1.1 BACKGROUND OF THE STUDY
Globalization is a child of necessary that brings opportunities and pressures for manufacturing firms in emerging markets to innovate and improve their competitive position (Obi: 2000). Firms competitive advantage depends not only on its productivity but also on the quality of its product, which may be seen as a bye product of globalization but at long, run it will collapse the domestic firms (Uche, 2001). Over the past few decades, there have been gains and benefits from increased border transaction and massive flow of investment, technology and information between and among countries. Many other countries have however been faced with enormous challenges of partaking in the benefits of globalization. Such challenges include structural deficiencies, inefficient and inappropriate economic policies and high existence of corruption in the country amongst others. All these internal problems reduce their strength and capacity to successfully compete in the global trend rather they tend to reap the negative effects of globalization. According to the World
Development Indicators (2007), “globalization has created opportunities and challenges for developing countries. While the experience of China, India, Indonesia, Thailand and some other countries have demonstrated that integration into the global economy is necessary for long term growth and poverty reduction, concerns have been expressed over equality of opportunity and unequal distribution of benefits”. By integrating the world into a global economy through trade liberalization, commercialization and privatization, globalization can undermine industrial growth in Nigeria as it exposes local businesses and industries to competition from global corporation who often have better financing, technology, advertising and market reach.
Globalization has largely been driven by the interests and needs of the developed world who have access to the markets of developing countries. However, developing countries have a major problem accessing the markets of developed countries, many tariffs and non tariffs barriers in developed countries have continued to hinder exports from developing countries (Obadan, 2008). This problem however lies beyond the control of developing countries. Also with increased dependence of nations, most developing countries have been exposed to external shocks and crises and these economic crises tend to exist much longer in the developing countries due to the unwary and unstable nature of their economy. In an attempt to reduce these negative effects and reap the benefits of globalization in Nigeria, various policies have been put in place by the government to strengthen performance of the industrial sector; to ensure growth and increase output in the sector; to encourage increased investment in the industrial sector by granting incentives to new and existing firms in various sub sectors of the industrial sector. Little improvement have been recorded so far in achieving the above objectives. Flow of cheaper foreign goods as a result of trade liberalization, increased trade barrier in developed countries, heavy dependence on crude oil for foreign exchange earnings and government revenue thereby giving low priority to the industrial sector, poor infrastructural facilities and unhealthy business environment undermine the potentials of the industrial sector in Nigeria. Therefore, this study focuses on the Effects of globalization on the development of domestic manufacturing industries in Nigeria, a case study of cometstar manufacturing company Limited.
1.2 STATEMENT OF THE PROBLEM
The Nigerian economy is characterized by high dependence on crude oil and this feature has seriously served as a constraint in maximizing the benefits of globalization rather it has partly led to slow growth in non–oil export and poor development of other sectors mainly the agricultural and industrial sector of the economy. With increasing breakdown of trade barriers in developing countries including Nigeria as a result of globalization, industrialized nations have therefore taken advantages of trade liberalization thereby seeking markets to dump their cheap manufactured goods rendering the local industries inefficient leading to slow growth rate, low capacity utilization and low output of the sector as the demand for goods produced within the country decline due to cheap imported goods and high cost of production faced by firms in the sector.
Globalization has posed a threat to Nigeria manufacturing sector, through the pronouncement of economic policies and programs, which metamorphoses into liberalization of trade that hinders economic growth and sustainable development. This policy led to the exposure of infant local industries in Nigeria to unfavorable competition with an international corporation, which local firms cannot compete with those develop Nations that have a stronger financial base, cheaper raw material, high capacity. On this ground, Nigeria became a dumping ground for all kinds of foreign product and this had to cause Nigeria manufacturing sector to be on the edge of collapsing, which result in massive unemployment, widespread industrial closures, and a massive drop in capacity utilization, which in totality affect our GDP. These problems make it onbvious that there is a need to carry out a study on the effects of globalization on the development of domestic manufacturing industries in Nigeria, a case study of cometstar manufacturing company Limited
1.3 OBJECTIVES OF THE STUDY
The general objective of this study is to examine the Effects of globalization on the development of domestic manufacturing industries in Nigeria, a case study of cometstar manufacturing company Limited. The specific objectives are:
1.4 RESEARCH QUESTIONS
The relevant research questions related to this study include the following:
Does globalization has influence the development of cometstar manufacturing company Limited?