Trade and protectionism in Nigeria: Effects on employment and income distribution

Emmanuel Ogbonna Nwidoko, Fordham University


This dissertation investigates the effects of trade policy regimes on employment by skill levels and income distribution among three socio-economic groups in Nigeria. The study presents a model that provides a unified treatment of the determinants of both employment and income distribution effects of trade policy regimes and uses a social utility function to rank these policies. The model is a price-sensitive Keynesian formulation using both Cobb-Douglas and CES production technology in the specification of research equations. It is a Computable General Equilibrium (CGE) model and embodies a capitalist mode of production characterized by the use of hired labor and a traditional mode of production characterized by self employment and family labor. The Study aggregates Nigerian economy into four production sectors: petroleum, agriculture, manufacturing and home goods. Output levels in agriculture and manufacturing follow Keynesian adjustment pattern, changing without restriction to meet demand. A standard linear expenditure system splits total consumption among agriculture, manufacturing, home goods and consumers' imports of foreign agricultural and manufactured goods. Since linear expenditure system is a complete set of demand equations, sectorial consumption values sum up to the total consumption expenditure from the production side. The model is then solved as a closed Leontief system, given a sectorial breakdown of exogenous final demand. The most forwardlooking of our findings is that trade policy can be used to reduce the degree of income inequality. Four policy packages are specified and simulated. We found that the pro-export promotion policy is superior to the other policy packages in the growth of employment, the GDP growth and growth in the low income group's share of income. The study confirms the results of some earlier studies in the literature which conclude that export-substitution strategy is better than import-substitution strategy in employment creation and in GDP growth. See Bhagwati (1978), Krueger et al (1981) and Balassa (1985). In all policy packages simulated, employment, income and GDP growth were lowest in the base policy, Nigeria's applied policy in 1980 and 1981. Therefore Nigeria can increase her employment, income distribution and GDP through trade policy techniques.

Subject Area

Business costs

Recommended Citation

Nwidoko, Emmanuel Ogbonna, "Trade and protectionism in Nigeria: Effects on employment and income distribution" (1988). ETD Collection for Fordham University. AAI8818470.