International Trade and Economic Growth in Nigeria - Thesis Statement Example

The economic growth of Nigeria to large extent depends on her trade with other nations. Nigeria as a developing country has been grappling with realities of developmental process not only politically and socially but also economically. In 1960s, agriculture was the main stay of the economy and the greatest foreign exchange earner, and Nigerian government was able to execute investment projects through domestic savings, earnings from exports of agricultural products and foreign aids (Ezike et al, 2011). But since the advent of oil as a major source of foreign exchange earning in Nigeria since 1974, the picture has been almost that of general stagnation in agricultural exports. This led to loss of Nigeria's position as an important producer and exporter of palm oil produce, groundnut, cocoa and rubber (CBN annual report, 2006). Between the year 1960 and 1980, agricultural and agro-allied exports constituted an average of sixty percent of total export in Nigeria, which is now accounted for, by petroleum oil export, (CBN annual report 2004). However the importance of international trade in the Nigerian economy has grown rapidly in recent time, especially since 2002. Economic openness measured as the ratio of export and imports to GDP has risen from just above 3 percent in 1991 to over 11 percent in 2008 due to the unrest in Nigeria's oil producing Niger Delta region which resulted in significant disruption in oil production and shortfalls in oil export from Nigeria.

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Promotion of economic growth is one of the major objectives of international trade, but in recent times, this has not been the case because the Nigerian economy is still experiencing some elements of economic instability such as price instability, high level of unemployment and adverse balance of payments. Furthermore, the benefits of international trade had not been noticed in the economic growth of Nigeria because some of the goods imported into the country were those that cause damages to local industries by rendering their products inferior and being neglected, thereby reducing the growth rate of output of such industries which later spread to the aggregate economy. Also the poor performance of international trade has been ostensibly blamed on factors such as different languages, difficulty in transportation, risk in transit, lack of information about foreign businessmen etc. Despite the above mentioned problems the study seeks to find answers to the following questions: i. Does international trade stimulates economic growth in Nigeria? ii. Do trade policies have impact on international trade in Nigeria?

Therefore, this paper seeks to examine the impact of international trade on economic growth in Nigeria. In other words, how activities in international trade transmit to economic growth in Nigeria. The result of this study would be of use to policy makers both in the public and private sectors of the Nigerian economy. It would also be of use to other developing countries especially those at the same level of development as Nigeria and in particular, those economies that rely on international trade. Also, it would help policy makers to identify the relationship between international trade and economic growth and hence find ways of realizing the full benefits of international trade to the Nigerian economy.

1.2 Objectives of the Study

The general objectives of the study are:

Firstly is to examine the factors constraining import & export and economic growth in Nigeria with a view to suggesting solutions to redoes the situation.

Secondly to assist the government in her effort in import & export development and promotion by generating ideas, suggestions and measures designed to advance the course of Nigeria import & export trade.

Thirdly, to critically observe or examine the instruments involved in international trade transactions in Nigeria.

1.3 Significance of the study

The significance of this research is to update previous work done and accommodate the views of the changing environment and it will sensitize international trade in Nigeria and complement government effort at improving international trade. Practical solutions will be preferred to them. Undoubtedly, this will increase knowledge on the part of those involved in this trade and the general public.

It will also go a long way in stimulating exporters to carry out export trade with less hitch. This will go a long way in generating employment opportunities for our teaming population, thereby allowing private sector contribution to the economic development of the country in general.

This study is also relevant to the government, as it will analyze the shortcoming involved in carrying out international trade. Measures and policy reviews can be carried out by the government in order to stimulate foreign trade thereby increasing her balance of payment surplus.

Also, the residence of the host country can benefit from international trade by way of investors assisting communities by providing community health centers, employment for their youth, etc.

Organizations also will have an opportunity to benefit from international trade by means of technical assistance from foreign countries thereby improving on her products. Joint ventures and bilateral trade agreement will assist the host country in benefiting from the latest technology and financial assistance from their partners abroad.

1.4 Main Contents

This thesis is divided into 4 chapters and everything that will be in each chapter will is explained below

Chapter one contains the introductory aspects of the study including background of study, Objectives of the Study and Significance of the study

Chapter two contains information about international trade and economic growth in Nigeria, in this chapter I will also explain some concepts that needed to be considered when doing trade and also talk about the Economic growth in Nigeria.

