TRADE OPENNESS AND UNEMPLOYMENT RATE IN NIGERIA

Abstract

This study examines the effect of trade openness on unemployment rate in Nigeria, covering a period of thirty-eight years i.e. from 1985 to 2022. Absolute cost advantage theory guided the study. Time series data taken from the National Bureau of Statistics and the Central Bank of Nigeria (CBN) came under use in the study. The techniques of data analysis utilised were the Error Correction Model, the Autoregressive Distributive Lag (ARDL) method, and the Augmented Dickey-Fuller (ADF) statistic. The main conclusions of the study are that, both in the long and short terms, trade openness substantially and negatively influences unemployment rate in Nigeria. Similarly, both in the long and short terms, FDI has a negative and notable impact on unemployment rate. Still, the rate of unemployment in both the short and long terms is much favourably influenced by the exchange rate. This outcome implies that trade openness creates job possibilities, hence lowering the unemployment rate in Nigeria. Therefore, the research comes to the conclusion that unemployment in Nigeria is substantially influenced by trade openness. Among other things, the research suggested that the government of Nigeria institute calculated economic strategies aimed at luring private investment from outside the country. This would increase the overall amount of investment in the country and perhaps lead to the creation of more employment. Finally, in order to create more job possibilities, the government should look into new marketing areas that attract investors from other countries.