THE EFFECT OF GLOBALIZATION ON MANUFACTURING SECTOR OUTPUT IN NIGERIA

Globalization, a multifaceted phenomenon encompassing economic, political, social, and cultural dimensions, has significantly shaped economies worldwide. While its various aspects are crucial, the economic implications remain central to discourse, particularly in developing economies such as Nigeria. This study examines the impact of globalization on Nigeria’s manufacturing sector, a key driver of economic growth, industrialization, and employment generation. Despite Nigeria’s extensive participation in global trade agreements and economic partnerships, the manufacturing sector continues to struggle due to factors such as inadequate infrastructure, limited access to finance, high production costs, and trade liberalization policies that expose local industries to intense foreign competition. The research explores the relationship between trade openness, inflation, and exchange rate volatility and their effects on manufacturing output in Nigeria. By employing an econometric approach using data from 1981 to 2023, the study aims to provide empirical evidence on how globalization has influenced the sector’s performance. Findings from this research will offer valuable insights for policymakers, helping them craft strategies to enhance the competitiveness of Nigeria’s manufacturing industry in the global economy. For short run, Past values of MAF and MHT significantly impact MAF, while current values are not significant., Inflation (LINF) has a positive and significant impact, while Exchange Rate (LEXR) negatively affects MAF at lagged values. FDI has a mixed effect—positive in one lag but negative and significant in others. In the Long-run, MHT and LEXR negatively impact MAF, Inflation (LINF) significantly boosts MAF, FDI negatively impacts MAF but is not statistically significant. Based on the findings of this study, Merchandise trade may boost manufacturing output over time rather than immediately. A stable exchange rate policy is necessary to protect manufacturing output. Inflation control policies are crucial, as inflation positively influences manufacturing in both the short and long run. FDI policies should be carefully structured, as their impact on manufacturing output varies. This analysis provides valuable insights for policymakers aiming to enhance the manufacturing sector's contribution to the economy, Additionally, the study contributes to the broader discourse on globalization’s impact on developing economies, highlighting key challenges and opportunities for sustainable industrial growth.