International Trade Flows and Employment in Nigeria

This study investigates the relationship between international trade flows and employment in Nigeria for the period 1981 to 2006. Using time series estimation technique, we found no significant link between trade flows and employment in Nigeria both in the short-run and long run. However, external factors such as FDI, real effective exchange rate, SAP and internal factors such as political stability, labour regulation and real wage are more important factors in explaining employment rate in Nigeria. Likely explanations of these outcomes are probably due to the country trading majorly in primary products which are largely uncompetitive and the non-diversification of the productive base of the economic such as the overdependence on oil exports. An effective and result-oriented employment effect from trade is likely to be aided by fortifying appropriate and enabling institutional and regulatory measures to enhance the diversification and competitiveness of Nigeria trade, the removal of impediments to labour market participations and labour market interventions such as putting effective social protection systems in place and strong political and social commitments to principles of competition and diversification.