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Cluster Analysis On The Effect Of Dollar Increment On The Economy Of Nigeria
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When the value for the dollar increase which simultaneously devaluates
the Naira, domestic firms and households can no longer afford to buy
domestic goods and services, and foreigners aren't interested in buying
overpriced goods and labour. So companies go broke or cash trapped and
unemployment rises because more people would be layed off. With lots of
unused industrial capacity and crowds of unemployed workers, prices and
wages slowly decline. More flexible labour markets with lots of room for
productivity growth will adjust faster than less flexible economies
like that of Nigeria.
Statement of the general problem
The dollar
rate when compared with the Naira has been stable between the 1973 and
1979 which were the oil boom era. This was also the case before 1990
when Nigeria generated huge gross domestic product (GDP) from the
agricultural sector unlike now where the agricultural sector has gone
nearly comatose of not been able to account up to 5% of the country’s
gross domestic product (GDP) owing to the discovery and development of
the oil sector.
The problem of the alarming increase of the dollar
when compared to the naira has been a cause for a serious concern and
has led to the depreciation of the economy. Small scale enterprises has
been discouraged as a result of the increment of the dollar, imports
reduce significantly and having known that the small enterprises are the
bedrock of any economy and for any economy to thrive, the small scale
businesses must be encouraged and supported but this has regrettably not
been the case in recent times.
Aims and objectives of the study
The
major aim of this study is examine the effect of dollar increment on
the economy of Nigeria. Other specific objectives of this study include
the following;
To examine the present state of the economy.
To examine the relationship between dollar increment and economic development of Nigeria.
To recommend ways of improving the value of the Naira against the dollar.
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