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

Abstract

AbstractThis 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.