The Effects of Globalization on Nigeria

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24 April 2013
Shakhnoza Kabilova
CCGL9013 Globalization: African Experiences
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Question 2: Choose one African country or society and critically assess both the positive and negative consequences of one aspect of globalization that is affecting this society. Word count: 2090

There are many definitions of globalization, some suggesting that globalization is an ideological battleground where power and resources are fought over and won by a privileged few - that power in fact controls globalization (Adesanya, 2011). Theoretically globalization is meant to make possible the democratization of market forces, the breakdown of trade barriers (Adesanya, 2011) and the transformation of a country from one with a primarily extractive economy to one which has a larger manufacturing sector (Subair, 2011). However in practice this has not proven to work very well, especially in Lower Developed Countries (LDCs). In fact some suggest that globalization has led to an intrinsic bias in the world economic order against LDCs that is making it impossible for them to prosper (Edokpayi, 2004). To explore this issue I wish to analyze the effect of globalization on one of the richest countries in resources in Africa – Nigeria. I want to explore in particular the negative and positive effects that oil prospecting has had in the Niger Delta region of Nigeria, economically, socially and environmentally. I also wish to analyze the extent to which the Nigerian government is responsible for the region’s lack of economic prosperity. My hypothesis is that the involvement of foreign companies in oil extraction has had a mostly negative impact on the region and its people. The aim of this essay is therefore to explore if this hypothesis is true. It is argued by some that economic policies pursued under globalization, such as liberalization and Structural Adjustment Programs (SAPs), actually had adverse effects on the Nigerian economy. While liberalization is meant to eliminate trade restrictions, it has in fact enhanced the proliferation of multinational corporations (MNCs) which attempt to control extractive ventures instead of manufacturing ventures in the country (Subair, 2011). MNCs, such as Shell Oil Company, are now seen by some as having replaced colonial powers. This is because in countries like Nigeria, the effects of MNCs have largely been the exploitation of resources, expropriation of their profits and widening of the gap between the rich and poor in the locality (Edokpayi, 2004), effects that colonial powers had on the country only 50 years earlier . SAPs are meant to diversify the productive base of the economy, yet the immediate effect of SAPs was that the output share of the manufacturing sector in GDP declined all through 1981 to 2001, from 5.3% to 3.3% (Subair, 2011). Even though Nigeria used to be primarily an agricultural economy, with the sector accounting for 64% of output, agriculture was largely forgotten about and its development ceased after the late 1960s (Edokpayi, 2004). Instead oil revenue took over and now about 90% of foreign exchange is derived from oil exports (Abergunrin, 2006). This clearly shows that development of non-oil sectors is being largely ignored due to foreign direct investment being concentrated in the oil and mining sector (Subair, 2011), thus making the economy too dependent on one export product. However, some positive impacts of globalization on Nigeria as a result of the oil sector should also be taken into account. After all, over the past 30 years about $280 billion has been derived by the country from oil revenue which has huge potential for the country’s development (Edokpayi, 2004). Furthermore oil helped Nigeria’s GDP increased by 28% between 1977 and 1979, a huge boost to the economy (Abergunrin, 2006). Throughout the 1970s there was a strong correlation between domestic health and the prosperity of the Nigerian economy (Abergunrin, 2006). Petroleum was also used by the...
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