International Trade and Unemployment Rate in Nigeria: An Empirical Analysis
Abstract
As Nigeria yearn for economic growth and development, there has been increasing international trade accompanied with the utilization of labour. This study analysed the effect of international trade on unemployment rate in Nigeria for the period 1985 to 2023. The study specifically determined the effects of exchange rate, foreign direct investment, trade openness, trade balance and labour force participation rate (proxies of international trade) on unemployment rate in Nigeria. Relevant time series data used for the study were extracted Central Bank of Nigeria Statistical Bulletin, National Bureau of Statistics report and World Bank Development Index/Indicators. The study adopted different econometric techniques such ADF unit root test, Bounds cointegration test and Autoregressive Distributed Lag approach. The findings revealed that exchange rate has a positive and significant effect on unemployment rate in Nigeria, foreign direct investment and trade openness have negative and significant effect on unemployment rate in Nigeria, trade balance has a positive and non-significant effect on unemployment rate in Nigeria while labour force participation rate has a negative and non- significant effect on unemployment rate in Nigeria. Based on the findings, the study concluded that international trade plays a significant role in the macroeconomic performance of Nigeria. Among other things, the study recommended that government should implement policies to reduce exchange rate instability through adoption of a managed float system and increase of foreign exchange reserves. Key words: unemployment rate, exchange rate, foreign direct investment, trade openness, labour force participation rate
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