Effect of Financial Globalization on Employment Generation in Nigeria

Abstract

This study sought out to examine the impact of financial globalization on employment generation in Nigeria. This draws support from the pro-globalization theorists assumption that financial globalization, which allows for reduction in capital control and expansion of financial transactions across national boundaries creates more opportunity for sustainable economic and social development. The specific objectives were to ascertain the effects of capital account openness, portfolio investment, broad money supply and market capitalization on employment generation. The data required for the investigation were sourced from the Central Bank Nigeria Statistical Bulletin, World Development Indicators, National Bureau of Statistics and IMF Financial Statistics. The data analysis techniques include ADF unit root test, bounds cointegration test, ARDL model method and post-estimation tests. The unit root test results showed that the variables are mixed integrated. While market capitalization is integrated of order zero, the other variables were integrated of order one. Evidence of long run relationship was established among the variables in the model from the bounds cointegration test. The ARDL results showed that capital account openness positively impacted on employment generation. This finding highlighted the significant role played by financial openness in promoting job creation. It was also evident from the results that portfolio investment has an insignificant negative effect on employment generation, which indicates that the growth in portfolio investment inflows is associated with increase in unemployment during the study period. Based on the findings, it is recommended that policymakers should promote gradual and consistent integration of the Nigerian financial system to the international financial environment to optimize the benefits of capital account openness for job creation.

Keywords

References