EFFECT OF GLOBALIZATION ON NIGERIA SMALL AND MEDIUM SCALE INDUSTRY

CHAPTER ONE

1.1    INTRODUCTION

Early theories on globalization were written by classical economist whose main concern was not on International trade out on the political economy of a nation. Duyile (2004) explained that “after the industrial revolution, trade mainly exports and imports between nations expanded”. As information and communication technology advance and production becoming more complex, scholars and researchers started writing about firms, producers and marketing strategies. Companies started producing for foreign markets and more complex products introduced. The system was described by Lilus (2001) as “mass production for mass market”. The control and coordination efforts brought about multinational organizations involved in production and distribution of goods and services across national boundaries. 

International business research has drawn attention to globalization and its effects on national economy. As a result, a number of controversial views have been made. Questions asked included Impact on economic growth and development, introduction and expansion on small and scale business enterprise, political and social life of developing and under-developed nations. Conditions under which local or indigenous organizations choose to operate are also influenced by political, economic and complex social relationships. Schults (2004) explained that “Business activities are rapidly becoming internationalized as trade becomes more global and products seek wider and international markets for their goods and services”.

Small and Medium scale business enterprises in Nigeria are involved in various business activities and the volume is greatly influenced by many factors. The success, survival, growth and development of Small and Medium Enterprises (SMEs) can be determined by level of interactions and influence from global operations. Entrepreneurship in SMEs according to Wore (2004) is a significant factor in the process of any country’s economic development. The role involves more than increasing per capita output and income. It involves initiating and constituting changes in the structure of business and society. The change is accompanied by growth and increased output. Globalization can be said to have influenced Nigeria small and medium scale enterprise either positively or negatively and may be with no significant effect or relationship.

1.2    BACKGROUND OF THE STUDY

Economic growth according to Ajayi (2005) refers to “increase over time in a country’s real output of goods and services”. Output is measured by gross national product or national incomes with SMEs have significant contributions. Economic development implies not only real output but growth that is accompanied by changes in the structure of a nation’s economy. This include the structure of business organizations, national political and social structures, technical and institutional arrangements by which output is produced and distributed as part of economic development. dependence on globalization in some situations could not be in a form of SMEs development to the extent that there is growth in poverty. Within this view, Vernon (2001) said, “it is possible to have growth without development as growth and development of business organizations are not exactly the same”.

The economic history of any nation to Osuji (2005) also explained that “no nation has ever developed without an appreciable growth and involvement of international trade and relations”. The role of globalization in national economy also exert influence on the speed of growth of business organizations especially the SMES. Growth in finance through direct foreign investment, fiscal and monetary policies, money and financial institutions are influenced by International or global activities which also influence a nation’s Small and Medium scale business enterprises. Technology and production processes for example are “determinants of the rate at which productivity capacity and income can grow (Buckley and Ghauri, 1999). Studies have revealed that developing nations have had higher production technology than the under-developed nations. Faster growth, more investment, expansion of SMES comes partly from interdependence and globalization.