Abstract
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INTRODUCTION
1.1 Background to the Study
The concept of “globalization” is not more than twenty years old, but the social, economic,
political, and cultural processes that have been associated with globalization have existed for
many years. “Globalization” refers to the increasing movement and exchange of capital,
commerce, communication, and culture world- wide. According to lugalla, globalization is
not at all a new process. It is simply an expansion of capitalism as a mode of production at a
global scale.
Human economy progresses from primitive accumulation to peasant farming through
agriculture and industrial revolution to capitalism, colonialism, neo colonialism, imperialism
and now to globalization which is the current economic system. Globalization is the most
important phenomenon shaping the current environment for economic development.
Globalization simply defined is the increasing interaction among, and integration of, the
activities especially economic activities of human society around the world(Musa, 2000).
Globalization is the summit of mankind?s effort towards breaking down of the physical
barriers among the various races of the world for the mutual benefit of humanity. In
Ajayi(2008),description, globalization is “the latest economic fad that is turning the whole
world into a global village”. Facilitating the attainment of globalization are such factors as
technological advances in the transportation particularly maritime technology, which gave
rise to slave trade colonization and the attendant exchange of goods and services among
nations. Second is the international trade with its underlying comparative advantage,
international gold reserve, euro dollar market, „offshore export platforms? and „supply side
economics?. The third factor is the advent of multinational companies, which forge a link
among nations in the production of goods and services far beyond the headquarters of these
multinationals. Fourthly, the advent and revolution in information and communication
technologies makes it possible to have access to remote location in real time. Coupled with
this are computer mediated communication (CMC), Computer-supported Cooperative Work
(CSCW) and World Wide Web(WWW), electronic commerce, virtual communities, and
virtual social structures, electronic achieves, virtual architecture, virtual imaging and
information design. Similarly, the term „cable network news? epitomizes the revolution in the
electronic media; and the name „Rupert Murdoch? the international imprint magnate,
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symbolizes the new industry and what globalization has come to mean to its ownership and
distribution. Fifthly, the establishment of international and supernatural organization among
nation and continent necessitating the union of regional, continental and world bodies.
The most challenging development in world history today is globalization.
Globalization is the increased integration of world economies through trade and capital flows,
facilitated by the phenomenal growth in information technology and the opening up of closed
economies and societies (Ezike, 2009). The concept of globalization infers that the globe is a
single unit which functions as one when it comes to decision-making. In other words,
globalizations implies the free movement of goods, services and capital throughout the world.
Globalisation involves the opening up of national economies to global markets (Rupali, 2008).
With the advent of globalization, the world has become a much smaller place where
interaction between different countries has led to a situation where a country?s economy and
development are not only in the hands of the ruling government, but is highly influence by
international organizations where international rules and legislations reigns. This naturally
and simultaneously results in the simultaneous reduction in the role of the State to shape
national policies. Many Socialists define globalization as a primarily economic phenomenon,
which involves increasing interaction and integration of national economic systems. This
leads in turn to growth in international trade, investment and capital flows. Moreover, there is
a rapid increase in cross-border social, cultural and technological exchanges because of the
phenomenon of globalization. Globalization affects virtually all the industries and the
banking industry is no exception.
Globalization can be described as a concept or a phenomenon, which either rallies
public support or evokes opposition or protest- sometimes- violent protest. It creeps up in
virtually every discourse is it political, economic, social and cultural. Santarrelli&Figini,
(2010), defined it as a historical process driven by technology factors such as development of
computers and the internet, which reduces the distance between people in terms of space and
time.
Globalization is the term used to describe the growing worldwide integration of the
people and countries. Globalization has reduced barrier existing in international trade. The
reduction in those barriers has opened the door for exported growth. Nigerian economy has
been mono-cultural since independence and has so much depended on the western countries
for its survival (Salimono, 2009). Globalization according to Akinbayo (2007), is the process
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of shifting autonomous economies into the global market or the systematic integration of
autonomous economies into a global system of production and distribution. This invariably
involves an efficient and dynamic financial sector that is necessary for the facilitation of
intermediation and exchange of goods and services.
The world is fast becoming a global village a metaphor that is often invoked to depict
global interdependence and the increasing interaction among the integration of economic
activities of human societies around the world (Ajayi, 2009). In concrete terms, globalization
is the intensification of cross border trade and increased financial and foreign direct
investment flows among nations, promoted by rapid advances in liberalization of
communication and information technology Since globalization entails trade liberalization, it
is therefore imperative that there is free and unrestricted movement of trade, finance and
investment across the international border. The advantage here is that globalization allows
Nigeria to export and import goods, capital and investment without restriction (Oputa 2006).
Hence, the place of Nigeria in the globalization agenda requires some in-depth study.
Very critical to our understanding of globalization is the dire need to use it as a
synonym for liberalization and greater openness. The implication of this is that both domestic
and foreign liberalization are said to imply globalization, since the formal brings domestic
markets more in conformity with forces operating in markets abroad, and, the removal of
administrative barriers to international movement of goods, services, labour and capital
increases economic interaction among nations. It is within this purview that we can argue that
globalization is mainly a phenomenon of capital mobility. Its two prongs are; (i) foreign
direct investment and (ii) international portfolio flows.
