ABSTRACT
Several statistical approaches were implemented to carry out
this research, in
which Central Bank of Nigeria (CBN), Nigeria Institute
of Economic Research (NISER), National Bureau of Statistics (NBS) were involved, information were
adequately collected and analysed
respectively. The purpose of the study is to evaluate the effect of trade and
finance evaluates the effort of Nigerian economy on the on economic growth and
development in Nigeria and its impacts on development.
The findings however, showed that trade and finance has a direct impact on the economic growth and
development in Nigeria.
The philosophical
and logical framework of this study is based on the" hypothesis that trade and finance plays veritable role in sustainable development- whether in the developed or growing economy. Both the controllable and non controllable variables were subjected to strict
and
critical analysis in line with the research question.
The findings of
this work clearly showed that no nation can do without trade and commerce. Another interesting finding of the work is that finance enables
and facilitates efficient and effective home and international trade thereby promoting sustainable economic development.
It is very instructive to point out that trade and finance impacts significantly to the wheel- of commerce. In summary therefore it is believed that the effect of trade
and finance cannot be over-emphasized here due to the findings of this work which corresponds to previous findings of both the various authors and the statistical records of the Central Bank of Nigeria and World Bank respectively, which indicated that Nigeria with fast growing population will benefit
greatly from the availability of sufficient capital and international trade.
TABLE OF CONTENTS
Approval page i
Declaration ii
Dedication
iii
Acknowledgement iv
Abstract v
Table of Content vi
CHAPTER ONE
1.0 Background
of the Study 1
1.1 Statement
of Research Problem 2
1.2 Purpose
of the Study 3
1.3 Research
Questions 4
1.4 Significance
of the Study 5
1.5 Test
of Hypothesis 7
1.6 Scope
and the Delimitation of the Study 8
1.7 Definition
of Terms 8
CHAPTER
TWO
2.0 Review of
Related Literature 10
2.1 Definition of
International Trade 10
2.2 Type of
International Trade 12
2.3 International
Trade and Economic Growth 13
2.4 Features of
International Trade 16
2.5 Nigerian Trade
Import 16
2.6 Nigerian Trade
Export 17
2.7 Importance of
International Trade 20
2.8 Other Possible
Benefits of International Trade 21
2.9 Economic Growth 22
2.10 Trade as an
Engine of Growth Theoretical Perspectives 24
2.11 Theories of
Economic Growth Old and New
Models Growth 27
2.12 Nigeria’s Current
Trade Policy 27
2.13 National Economic
Empowerment and Development
Strategy
(Needs) 29
2.15 Dynamics of Trade
Policy since 1960 32
2.16 Trade Policy
Trends between 1960 – 1970s 33
2.17 Trade Policy
Trends between 1980 – 1995 34
2.18 The Economic
structural adjustment ERA in Nigeria 35
2.19 Trade Policy
under the needs ERA (1999 – 2006) 36
2.20 Duty Exemption
and concessions 38
2.21 Import
Prohibition 39
2.22 Export
diversification as a key component of trade 40
2.23 America
International Trade 42
2.24 US Trade Policy 42
2.25 The World Trade
Organization (WTO) 43
2.26 France and
international trade 43
2.27 France Export 49
2.28 France Imports 49
2.29 United Kingdom
and International Trade 50
2.30 UK’S Import and
Export Indicators and Statistics at a
Glance (2010) 51
2.31 Jordan 53
2.32 Other Possible
Benefits of International Trade 55
2.33 Barriers of
International Trade 55
CHAPTER THREE
3.1 Research Design 58
3.2
Population of the Study 59
3.3
Sampling Size and sampling
procedure 59
3.4
Sampling Techniques 60
3.5
Method of Data Collection 60
3.6 Method
of Data Analysis 60
CHAPTER FOUR
4.0 Presentation of Data Analysis and
Interpretation 61
4.1 Presentation of
Data 61
4.2 Model
Specification 64
4.3 Data Analysis 64
CHAPTER FIVE
5.0 Discussion of
Findings, summary, conclusion and
Recommendations
68
5.1 Introduction 68
5.2 Discussion of
Findings 68
5.3 Summary 69
5.4 Recommendation 71
5.5 Conclusion 73
5.6 Suggestions for
further research 74
REFERENCES 75
CHAPTER
ONE
1.0
BACKGROUND
OF THE STUDY
This study is basically under taken to take
an objective view of the impact of international trade, initially with
predominately a grain product, but presently dominate by petroleum products.
