DOES TRADE LIBERALIZATION IMPROVE UNEMPLOYMENT RATE IN NIGERIA: EVIDENCE FROM RECENT DATA

Abstract

Trade liberalization and its effect on unemployment have, over the years, attracted greater research and attention from many researchers, given the attendant negative effects it has on the growth of an economy. The study investigated trade liberalization's impact on Nigeria's unemployment from 1981 to 2022. The study divided trade liberalization into exports trade and imports trade. The study employs the Ordinary Lease Square. The study conducted for descriptive statistics tested for unit root where most of the variables like export trade, import trade, real gross domestic product, unemployment, and exchange rate are stationary at first difference I(1), while inflation and foreign direct investment were stationary at level I(0). The study uses to co-integration test to confirm the long-run relationship between trade liberalization (export trade and import trade) and unemployment, and the result shows that there exists a long-run relationship. The result reveals that trade liberalization (both export trade and import trade) has a negative and significant relationship with unemployment in Nigeria; it means that an increase in both export and import trade will reduce unemployment in the country. The study concluded and recommended that the government should establish a trade policy that enhances employment opportunities and would contribute significantly to reducing unemployment in Nigeria. Keywords: Trade Liberalization, Export, Import, Unemployment, OLS, Nigeria. JEL Classifications: E24, F02, F16, F41, F32