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IMPACT OF INTERNATIONAL TRADE ON THE ECONOMIC GROWTH OF NIGERIA
Several statistical approaches were implemented to carry out this research, inwhich 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 sustainabledevelopment- whether in the developed or growing economy. Both thecontrollable and non controllable variables were subjected to strict and criticalanalysis 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 therebypromoting sustainable economic development.
It is very instructive to point out that trade and finance impacts significantlyto 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 ofthis work which corresponds to previous findings of both the various authorsand the statistical records of the Central Bank of Nigeria and World Bankrespectively, which indicated that Nigeria with fast growing population will benefit greatly from the availability of sufficient capital and internationaltrade.
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:
iii. To assess the trade policies of Nigeria over the years
1.3 RESEARCH QUESTIONS
The research questions, which guide this research work, are as follows:
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.
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.
Gdp = bo + b I Exp + b2 open + ui
Where gdp = gross domestic product
Exp = volume of export
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