Global Journal of Human Social Science, E: Economics, Volume 22 Issue 2

other words, quality of labour force or knowledge embedded in human leads to augmentation of product and economic growth in countries. Quality of labour varies and labour productivity increases with education and training. However, education and training use resources that could have been allocated to alternative uses such as consumption or investment in physical capital. The decision to increase stock of education/ training within the labour force is conceptually similar to investment in stock of physical capital. A higher saving rate in physical capital not only increases KS, but also human capital H. The same applies for higher investment in human capital. The relative contribution of physical and human capital in output depends on share of each factor. Even though human capital is only one factor to many that derives manufacturing performance, it is very important factor for the growth process of Nigeria. The productive capacity of a country is related to the level of human capital, explaining why human formation must be considered of great importance. Openness (OPN) has a negative relationship with manufacturing performance. The rate of change of the conditional mean MP with respect to OPN is about - 0.55. A one unit change in openness will make manufacturing performance to decline by 0.55 units. With free trade, all sorts of goods will flood the market in Nigeria with limited foreign direct investment to total absent of infrastructure. The local industries, if not protected, will not be able to compete internationally. Lack of technological know- how and IT is an added disadvantage to these facts. This findings collaborates that of Adenikinju and Chefe (1987). It has been shown that in Nigeria manufacturing sector, import liberalization has a negative impact on total factor productivity growth. The reason for this was adduced to the fact that domestic manufactures are unable to compete with often high quality imported products. Real exchange rate has a negative relationship with manufacturing performance which is according to apriori expectations. The rate of change of the conditional mean MP with respect to Real exchange rate is about -0.61. A unit change in Real exchange rate will bring about 0.61 increases in industrial performance. According to the theory, depreciation in exchange rate makes export cheaper and import expensive. A negative sign of real exchange rate is healthy for the growth of the economy and indeed manufacturing performance. Real exchange rate depreciation implies appreciation of the nominal exchange rate which can result in current account surplus and increased international competitiveness as it affects export. Real exchange rate depreciation as a policy can be used in the short-run as expansionary monetary policy ↑ M → ↓ i → ↓ E → real depreciation → more exports. In the long –run, it will lead to increase in inflation and price level which will subsequently result to appreciation of the real exchange rate. A depreciated currency means that imports are more expensive and domestically produced goods and exports are less expensive. It also lowers the price of exports relative to imports. Real exchange rate appreciation implies depreciation in nominal exchange rate which reduces international competitiveness and may lead to current account deficit. Increased real exchange rate may lead to lower Manufacturing Sector Performance (MP) because of increased import activities. An appreciated currency is more valuable and therefore it can buy more foreign produced goods that are denominated in foreign currency. It also means that imports are less expensive and domestically produced goods for exports are more expensive. Dutch disease (DD) has a negative relationship with industrial performance. This is in conformity with the apriori expectation. Dutch disease impacts the economy negatively because of its rent seeking activities. The rate of change of the conditional mean MP with respect to DD is about -0.58. A unit change in DD will cause manufacturingl performance to decline by 0.58. Tariff has positive relationship with manufacturing performance which is according to economic theory and in accordance with the apriori expectations. Tariff discourages imports due to imposition of tax on the items. The rate of change of the conditional mean of industrial performance with respect to tariff is about 0.185. A unit change in tariff will cause manufacturing performance to rise by 0.185. The R-square explains 99 percent of the determinants of manufacturing performance. The F- statistics of 300.0216 shows that, all the variables are significant in explaining the variation in manufacturing performance. The Durbin-Watson statistics was 1.733615 which shows that, there is no problem of serial correlation. The Akaike information criterion shows the variables are significant. V. C onclusions and R ecommendations The study documented that all the variables used to measure trade liberalization exhibited positive sign and have statistically significant effect on manufacturing output index in Nigerian. Therefore, given trade liberalization positive effects on industrial performance in Nigeria and with the two major objectives and variables for hypothesis testing; the foreign direct investment (FDI) and tariff were found to impact positively on the manufacturing output index in the Nigerian economy; the study concluded that there is need for another policy measure that will positively promote industrial manufacturing output in Nigeria given the non significant of the policy variables included in the model. Volume XXII Issue II Version I 78 ( ) Global Journal of Human Social Science - Year 2022 © 2022 Global Journals E Impact of Trade Liberalization on the Nigerian Manufacturing Sector