EFFECTS OF GLOBALIZATION ON THE NIGERIA’S ECONOMY: PROSPECT FOR DEVELOPMENT AND UNDERDEVELOPMENT

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EFFECTS OF GLOBALIZATION ON THE NIGERIA’S ECONOMY: PROSPECT FOR DEVELOPMENT AND UNDERDEVELOPMENT

CHAPTER ONE

1.1  Introduction

The concept of globalization is global and dominant in the world today. It did not emerge spontaneously rather it was created by the dominant social forces in the world to serve their specific interest. It has been largely driven by the interest and needs of the developed world.

Globalization is a technology driven process, which breaks down national borders to ensure an unrestricted movement of capital technology and serves across national boundaries. The Transnational Corporations (TNCs), International Finance Institutions e.g. America, are seen and regarded as purveyors of contemporary globalization. They view globalization as “a process of freeing economic”, particularly that trade between countries can take place more easily.  According to them, globalization is a natural and inevitable part of historical change, which will eventually increase wealth and prosperity for all countries and peoples and subsequently enhance world economy (Okokie, 2003). But the activities and operations of these international organizations are marked by uneven distribution of opportunities, constraints and disadvantages.

Hence, the excessive inequalities and power imbalance among the members’ states raise serious doubts about the prospect of the process benefiting all equally. This apprehension is underscored in a UNDP (1996:56) Human Development Report, which describes the process as a “two edged sword with winners and losers”. The inequitable distribution of wealth and power in the system is reflected in the inability of the weak, (developing countries) as losers, to influence the world’s economic and political affairs. The technological advanced powerful industrial economies (developed countries) occupy key positions in the global institutions and they are largely responsible for major decisions in the system, excluding the weak. Consequently, it is a system in which the strong (developed countries) exercises their power without any regard for the rest of the world while the weak, in their powerlessness are compelled to endure or suffer what they must.

Basically, writers  from developing economies argue and maintain that contemporary globalization which has as its principle instruments, the reformed Bretton woods institutions, the world Trade Organization (WTO) and the G8 (Group of Eight”, consisting of eight large world economic powers namely: Canada, France, Germany, Italy, Russia, United Kingdom, Japan and United States) is rather reproducing negative consequences in the development efforts of peripheral capitalist economies. Specifically, they noted that the three general policy measures of globalization, viz privatization, deregulation, trade and financial liberation have rather left developing economies prostrate i.e.  These three general policies of globalization have rather left developing economies weak and fall suddenly and very big at the middle of its difficult and complicated situation instead of salvaging it.  Hence, real income for most Africans and indeed Nigeria is lower than they were three decades ago; health prospects are poorer and human poverty index is becoming more elastic (Okokie, 2003).  It is however, relevant to note that since Nigeria is a third world Nation and was at a certain time in her history colonized  by  Britain, her domestic economy was incorporated into the global capitalist system to her own detriments, at a time when her economy was not prepared for such an advancement.

The growing  trends in trade and capital flows were also interconnected. The expanding demand for food and raw materials in Europe and North America Encouraged Foreign Direct Investment (FDI) in primary sector activities. Thus, commodity exports accounted for over 60% of international trade at both the beginning and the end of the phase and 550/0 of the stock of FID in 1914. Complementary portfolio investment flow financed infrastructure projects, particularly railway construction  in the primary produces exporting nations even through such investments were intended to facilitate the exploitation of these nations, and not to assist them in their development efforts. Because many of the leading core industrial and trading nations were also labour scarce economies, the emerging growth opportunities attracted substantial inflows of unskilled workers particularly from the poorer European nations, (Alfred, 2001).

The growth of transnational linkages in the 19th century increased technologies and communication networks. The incorporation of the underdeveloped nations into the global network attained greater dimension because it introduced a new global interdependence into international political economy. European merchants establish trading networks that spanned the glob. European established colonies, slave plantations, and trading outpost in tropical regions to grow or obtain goods unavailable in Europe, such as sugar, tobacco, coffee and spices. This brought about industrialization in Europe and North America that drastically increased the volume and economic importance of international trade (Microsoft Encarta Encyclopedia, 2002).

Globalization as a process is not a new phenomenon. However, the character and basic features have continued to facilitate at a particular historical epoch with the prevailing mode of production, exchange relations and societal propensities and preferment. Thus, globalization as a process was prevalent form the empire, kingdoms, and chiefdoms days to the moderns’ state system and has over the years propelled international relations (Owugah, 2003). As noted by Chakravarthi Raghayan in Third World Resurgence (1999) “the current talk since late 1980s and early 1990s of globalization and integration is really an effort of transnational corporations (TNCs) to expand their activities to the developing countries. And just as the term multinational corporations based in one home country, with management and control, if not all shareholders from that country, but having branches, subsidiaries and production units in other countries, the world ‘globalization’ is being used to wrap together and hide the reality of the current stages of the activities of the TNC, mainly the attempt at Trans-nationalization of the world, and more so that of the developing countries (Raghayan, 1996).

Nigerian being one of the weakest economies in the globalize system: due to lack of advanced technology, political instability, high rate of unemployment etc, the process therefore poses a great challenge to the Nigerian state economically. The strategies employ by the institutions of globalization as earlier stated in this introduction poses a serious threat, not only to the economic development of Nigeria, but also to the overall development of the country, politically, socially and culturally.

1.2  Statement of the Problem

One of the problems of Nigeria is how to develop economically to a point were she can participate effectively in the global market. With the call for integration of African countries of which Nigeria is one into the “Global Village” and application of all developmental strategies (policies) such as: privatization, Trade Liberalization, Devaluation of Currency, Structural Adjustment Programme (SAP) to name but a few, suggested by the IMF, World Bank and other agency of Globalization, it is expected that the economy of Nigeria will witness rapid development but the reverse is the case.

The statement of problem is: what has made Nigeria’s economy underdeveloped after subscribing positively to becoming a member of the global village and has applied all developmental policies suggested by IMF and world bank such as privatization, trade liberalization, democracy, devaluation of currency etc, as strategies of Economic Development, or could it be true that “Globalization is a means through which developed Nations further underdeveloped the developing Nations?

1.3  Research Question

  1. What are the benefits of globalization to the Nigeria’s economy?
  2. Has globalization any negative effects in Nigeria?
  3. Is globalization the yardstick for economic development in Nigeria?
  4. Could there be other avenue for economic development in Nigeria outside the processes of globalization?

1.4  Objective of the Study

The objectives of the study are:

  1. To examine the benefits of globalization to Nigeria’s economy.
  2. To evaluate the agents of globalization.

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