Abstract
Nigeria textile industry is characterized by questionable incentives, political uncertainty, acute power shortage, poor infrastructure, smuggling and red-tape bureaucracy, among others. The study modified the endogenous growth model within a time series (1986 and 2015) estimation techniques of Autoregressive Distributed Lagged model (ARDL). Findings revealed that the effect of simple tariff rate on textile industry is negative and statistically significant in the long-run; while trade liberalization policy measure through simple tariff rate has a lag effect before it can be effective in the textile industry. In both short and long run, real effective exchange rate depreciation worsens the performance of the textile industry in Nigeria. In the long run, a 1.0% rise in trade openness would decrease the level of textile industry performance by about 17.49%, while factor affecting textile industry performance in the short run are simple tariff rate, financial development, exchange rate changes, trade openness and labor and capital inputs respectively. The study concluded that Trade liberalization has a lag effect on textile industry performance and a significant effect on the performance of the Nigerian textile industry. It is therefore recommended that government should make concerted efforts toward providing a favorable business environment, reducing inflation and improve the infrastructural facilities for the textile industry to strive.
Highlights
Textiles industry is an important, but often negligent sector when it comes to empirical research
Where y = output of textile industry that is proxy by textile export value K = Physical Capital that is proxy by Gross fixed capital formation (% of Gross Domestic Product (GDP)) LAB = Labour force that is represented by Population, total Energy = Energy use Find = Domestic credit to private sector (% of GDP) EXC = Real effective exchange rate index (2010 = 100) Openness = Trade Openness HC = Human capital that is represented by Secondary School Enrollment, gender parity index (GPI) simple mean tariff rate (STR) = Tariff rate, most favored nation, simple mean, all products (%) εt= White noise stochastic term t= time (1986 – 2015)
This study conducted an empirical study on the relationship between trade liberalization policies and textile industry performance in Nigeria over the period 1986 -2015
Summary
Textiles industry is an important, but often negligent sector when it comes to empirical research. Other identified objectives of the incentives are to address the problem of inputs supply, demand, and price competitiveness of Nigerian textile industry, the provision of foreign exchange requirements to direct cash grant on export performance, trade liberalization, tax relief inducements and some other industrial assistance in the form of marketing, technology advancement, packaging quality, R&D, and innovation of Nigeria textile products, all are to improve productivity (NIRP, 2014) All these policies were designed to address these problems and encourage textile industry performance with a view of diversifying the productive base and increase its output for both domestic and export earnings. H1: Trade openness has no significant effect on the Nigerian textiles industry export rate
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