THE IMPACT OF INTERNATIONAL TRADE ON EMPLOYMENT GENERATION IN NIGERIA

Abstract

The severity and the depth of unemployment in Nigeria has been alarming and of great concern to government and the general public. The task of creating sufficient new jobs to overcome unemployment, underemployment and problems of low wages and salaries ranks as the primary challenge to economic and social policies. Government had, over the years, implemented some macroeconomic policies with the aim of generating new employment and reducing the growing unemployment. The slow pace of employment generation has been attributed to the prevailing policy inconsistencies and institutional weaknesses in the nation. The divergence between the policy prescriptions of government and employment generation has, therefore, made a rethink on the appropriateness of policy interventions necessary. The paper examine the macroeconomic policies and employment relationship in Nigerian economy. It adopted the Keynesian theory of output and employment as theoretical framework. Macroeconomic variables considered were; employment growth; import rate; export rate; inflation rate and exchange rate. A simple employment model was formulated and estimated using Ordinary Least Square (OLS). The result of the dynamic analysis showed positive and statistically significant relationship between macroeconomic variables, output and employment. Specifically, import rate and export rate significantly boost employment. This result was consistent with our theoretical framework which implied that macroeconomic variables play important role in employment generation. Based on the findings, it has been concluded that macroeconomic policy variables have positive impact on employment generation in the economy. The outcome of the research shows that the macroeconomic policies that appropriately moderates import rate and exchange rate have the greatest potential to generate employment. The paper in its conclusion advocated a coherent policy framework that would allow for multiple policy instruments aimed at supporting the economy for employment generation in the long run.