Since the discovery of oil in commercial quantity at Oloibiri in the present
day Delta State, Nigeria has been an important player in world affairs,
economically and other wise, particularly being the 6th largest producer of
crude oil in organization of petroleum exporting counties (OPEC). Unfortunately,
these blessing by nature to Nigerians didn't reflect in total overall welfare
of the citizen, made worse, by the collapse of world oil "market as a
result of glut in 1981. For example, crude oil prices, which rose rapidly from
120.94 Dollars per barrel in 1979 to $36.95 Dollars in 1980 and $40.00 Dollars
in 1981, fell to $ 29.00 in 1983 and low level $14.85 in 1986. (Anyanwu, Oyefusi,
Oaikhenan 1997). Exchange receipt which rose form. $ 15.7 billion dollars in
1981, fell to $ 5.2 billion dollars. (Anyanwa etal).
The above does not mean that there have been
absolutely no gain from Nigeria's participation in the arena of international
trade, the point is that the gains have been normal, not in real terms, because
a nation where over 40% of the population live below poverty line, cannot be
said to have prospered in real economic terms.
This study is going to take a position,
whether Nigeria's economic under development can be attributed to international
trade or whether her relative economic prosperity, in -terms of growth and
development can be attributed to her taking part in the field of international
trade. In other words, how effectively has trade contributed to Nigeria's
economic growth and development? This is the important question which this
study attempts to answer.
1.1
STATEMENT
OF RESEARCH PROBLEM
The importance of international trade in the
development process has been of interest to development economist and policy
makers alike. Imports and exports are key part of international trade and the
import of capital goods in particular is vital to economic growth.
This is so because imported capital goods
directly affect investment, which in turn constitutes the motor of economic
expansion. Economic refund is expected to affect imports as part of the
strategy to restore external balance. However, unless policy makers know what
the major components of import-are and how determine, such a policy decision
can be harmful to investment if domestic production relies on imports.
In Nigeria, some people are in favour of
protectionist and highly regulated economy and have even criticized the
pervious Nigerian government, for signing treaty of the world Trade
Organization (WTD), claiming that, Nigeria was not adequately represented in
the negotiations and should push for a fairer deal. As regards to this statement,
some people, particularly economists pushed for the implementation of the
Structural Adjustment Programme (SAP) in 1986 which brought about deregulation
of formerly regulated areas of the economy, so that the country could reap the
benefit of economic openness.
The main thrust of this research is to take
an objective view regarding the controversy of the role of international trade,
in the progress of a country in terms of economic growth of Nigeria. It has
been eluded 'by the dissenting voices in the 21st century, that trade could be
negative in terms of acting as a catalyst of economic growth and development,
being a retrogressive force, in the journey to Economic independence. But
ironically, past experience has proven the potency of trade as a catalyst of
economic progress, with regards to growth and development.
1.2
PURPOSE OF THE STUDY
International trade has, by and large, been
an "engine of growth" for global economy. But there have been large
disserting voices in the 21st century, claiming that international trade only
perpetuates the under-development of poor countries due to the fact that there
are disproportionate shares of gains from trade that accrues to industrialized
centuries. This research work focuses on, the following objectives:
.
i.
To
examine the impact of international trade on the economic growth of Nigeria.
ii.
To
determine the extent to which trade policies have impacted on the growth
process of Nigerian economy.
iii.
To
assess the trade policies of Nigeria over the years
iv.
To
evaluate the trade and exchange reforms in Nigeria over the years.
v.
To
identify the factor that hinders the international trade progress of Nigeria
and make suggestion on how they could be resolved.
1.3 RESEARCH QUESTIONS
The research questions, which guide this
research work, are as follows:
1.
Does
international trade stimulate economic growth in Nigeria?
2.
To what
extent does the exchange rate impact on the growth process in Nigeria?
3.
Does
external reserve of the country affect it economic growth?
4.
What
are the factors that hinder international trade in Nigeria?
1.4 SIGNIFICANCE OF THE STUDY
This study makes use of the econometric
procedure in estimating the relationship between international trade components
and economic growth in Nigeria. The Ordinary Least Square (OLS) technique is
employed in obtaining the numerical estimates of the coefficient in different
equations.
