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

significantly affects manufacturing output growth while the investment policy reform dummy does not. However, manufacturing investment growth is positively and significantly influenced by its one-period lag. Adebiyi (2002) studies the relation between trade policies and industrial growth in Nigeria, using quarterly time series data spanning 1973 and 2001. Undertaking empirical work on the relation between trade liberalization and industrial growth in Nigeria in the empirical investigation of the aggregate growth function of index of industrial production in Nigeria, he found out that there is no unique co integral relation between the index of industrial production and its major determinants. The results of the study seem to suggest the importance as well as the imperative for Nigeria to embark on comprehensive trade liberalization policies in order to accelerate and sustain industrial growth. Bakare and Fawehinmi (2011) studied Trade Openness, Non-Oil Industrial Sector. The findings from the study show that sectors with a high component of local raw materials generally performed better than those depending on imported inputs. In this study, empirical investigation found that the unilateral trade openness of 1986 produced the sustainable impact on the non-oil industrial sector of the Nigerian economy. It was observed that public domestic investment, savings rate, capacity utilization and infrastructure have negative impacts on Nigeria’s industrial performance. Their findings and conclusion support the need for the government to consolidate and maintain the credibility of the trade policies for sustainable growth and development. More progress will be achieved if the conditions needed for a deregulated trade system to work properly are set in place. There were also mixed results emerging from three studies of trade liberalization in African countries. In Zimbabwe (Rattso and Torvik, 1998), it was found that the drastic trade liberalization implemented in the early 1990s resulted in a contraction in output and employment that was accompanied by a sharp increase in imports and a rising trade deficit. The study argues that the contraction in output was associated with de- industrialization, a development that may also have had unfavorable effects on the future growth potential of the economy. iii. M ethodology and T heoretical F ramework Researchers have adopted many different empirical methods to analyze the linkages between trade liberalization and industrial performance. These different methodologies have strengths and weaknesses, and have some conceptual approaches. McCulluch and Calandrino (2001) identified three main empirical approaches used by various researchers in exploring the link between trade and industrial performance: the descriptive or qualitative approach, the data-based approach and the modeling approach. In general, most of the empirical studies carried out within the past fifteen years have concentrated on cross- country and panel data regression analyses. Only few studies have employed Ordinary Least Squares (OLS) and recently, the Computable General Equilibrium (CGE) techniques. Ousmanou (2009) Using pre-and post-reform industry-level panel and aggregate national infrastructure data, examines the effects of infrastructure on industry productivity in Cameroon, controlling for trade variable and correcting for the likely endogeneity of infrastructure and other regressors. The empirical strategy involves, (i) estimation of production functions augmented by the infrastructure quantity and quality indicators and then derivation of industry-level productivity measures, (ii) accounting for output growth, and (iii) assessment of infrastructure impact on industry productivity growth. Mouelhi (2007) took into account the effects of exogenous shocks and the delay of adjustment. A pooled sample of industries is used in this econometric analysis because the number of observations by industry is too small to conduct estimations separately for each different industry. About 17 observations (years) by industry are available, but not for all the variables. Moreover, two years are lost in constructing lags and taking first differences for estimations. A lag of variables as instruments to correct the endogeneity problem was used. The dynamic nature of the models and techniques used needs more observations that is why pooled sample of industries was used. Fixed effects models to check biases caused by unobserved sector characteristics or cross section specific effects correlated with performance outcomes that are fixed over time was also used. a) Theoretical Framework The study found Lucas (1998) human capital model as framework on which the work is based due to its emphasis on both labour and physical capital productivity enhancement. The basic idea of the model is that people divide their time between work and training. So, there is a trade-off, since when taking on training people give up part of their work income, but raise their future productivity and therefore their future wages. Thus, the decisions concerning the accumulation of human capital depend on the dynamic features of the economy, which made it endogenous. Since human capital accumulation is the ‘engine’ of growth, growth will itself be endogenous as well. This model has two types of capital: physical and human capital. The fundamental equation of the model which is a portfolio equilibrium equation states that, in steady- Volume XXII Issue II Version I 74 ( ) Global Journal of Human Social Science - Year 2022 © 2022 Global Journals E Impact of Trade Liberalization on the Nigerian Manufacturing Sector state, the marginal product of the two types of capital must be the same.