Chapter three deals with research methodology and calculations, this is where I will put all the datas have collected to work I will calculate using simple liner regression and do some Regression and also give some results

Chapter four is the final chapter that has the conclusion and recommendation, in this part I will give the conclusion of the whole thesis and recommendation on how what need to be done to increase import and export and economic growth.

CHAPTER 2 INTERNATIONAL TRADE AND ECONOMIC GROWTH IN NIGERIA

2.1 Some Concepts

Before we can talk about trade and how it done I will like to explain some concepts, especially the concepts of import, export, and trade balance.

First thing to also keep in mind is import and to better understand what imports means I will say it a good and service brought into one country from another to be distributed locally, for example Nigeria imports goods like Parts For Fork Lifts, Bulldozers & Graders, Structures & Parts of Iron or Steel , Polymers of Ethylene, Concentrated Milk & Cream, Polymers of Propylene & Other Olefins, Computers, Printers & Storage Units, Pumps For Liquids , Refrigerators & Freezers , Aircraft, Dishwashing & Packaging Machines, Semi Trucks & Tractors, Uncoated Paper, Iron & Steel > 600 mm Wide - Hot , Water Heaters, Survey Instruments, Insulated Wire & Cable, Dried Fish, Special Purpose Motor, Vehicles, Air Conditioners, Food & Drink Preparation Machines, Food Preparations, Non-Adhesive Plastic Plates, Sheets & Film, Electrical Switching Boards, Electric Motors & Generators, Oxygen-Function Amino-Compounds, Odoriferous Mixtures.

Second thing to consider when doing trade is export is the faction of international trade whereby goods produced in one country are shipped to another country for future sale or trade. The sale of such goods adds to the producing nation's gross output. If used for trade, exports are exchanged for other products or services in other countries. For example Nigeria Export goods like Mineral fuels including oil, Cocoa, Wood, Oil seeds, Ores, slag, ash, Aluminum, Copper, Fruits and nuts, Cassaiterite, Columbite,Gelena, Gold, Iron-ore", Ilemmite, Lead-Zinc, Manganese, Moleybdenite, Asbestos, Limestone, Coal, Lignite, Emerald, Aquamarine, Ruby, Sapphire, Granite, Marble

Thirdly I will explain the term (BOT) which stands for balance of trade and this is the difference between a country's imports and its exports for a given time period. The balance of trade is the largest component of the country's balance of payments (BOP). Economists use the BOT as a statistical tool to help them understand the relative strength of a country's economy versus other countries' economies and the flow of trade between nations. And when we talk about this we have make sure we are not forgetting surplus because it an economic factor for every country, when the nation has a trade surplus, it a positive measure of balance of trade, where a countrys exports exceed its imports. It also represents a net inflow of domestic currency from foreign markets and is the opposite of a trade deflect. Also during this trade we need to talk about deficit because it also an economic measure of a negative balance of trade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets.

The concepts below talk more about Economic Growth and GDP

When we talk about economic growth of a country this is defined to be how much economy produce than before and if economy is producing more, businesses are more profitable, and stock prices rise. That gives companys capital to invest and hire more employees. As more jobs are created, incomes rise. And to be able to understand this better we need to use GDP which stands for Gross domestic product and this is a broad measurement of a nations overall economic activity. GDP can be calculated on annual or quarterly basis and it includes all private and public consumption, government outlays, investments and exports minus imports that occur within a defined territory

2.2 International Trade in Nigeria

The beginning of Nigeria's international trade dates back to the pre-colonial period, when the European first came to Lagos in 1896. (A decade of the Commonwealth 1955-1964, Written by Hamilton Robinson and Godwin, Eds) during the colonial period, Nigeria's external trade was dominated by Britain its colonial master with less volume of trade with other nations.

The achievement of independence by Nigeria brought a drastic change in the direction of Nigeria's external trade, which was diversified.

Nigeria served as a source of raw materials to U.K industries during the days of colonial rule. As time went on Nigeria's export to Western Europe stared declining while that f the U.S.A witnessed steady increase. U.S.A served as the greatest buyer of Nigeria's cr...