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Trade protectionism and the manufacturing sector: a review of border closure policy in Nigeria

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  • Olufunke Iyabo Ajoje

    (Federal University Oye-Ekiti)

  • Olufemi Samuel Adegboyo

    (Federal University Oye-Ekiti)

Abstract

This study empirically investigates to ascertain the impact of trade protection vis-à-vis border closure policy on manufacturing sector in Nigeria between January 2018 and June 2021 using monthly secondary data. The study employs traditional theory of protectionism as its theoretical framework. The chow breakpoint result revealed that there is a significant change in the parameters of the model in July 2019 which coincides with the time the policy implementation started. It employs dummy variable to investigate the impact of the policy on manufacturing sector output as against use of two regression model. The regression analysis revealed that in the short run, the impact of the border closure on manufacturing sector was positive but later became adverse in the long run. Also, the interaction of the border closure with the inflation rate revealed that the inflation rate became high during the period but the government generated income from tariff increased. This revealed that there are leakages through the land borders that needs to be curbed through legislation. Sequel to these findings, the study makes the following recommendations: government should not consider closing the borders again as it closures constitute a drag to the manufacturing sector growth; rather than closed border, government should formulate policies to enforce trade protection; lastly, should it become exigent for the government to close the border, they should allow moderate inflation rate that the economy can tolerate in order to spur manufacturing output.

Suggested Citation

  • Olufunke Iyabo Ajoje & Olufemi Samuel Adegboyo, 2022. "Trade protectionism and the manufacturing sector: a review of border closure policy in Nigeria," Future Business Journal, Springer, vol. 8(1), pages 1-10, December.
    • Handle: RePEc:spr:futbus:v:8:y:2022:i:1:d:10.1186_s43093-022-00170-4
    DOI: 10.1186/s43093-022-00170-4
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    References listed on IDEAS

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    1. L. Rangasamy & C. Harmse, 2003. "The Extent Of Trade Liberalisation In The 1990s: Revisited," South African Journal of Economics, Economic Society of South Africa, vol. 71(4), pages 705-728, December.
    2. Barattieri, Alessandro & Cacciatore, Matteo & Ghironi, Fabio, 2021. "Protectionism and the business cycle," Journal of International Economics, Elsevier, vol. 129(C).
    3. Lawan Cheri, 2021. "Perceived Impact of Border Closure due to Covid-19 of Intending Nigerian Migrants," Social Inclusion, Cogitatio Press, vol. 9(1), pages 207-215.
    4. Harry G. Johnson, 1965. "An Economic Theory of Protectionism, Tariff Bargaining, and the Formation of Customs Unions," Journal of Political Economy, University of Chicago Press, vol. 73(3), pages 256-256.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Trade protectionism; Free trade; Border protection; Manufacturing output;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F19 - International Economics - - Trade - - - Other
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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