In general, globalization summarizes a number of interrelated features of the world
economy; rapid advances in the communication and transport technologies, expanding spatial
scope for the business activities of uniformity in policy and institutional environment that set
the rules of the game for economic actions and interaction on the part of private agent based
in various countries (Court and Yanagihara, 2008).
However, despite the glowing advantages, globalization has its set-backs. It is remarkable
to note that despite the giant striders that have accompanied the process of globalization, the
statistics suggest that the rate of improvishment is growing on a global scale and the numbers
of the poor and the excluded are rising in many parts of the world (UNCTAD, 2002).
Although the evidence for these trends varies among the different regions of the world, it is
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evidently overwhelming among the sub Saharan countries, Nigeria inclusive. Indeed if
anything, the number of people living in absolute poverty has been on the rise. In Nigeria,
globalization has been associated with the collapse of the middle class and the swelling
number of the very poor and armies of unemployed people including university graduates.
The centrality of this project is to advance balanced and reasoned agreements for and
against the global order in order to bring out in bold relief the effect of global order on the
sub Saharan Africa, Nigeria in particular.
1.2 Statement of the Problem
The benefits of globalization have been less than its advocate claim, the price paid has
been greater, as the environment has been destroyed, as political processes have been
corrupted, and the rapid pace of change has not allowed countries time for cultural adaptation.
The crises that have brought in their wake massive unemployment have, in turn, been
followed by longer-term problems of social dissolution…. ( Stiglitz, 2002). In spite of the
openness of the economy and the numerous opportunities associated with globalization, it has
been observed that external trade performance has not been encouraging. Some countries like
Nigeria are yet to benefit from it
The globalization orthodoxy contends the one major effect of the regime is the ability and
ease of movement of labour, especially skilled labour, across national boundaries. They
maintain that once the qualification are right and the cognate experience met prospective job
seekers can apply to and be employed in given company in any region of the world. Harris
(2006) observed a trend towards a simple global labour market, moving towards on price for
labour for each skill grade regardless of whether the country compete with each other for
unemployment, offering employers the lowest price at a given level of labour productivity.
The anti-globalization countered that rather than universalization of employment
opportunities favouring LDCs the reverse has been the case. Technocrats and professionals
are few and far between in LDCs and these few ones are attracted to North America and
Western Europe due to „dollarized income?. The next effect is brain drain in critical sector of
the economy. Similarly, the „mad rush? to Western Europe and North America by African
youth is detrimental to the growth and development of Africa.
The role of the state in a global order has been a subject of controversy by the schools of
thought. Proponents of globalization contend that rather than being eclipsed the role of state
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has enlarged in the wake of globalization. On the contrary, anti-globalization element
maintained that the role and place of international rather than national forces and institutions
has assumed a particularly prominent profile in the era of globalization. It further argued that
„it is no longer the state to which we should be paying attention but rather to the forces of the
international arena? (Orford, 2009). Globalization orthodoxy pointed to the synergy between
globalization and democracy, noting that global interconnectedness has engendered the
global upsurge and spread of democracy in several ways. Beck (2009) opined that
globalization “creates trans-national solid links and spaces, revalues local culture and
promotes third cultures”. Schwartzman (2008) argued that global shocks have contributed to
democratization by creating legitimacy crisis in authorized regimes.
On the other hand, antagonists maintained that „globalization is rendering democracy
irrelevant and this it poses the most serious threat yet in the history of democracy? (Ake). As
a result of globalization, people are becoming generally affected economic, culture and
environmental factors that are beyond their borders and shores; and people are losing their
ability to participate in decision making. The protagonist of globalization maintained that
whatever the shortcomings inherent in global order could be ameliorated within the workings
of international institutions such as International Monetary Fund (IMF), World Bank, World
Trade Organization (WTO).
In respect of international law, many scholars have questioned what is international
about international law. Africa and the Third World in general were not part of the originator
of international law. Consequently, their values, social norms and expectations are not fully
are not fully reflected or covered by international law (Anand, 1974). Anti-globalization
thinkers opined that the knitting together of world economies which is the hall-mark of
international capitalism, otherwise known as globalization has not insulated any part of the
globe from crisis and shock in the capital and financial markets.
1.3 Objectives of the Study
Therefore, the main objective of the study is to examine the socio-economic implication of
globalization for sub-Sahara Africa. The specific objectives of the study are to:
i] To examine the benefit and burdens of globalization in general and on sub Saharan
Africa using Nigeria as a case study.
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ii] To assess the effects of globalization on Nigeria?s economy using gross domestic
(GDP) in relations to that of international trade and foreign Direct Investment.
iii] To examine how globalization has led to economic breakdown and to know to what
extent globalization has affected roles of states.
iv] To ascertain whether globalization has effect on democratization in sub Saharan Africa.
1.4 Basic Assumptions
The research is predicted on the following assumptions;
1] That globalization has theoretical advantage and disadvantage on the economies of sub
Saharan Africa.
