Global value chains (GVCs) and its effects in the Nigerian Economy By Bodunde Samuel Damilola
As countries become more interconnected, natural resources become scarce and technological advancement increases. There is need for a fostering of trade relations, between countries internationally. Global value chains GVCs are the new definition of trade relations. They are affected by the following levels.
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Natural resources Nigeria is well endowed with minerals like, iron, zinc, limestone and other natural occurring solid minerals. These are needed by other countries of the world in manufacturing, electronics and automobile industries. The presence of these solid minerals puts the country at the foundation of GVC trade. Countries that have been able to harness or deplete their resources trade with us an exchange some finished and refined goods for natural resources. Crude Oil which is a major export is given to other countries to refine and the refined products are then sold back to us at varying cost. Presently the country has been losing money due to the rise and fall in oil prices, so diversification is the way forward to ensure that the economy keeps growing.
Population Having one of the fastest growing population in the world the abundance of human resources in terms of low cost labor has attracted huge industries especially in the agricultural and food sector of the economy. But there comes a challenge when it comes to the availability of jobs for the skilled labor workforce. This is on a negative for the economy because research and innovation cannot occur without the presence of skilled labor workforce.
Government Policies The government policies on investment should be improved especially with the tax and tariffs imposed on imports especially of parts not manufactured in the country. For example, the recent ban on automobile imports was in a positive light to help local car manufacturers thrive but this has not been the case as the there is no government concern in making sure that these companies thrive at least by reducing their tax and enabling them to be able purchase raw materials locally and less costly. The government till now prefers to use foreign produced automobiles than locally produced automobile.
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Gender equality With the rise in private sector involvement like Dangote Group we can see more inclusion of females in job recruitment process. most jobs are still male dominated but there is a steady
increase in women and their roles of specialization especially in the financial sectors. Policies regarding to their welfare needs to be paid more attention.
Security With regional violence, insurgency and rise in crime. The country will begin to get less safe for investment and growth basically because of unemployment and lack of focus on education. Corruption is also a major cutter of investment and this is related more to financial security. This is worrisome because when an investor cannot guarantee profit from investments he'll look for another country or environment to invest in.
Finally, we can see that the private sector involvement is the major driver of GVC growth in Nigeria. The international community has to do more to provide opportunity for countries like Nigeria to thrive in global trade and also Nigeria has to improve on its policies, foreign investments, human capacity development and security to foster productivity and reap from the benefits of Global Value Chains.