Implications of Free Trade Area For Poverty, Household Welfare And Economic Development In Nigeria
Abstract
The purpose of this study is to examine the implications of free trade areas on poverty, household welfare, and economic development in Nigeria. Using a fully modified ordinary least squares (FMOLS) regression technique, the study analyzes key macroeconomic indicators, specifically income per capita to measure welfare and unemployment to assess poverty. Historical data covering 27 years were sourced from the Central Bank of Nigeria’s statistical bulletin to support the analysis. The findings indicate that export contributions to gross domestic product (GDP) and foreign direct investment (FDI) positively impact household welfare, as reflected in the increase in income per capita. Furthermore, both FDI and export contributions to GDP were found to have a negative relationship with unemployment, suggesting that participation in free trade areas can help reduce unemployment in Nigeria. The study concludes that engaging in free trade areas is likely to enhance household welfare and decrease poverty through reduced unemployment. These results have significant implications for policymakers, academics, researchers, and government officials. The study suggests that policies aimed at promoting FDI, increasing export contributions, and supporting GDP growth—such as tariff reductions, simplified trade regulations, increased credit availability for exporters, and the creation of duty drawbacks—can effectively improve household welfare, reduce poverty, and foster economic development in Nigeria.
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Copyright (c) 2021 Idris Abubakar, Thomas onimisi Abaukaka, Muhammad Kabir O. Momoh
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