Does International Trade Reduce Unemployment? Empirical Evidence from Nigeria

This paper investigates the effect of international trade on unemployment in Nigeria. To achieve the purpose of examining how trade has created employment in Nigeria, international trade was disaggregated into: oil import, oil export, non-oil import, non-oil export, trade openness, foreign direct investment share of real gross domestic product and real effective exchange rate while job creation was proxied by unemployment rate in Nigeria. Data on international trade defined in terms of: oil import, oil export, non-oil export, non-oil import, Foreign direct investment share of economic growth and real effective exchange rate and unemployment rate were sourced from the World Bank Development indicators. The trade variables mentioned above were regressed against unemployment rate using the Autoregressive and Distributed Lag (ARDL) approach. The findings indicate that in the short run international trade impacted on unemployment more whereas in the long run, international trade impacted on unemployment marginally. Based on these findings, the study suggests: policies geared toward increase in non-oil export, reduction in oil import, review of FDI inflow policies and trade liberalization as possible ways of creating jobs and improving the performance of the Nigerian economy.