Nigeria economy needs not to be over emphasized. Globalization has brought rapid change in Nigerian economy that seeks to increase their share of financial and direct investment in the globalization market.
Globalization provides economic independence and triggers competition, stimulating globalization to elevate the living standard of people in the nation that offer themselves to the world trade, “We have moved from a world where the big eat the small to a world where the fast eat the slow” as observed by Klaw Schwas of the Dawob world economic living standard of people have considerably improved through the market growth within the development in technology is not only a steady increasing demands but also it has led to greater utilization. The result of the study will also be significant in the following way:
- Through the help of globalization, there has been easy and accessible communication network which facilitate production, distribution of goods and services both domestically and international
- Globalization has rapidly improves the social and economic status of women in the developing world. The explanation is based on the fact that in a competitive, globalization world, and the role of women becomes even more valuable.
- Globalization breaks the regressive taboos responsible for discriminating against people on basis of gender, race or religious beliefs and it is an antidote to the intolerant fundamentalism that appear to oppress million of the world’s poorest, globalization offers hope that one day they may enjoy the fruit of the west liberal tradition.
- Globalization has help in the reduction of likelihood for war between developed nations. It has also help to increase environmental protection in developed nations. Finally, another factor which is often considered as a positive outcome of globalization is the lower inflation. This is because the market rivalry stops the businesses from increasing prices unless guaranteed by steady productivity. Technological advancement and productivity expansion are two other importance of globalization because since (1970s) growing internationals rivalry has triggered the industries to improve increasingly.
1.6 Scope and Limitation of the Study
The study covers the effect of globalization on the Nigeria economy, because when change is not properly managed, there is the tendency it affects performance negatively which may result in total closure of the organization as it happens to many of the firms in the industry, or loss of valued employees or failure to meet financial objectives of shareholders and may eventually degenerate into customers dissatisfaction who could easily move to other competitors thereby affecting the overall performance of the firm. However the research has some constraints which are;
The time at the disposal of the researcher which is allocated for the study was a major limitation as the researcher has to combine other academic work with the study.
The finance at the disposal of the researcher in the course of the study does not allow for wider coverage as resources are very limited as the researcher has other academic bills to cover.
1.7 Definition of Terms
Globalization (or globalization; see spelling differences) is the increasing interaction of people through the growth of the international flow of money, ideas and culture. Globalization is primarily an economic process of integration which has social and cultural aspects as well. It involves goods and services, and the economic resources of capital, technology and data.
A market is one of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange
Competition is, in general, a contest or rivalry between two or more entities, organisms, animals, individuals, economic groups or social groups, etc., for territory, a niche, for scarce resources.
The act or process of developing; growth; progress:child development; economic development.
The process whereby something or someone is pushed to the edge of a groupand accorded lesser importance. This is predominantly a social phenomenon by which a minority or sub-group is excluded, and their needs or desires ignored.
The definition of indebtedness is the state of owing something (usually money) to someone, or the total amount owed.
Changes in Technology:
In essence technological change is the invention of technologies (including processes) and their commercialization via research and development (producing emerging technologies), the continual improvement of technologies (in which they often become less expensive), and the diffusion of technologies throughout industry .
Summary, Conclusion and Recommendation
It is pertinent to note that this research was aimed at examining the contribution of globalization to the development of the Nigeria economy, thus the topic “the effect of globalization on the Nigeria economy: prospect for development and underdevelopment”.
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 associated with globalization economic, political and social development in Nigeria.
Globalization, the closer interaction between national economies through trade, investment and capital flows, made possible by technological development and advancement in telecommunications, has increased global welfare and transformed the world into a global village.
The findings of this study revealed that, globalization has both positive and negative effects. The positive effects are international specialization, which results in high quality and low cost products, improvement in welfare and the closer interaction between national goods and services, and financial markets. These result in the free flow of investment capital to take advantage of opportunities for higher yields across national boundaries. The adverse effects include, the accentuation of macroeconomic imbalances, marginalization of economies that failed to apply appropriate policies and destabilizing impact of rapid short-term capital flows, especially when they cannot be absorbed in the production process and avenues for sterilization are slim.
However, it has been observed that globalization, despite the opportunities provided, is associated with serious problem that has to be managed in appropriate ways using appropriate fiscal policies. Globalization gives rise to macro-economy instability that had characterized Nigeria government. This problem shows that Nigerian economic development may remain only a dream and difficult to actualize. A highly globalize and integrated financial market spread rapidly across counties financial shocks and loss of confidence that affect exchange rate, interest rate, assets prices with the resultant effect on output and employment and ultimately adverse social effects.
The world has become a global village, where we see high degree of interconnectedness and integration among national economies. The era of economic isolation or closeness is now a history of the past. Globalization has increase global and national economic output, economicwelfare, specialization, and technological advancement and transfer. It is for these reasons among others that there is strong push for the need to abolish barriers to trade and financial flow, and for greater level of openness among countries.
We are in the era of new globalization. Innovations in science and technology, communication and economic relations are becoming the order of the day. The global market is becoming more complex, competitive, and interdependent. Today, the new globalization has no room for corruption-laden, mismanaged, directionless, and distorted economies. An enlightened, sensitive, open and accountable leadership is critical to not just recovery but also the restructuring of patterns of incorporation into, and participation in the emerging global order (Ihonvbere, 2004).
The study concludes that, Nigeria supports the economic openness that globalization preaches and bears its burdens. But the authority of the Nigerian state in economic management has to be strengthened as a bulwark against the notion that entirely unfettered markets are indispensable for development to occur. Such an ideological conceit if not questioned could weaken efforts at domesticating globalization for economic development in the country.
There is, therefore, a need for a reassessment of how Nigeria has fared in the era of globalization. Science in a globalizing world has benefits that Nigeria can and should take advantage of. The era of computers, revolutionized telecommunication and the Internet is what the country cannot shy away from, but the positives of the times should be properly harnessed for the country to appropriately benefit from globalization. Instead of a consolidation of the cultures and values of the country, various dimensions of globalization continue to erode what makes this part of the world unique. Imitations and adoption of western values are being done at the detriment of the nation’s essence of existence.
It is also recommended that Nigeria should approach the issue of globalization carefully and ensures that the necessaryconditions are in place before liberalizing its economy. These conditions may include diversification, boost domestic production of manufacture goods, reduce its reliance on foreign goods etc.
Government should establish a link between domestic investors and world market, in order, for them to have a place where their goods and services could be sold and hence economic growth.
Government should encourage grassroots production through the promotion of Small and Medium Enterprises to meet their basic domestic needs and/or tailor their participation in the process of globalization along serving the purpose of this initiative.
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