2] That the impact of globalization on Nigeria economy can be determined in the areas of
import, exports and Foreign Direct Investment (FDI).
1.5 Research Hypotheses
These research hypotheses were tested:
Hypothesis I
Ho: There is no significant relationship between globalization and socio-economic
development of sub-sahara Africa
H1: There is significant relationship between globalization and socio-economic
development of sub-sahara Africa
Hypothesis II
Ho: Globalization does not influence economic growth in Nigeria
H1: Globalization influences economic growth in Nigeria
1.6 Significance of the Study
Effects of globalization are controversial among scholars and policy maker of the
world. On one hand, some scholars are of the conviction is of devs ex machine an order that
is meeting the needs of mankind in a variety of ways at affordable cost, quality material and
service in real time even to remote locations. On the other hand, some argue that whatever the
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advantages the global order brings are enjoyed by a few developed economies at the expense
of the developing areas, particularly sub Saharan Africa. Since globalization entails trade
liberalization, it is therefore imperative that there is free and unrestricted movement of trade,
finance and investment across the international border. The advantage here is that
globalization allows Nigeria to export and import goods, capital and investment without
restriction. Hence, the place of Nigeria in the globalization agenda requires some in-depth
study.
This study would test the validity of these assumptions with the area of international
trade and capital flow in Nigeria with a view to showing the true position. And by these, it
would contribute to knowledge and enhance policy making.
1.7 Scope of the Study
Despite the tremendous growth rate of globalization over the years, sub Saharan Africa
has struggled to reap the benefits of globalization. In analyzing this, statistical data would be
used looking at the effects of globalization in sub Saharan Africa since 2003 to 2013.
1.8 Limitation of study
Globalization is a wide issue area as it affects the whole complex activities of man and
therefore difficult to examine all the aspects. Also, studies on globalization are more
amenable to quantitative rather than qualitative analysis thus eliminating biases.
1.9 Organization of Study
This project is divided into five chapters. The first chapter entails of the introduction
and under the introduction, statement of problem, objective of study, assumption of study,
research questions, significance of studies, scope, organization of study, definition of terms.
The second chapter is the literature review and the theoretical framework. The third chapter
contains the research methodology. The fourth chapter covers the data analysis and data
collected from research finding. Finally, the fifth chapter contains the summary and
conclusion of research work, as well as recommendation on how the problem can be tackled.
1.10 Definition of Terms
Globalization
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Most of the definitions of globalization are tainted with ideological biases between the
proponent of globalization and its opponents. For proponent of globalization referred to or
disinterested movement of history bestowing benefits without discrimination upon the earth?s
people (Camedessus, 2008). Musa (2009) describes globalization as increasing interaction
among, and integration of the activities, especially economic activities, of human societies
around the world?. International Monetary Fund (IMF,2007), viewed globalization as an
economic interdependence of the counties worldwide through the increasing volume and
variety of cross border transaction in goods and services and of international capital flows,
and also through more widespread diffusion of technology. And for stiglitz (2002),
globalization refers to” the removal of barriers to free trade and the closer integration of
national economies.
Capital flow
Capital flows are aggregated by the U.S. government and other organizations for the
purpose of analysis, regulation and legislative efforts. Different sets of capital flows that are
often studied include the following: • Asset-class movements – measured as capital flows
between cash, stocks, bonds, etc.
• Venture capital – investments in startup businesses
• Mutual fund flows – net cash additions or withdrawals from broad classes of funds
• Capital-spending budgets – examined at corporations as a sign of growth plans
Sub-Saharan Africa
This is, geographically, the area of the continent of Africa that lies south of the Sahara
Desert. Sub-Saharan Africa is, geographically, the area of the continent of Africa that lies
south of the Sahara Desert. Politically, it consists of all African countries that are fully or
partially located south of the Sahara (excluding Sudan, even though Sudan sits in the Eastern
portion of the Sahara desert). List of Sub-Saharan African Countries
Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African
Republic, Chad, Comoros, Congo (Brazzaville), Congo (Democratic Republic), Côte d’Ivoire,
Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gabon, The Gambia, Ghana, Guinea, GuineaBissau, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius,
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Mozambique, Namibia, Niger, Nigeria, Réunion, Rwanda, Sao Tome, Senegal, Seychelles,
Sierra, Leone.
Foreign trade
Foreign trade is nothing but trade between the different countries of the world. It is
also called as International trade, External trade or Inter-Regional trade. It consists of imports,
exports and entrepot. The inflow of goods in a country is called import trade whereas outflow
of goods from a country is called export trade. Many times goods are imported for the
purpose of re-export after some processing operations. This is called entrepot trade. Foreign
trade basically takes place for mutual satisfaction of wants and utilities of resources.
International trade is the exchange of capital goods, and services across international borders
or territories. In most countries, such trade represents a significant share of gross domestic
product (GDP). While international trade has been present throughout much of history, its
economic, social, and political importance has been on the rise in recent centuries. It is the
presupposition of international trade that a sufficient level of geopolitical peace and stability
are prevailing in order to allow for the peaceful exchange of trade and commerce to take
place between nationsSchwartzman (2008).