Effect of Globalization and Financial Management on Nigeria Economy

All over the world, output has been expanding and many countries are benefiting from increased cross-border trade and investments. The main factors for this are technology, global competition, and financial prudency. The paper investigates the effect of globalization and financial management on Nigeria economy between 1986 and 2011. using co-integration techniques and the direction of causality relationship in the long and short runs between the variables through integrating the Error Correction Model (ECM) into the traditional also, Unit root tests have been applied in order to investigate the stationarity properties of the series. Gross domestic product is used as endogenous variable, while the explanatory variables are globalization, exchange rate, inflation rate, foreign direct investment total revenue and total expenditure. The results however showed that there exists a long-run co-integrating relationship among the variables in the model. This is evident from the stationary state of all static equation residuals at level I(1). Moreover, the result further revealed that in the short run, globalization has a negative effect on gross domestic product but evidence from the co-integration result shows that in the long-run globalization has a positive effect on economic growth in Nigeria while proxy for financial management shows a positive relationship. This implies that, the variables are indispensable in contributing to the growth and development of the Nigeria economy. It is further suggested that the stability of the economy should first be taken into consideration before implementing globalization, so also are the financial resources of a nation