TRADE OPENNESS AND MANUFACTURING GROWTH IN NIGERIA
ABSTRACT
This study examined the effect of trade liberalization on manufacturing sector performance in Nigeria using secondary data sourced from Central Bank of Nigeria (CBN) statistical bulletin and other publications. This paper extended previous empirical studies on the issue by providing some evidence from time series data period over 1981 to 2015 in the context of the Nigerian economy.
 In this study, the dependent variable was manufacturing output growth rate. The model was tested using OLS analyzing the dynamic relationship between manufacturing output growth rate and inflation, labour factor, real interest rate and domestic credit t private investment.
 Finally, this paper draws some policy implications for further studies to focus on how to improve manufacturing sector performance in Nigeria.
 CHAPTER ONE
TRADE OPENNESS AND MANUFACTURING GROWTH IN NIGERIA
INTRODUCTION
1.1 Background to the Study
 The wave of trade openness is fast shaping the nature of a cross-border transaction. With the emergence of neo-liberal philosophy in the 1980s which espouses as one of its fundamental policies the removal of all forms of trade restrictions, most developing countries did a return in major policy thrust to embrace this neo-liberal development.
 Openness to trade has been of utmost relevance among nations ever since that realization that international specialization is required for global output growth.
 There are obvious gains from international trade which include maximization of production, increase in welfare, efficient employment of resources, widened markets among others.
 Nigeria has embarked on several trade policies throughout the post independence era. These policies include industrialization strategy based on import substitution, export promotion and all other forms of administrative procedures. The major objective of these policies is to diversify the country's export base and to continually strengthen trade with other countrires.
 Prior to trade openness in Nigeria, government strategy simply involved attraction and encouraging foreign capital to engage in manufacturing activities through provision of social overhead. The role of government was also limited to providing infrastructure and other public incentives.
 Trade openness policy was adopted to ameliorate the balance of payment crisis as a result of oil glut in the world market in the 1980s. This openness to trade, however, had various implications on the growth and development of different sectors of the Nigerian economy.
 In July 1986, Nigeria embarked on restructuring of the economy through the well documented Structural Adjustment Programme (SAP). SAPs are a package of policies that aimed at liberalizing various aspects of the Nigerian economy. However, the early drive to consolidate on the gains from the trade lost steam through policy reversal and lack of credibility.
 Many issues are easily evoked in the event of trade reforms being promoted. These issues include the structural problem characterizing the Nigerian economy, the sequencing of the policompelling and the credibility factor involved.
 Considering the foregoing issues, it is critical to study the impact of trade openness on the manufacturing sector growth in Nigeria.
1.2 Statement of the Problem
 Various factors have been adduced for Nigeria's poor manufacturing growth. The major problem has been the country's continued and excessive reliance on the fortunes of the oil market and the failed attempt to achieve any meaningful economic diversification reflecting the effect of the so called "Dutch Disease".
The need to correct the existing structural distortions and open up the Nigerian economy to the path of sustainable economic growth is therefore compelling.
 Nigeria, being fully integrated into the global economic system, is a member and signatory to many multilateral and regional trade agreements. The policy response of such economic partnership agreements on trade policy has been to remove trade barriers, reduce tariffs and embark on outward oriented trade policies.
 All of these measures resulted in uinhibited access to imported goods to the Nigerian market without obvious positive impact on domestic production in the industrial sector since the real sectors have had to function under conditions of unstable macroeconomic management, technology and credit facilities. These have proved to be an obstacle to strengthening the productive base, especially of agriculture and industry, in order to make them export oriented. Thus, in spite of the openness of the economy and the implementation of trade liberalization measures, some macroeconomic indicators show poor performance of the economy as a whole. For instance, the economy has been characterized by infrastructural inadequacy, widespread corruption, inefficiency in the public sector and low degree of private sector participation in economic activities, low degree of savings accompanied by liquidity trap, capacity underutilization and low rate of capital formation.
 With the present situation in the country, it becomes really expedient to examine the relationship between trade openness and manufacturing sector growth in the Nigerian economy.
1.3 Research Questions
 Having considered the Nigerian economy as related to trade openness and growth of the manufacturing sector, we may then ask the following questions.
1. Does trade openness have any significant impact on the growth of manufacturing output in Nigeria?
2. Is there any long run relationship between trade openness and manufacturing sector output in Nigeria?
3. Does the interest rate also determine growth in the manufacturing sector?
4. How has the manufacturing sector responded to trade openness?
1.4 Objective of the Study
 The broad objective of this research work is to study, in its entirety, the relationship between trade openness and manufacturing sector growth. This broad objective can be subdivided into the following smaller objectives.
1. To examine the impact of trade openness of Nigeria's manufacturing sector.
2. To evaluate the long run relationship between trade openness and Nigeria's manufacturing sector growth.
1.5 Statement of Hypothesis
 In view of the foregoing study with respect to trade openness and manufacturing growth in Nigeria, the following hypothesis will be tested.
Ho: trade openness does not have any significant impact on Nigeria manufacturing growth.
H1: there is no long run relationship between trade openness and manufacturing sector growth in Nigeria.
1.6 Significance of the Study
 The role of international trade in the development journey of an economy cannot be overemphasized especially with the recent trend of globalization. Nigeria, being part of the global village, is not left out of this world developed.
 This research work is carried out to study how trade openness has influenced the performance of Nigeria's manufacturing sector. It will help the Nigerian government to the effectiveness of trade liberalization policy on the growth of the manufacturing sector over the years.
 Furthermore, this research work will serve as a guide and provide insight for future research on this topic and related field for students who are willing to improve on it.
 It will also educate the public on various government policies as related to trade issues. It will also aid policy making.
1.7 Limitations to the Study
 This research work, like every other research work, is really a vigorous one that consumes much time and energy especially in the area of data sourcing, data computation and modelling.
1.8 Scope of the Study
 This research work will examine the effect of trade openness on the Nigerian economy using the manufacturing sector from 1981 to 2015 as a case study.
1.9 Definition of Terms
1. International trade : trade between two or more countries or nations.
2. Protection policy.    : imposition of restricted on the imports of low priced products in order to encourage domestic industries.
3. Trade openness       : free trade policy, that is, trade policy without any tariffs, quantitative restrictions and devices. It is also used interchangeably with trade liberalization.
4. Tariff.                     : a tax imposed on imports.