Ordinary Lease Square (OLS) method is chosen
because it possesses some optimal properties: its computational procedure is
fairly simple and it is also an essential component of most other estimate
techniques. The estimation period covers the last thirty-nine years since the
data needed are available for this period. The data for this study are obtained
mainly from secondary sources, particularly Central Bank of Nigeria (CBN)
publications.
MODEL SPECIFICATION
GDP = ao+a1 Imp + 92 open + Ui
Where GDP = Gross Domestic Product
Imp = Volume of Import
E open = Economic Openness (Expressed as (import +
export I gdp)
ao, a1 and a2·- parameters
Ui = Error term
A' PRIORI EXPECTATION
ao>O; a1 <0 and a2 <0 or a2 >0
The constant is expected to be positive
because there are number of other factors which determine the gross domestic
product aside the ones stated in model. It is a fact in macro economics theory
that import is a withdrawal from the economy and so, is expected to impact
negatively on economic activities in the country.
The effect of economic openness is based on
the principle .of comparative advantage by David Ricardo, which advocates
specialization and exchange of goods and services among nations. The economic
specialization could either be positive or negative depending on the values of
export, import and the gross domestic product. If the values of the export and
gross domestic product outweigh the value of import, then economic openness
would affect economic growth positively and vice-versa.
MODEL
II
Gdp = bo + b I Exp + b2 open + ui
Where gdp = gross domestic product
Exp = volume of export
E open =
Economic
openness (Expressed as (import +export)
b0, b l and b2 = parameters
Ui = error term
A’ PRIORI EXPECTATION
bO> 0, b l > and b2 < O or b2 > 0
Again the constant is expected to be positive
because there are number of other factors that determine the gross product.
In macroeconomic theory, export is regarded
as an injection in the economy and so, it is expected to impact positively on
the economy. The economy openness could either be positive or negative as
explained above.
1.5
TEST OF HYPOTHESIS
Ho: That international trade does not contribute to the growth of Nigerian
economy.
HI: That international trade contributes to the growth of Nigerian economy.
1.6
SCOPE AND THE DELIMITATION OF THE
STUDY'
Literature in most of the study of Nigerian
participation in international trade, with regards to policy and strategies has
been mostly concentrated on export, which is logical. This study will then pay
more attention to various economic policies or programmes or strategies, that
has encourage openness of the economy and Nigeria's participation in
international trade. This is not to say that the study will not look at export,
but Nigeria as a country focuses more on import than export, but in essence
this study will be as broad as possible.
1.6 DEFINITION OF TERMS
Needs- National
Economic Empowerment and Development Strategy
NNOC- Nigeria
National Oil Cooperation
Import- Bring
in goods into a country from abroad
ECOWAS- Economic Community of West African
State
SAP- Structural
Adjustment Programme
Deficit Financing-
Expenditure in Excess of Public Revenue madepossible typical by borrowing
NBS- Nigeria
Bureau of Statistic
CET- Common
External Tariff
EPA- Economic
Partnership Agreements
WTO- World
Trade Organization
ITC- International
Trade Centre
POLICY: A government proposal
for maintaining economic growth and tax revenue
FINANC- The
management of large amount of money
EEXPORT- A function of international
trade whereby goods produced in one country is shipped to another country for
sale.
COMMERCETRADE- The activity of buying and
selling in a large
quantity
TRADE-
The action of buying and selling goods and services
FDI - Foreign
Direct Investment
ORDINARY LEASESQUARE- In statistic and
econometrics, ordinary lease
SQUARE: Square is a method for estimating
the unknown parameters in a linear regression model.
GDP- Gross
Domestic Product
Economic Openness- Used for export share or
manufactured export
share of income
Economic Growth-Long term increase
in GDP of the country or long
term increase in per
capital.
Economic Development- The increase in the standard of
living in a nation's
population with
sustained growth from a simple low
economy to a modern
high income economy.
Econometrics - Application of mathematical and statistical
techniques
to economics in the study of problems,
the analysis of
data and the development
and testing of theories and
models.
Comparative
Advantage -When country specializes in producing and
Exporting only
those goods and services which it can
produce more efficiently
the effect of trade and finance
on the economic
growth and development in Nigeria at
lower opportunity cost.
SME- Small
to medium enterprises
VSE- Very
small enterprises
EU- Economic
Union
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