THE INFLUENCE OF TRADE ON THE ECONOMIC GROWTH OF NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Over time, international commerce has demonstrated its effectiveness in fostering the growth and development of nations, particularly emerging nations like Nigeria. The concurrent globalization that has shrunk the world to a "global village" has enabled countries to engage more effectively and efficiently. Thus, international trade, defined as the interchange of commodities and services across international frontiers, has become permanent (Prince 2022). Many modern economies, like Nigeria's, cannot function in isolation, which is why international commerce is so important. As a result of international commerce, nations today strive to make their products more acceptable in terms of appearance, quality, packaging, and quantity. Standardization and efficiency exist. However, it cannot be overstated how difficult it is for developing nations like Nigeria to participate in international commerce, especially given its distinctive nature. Long periods of truncated democratic control by the military suggests that the military may have influenced a great number of economic policy (John, 2022).

Since these economies have become more open through their participation in the World Trade Organization (WTO), obstacles such as technological know-how that influences product quality have rendered their products less competitive. As they are shipped in their raw state, these items have little to no additional value. Based on their technological know-how, technologically sophisticated nations are favored in international commerce. The majority of emerging nations export more primary goods. Their inability to profit from these items' value chain diminishes the significance of international commerce. The final products of the basic items exported by developing nations are frequently imported at a greater price. A fair playing field is required for international commerce to contribute to sustainable economic expansion. As long as economies continue to adopt the no-barrier system of trade without safeguarding local producers, emerging nations with little or no technical know-how will continue to miss out on the international trade gains they want (Omoregie, 2022).

As a developing nation, Nigeria is a key participant in international commerce. Its primary source of revenue is crude exports. Although its yearly budgets and expenditure profiles are bench marked to worldwide oil prices, this is not surprising. The swings in worldwide oil prices have an impact on the nation's revenues and expenditures. Therefore, the majority of Nigeria's income from external commerce comes from foreign trade. Due to its excessive reliance on oil exports as a source of revenue, its revenues are susceptible to variations in the international price of crude oil. The decline in international crude oil prices in 2014/2015, which caused Nigeria to experience a recession in the first quarter of 2016, sparked a great deal of controversy regarding the role of foreign commerce in Nigeria's economic growth (John, 2022).

Nigeria is endowed with vast natural resources, including crude oil, solid minerals, and human capital, among others. The finding of commercial quantities of crude oil in Nigeria stifled the expansion of non-oil sectors of the economy. The industrial sector appears to be nonexistent, as trade liberalization has rendered domestic companies incapable of competing with globalization. Agriculture, solid minerals, etc. do not appear to be contributing as much as anticipated to the expansion of the Nigerian economy through foreign commerce.

According to Matteis (2022), international commerce contributes significantly to economic expansion. Foreign commerce has sometimes been viewed as an impediment to economic progress, especially in emerging nations. This is due to the propensity for nations to be overly dependent on the worldwide market, hence increasing their susceptibility to international market instability. According to Matteis, Nigeria has neglected its industrial sector to the point that it cannot even process its own crude oil. Alarmingly, the country's over-dependence on economically developed nations stunts its economic progress through international commerce.

1.2 STATEMENT OF THE PROBLEM

Some economists have advocated for international commerce on the grounds that it has made nations interconnected and the globe a global village. As Rodrik (2022) notes, however, little is mentioned about the impact of international trade on macroeconomic instability, such as inflation and balance of payments crises, which may have a negative impact on local investment and lead to poor or sluggish economic development. As a vehicle for pursuing macroeconomic objectives, international trade may facilitate rapid economic expansion (John, 2022). Thus, the influence of foreign commerce on Nigeria's economic growth continues to be a topic of dispute.

1.3 OBJECTIVES OF THE STUDY

The primary objective of this study is to examine the influence of trade on the economic growth of Nigeria. Other objectives of this study are:

i.          To determine the extent  trade has impacted on the economic growth of Nigeria.

ii.        To determine the extent to which trade policies have impacted on the economic growth.

iii.      To examine the impact of trade on the economic growth of Nigeria.

iv.      To find out the factors that hinder the international trade progress of Nigeria.

1.4 RESEARCH QUESTIONS

The following research questions will be answered in this study:

i.          To what extent  has trade impacted on the economic growth of Nigeria?

ii.        To what extent has trade policies impacted on the economic growth?

iii.      What are the impact of trade on the economic growth of Nigeria?

iv.      What are the factors that hinder the international trade progress of Nigeria?

1.5 SIGNIFICANCE OF THE STUDY

This study will be greatly significant to the public as the findings of this study will reveal the extent  has trade impacted on the economic growth of Nigeria and the impact of trade on the economic growth of Nigeria.

This study will also be significant to the government as it will aid them in making favourable trade policies that will further make Nigeria grow economically.

Finally, this study will be highly beneficial to scholars as this study will serve as reference point for future studies.

1.6 SCOPE OF THE STUDY

Generally, this study is focused on the influence of trade on the economic growth of Nigeria. Specifically, this study is focused on determining the extent  trade has impacted on the economic growth of Nigeria, determining the extent to which trade policies have impacted on the economic growth, examining the impact of trade on the economic growth of Nigeria and finding out the factors that hinder the international trade progress of Nigeria.

1.7 LIMITATIONS OF THE STUDY

Generally, this study is limited to the influence of trade on the economic growth of Nigeria. Specifically, this study is limited to determining the extent  trade has impacted on the economic growth of Nigeria, determining the extent to which trade policies have impacted on the economic growth, examining the impact of trade on the economic growth of Nigeria and finding out the factors that hinder the international trade progress of Nigeria

1.8 DEFINITION OF TERMS

Trade: Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market.

Economic growth: Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over a certain period of time. Statisticians conventionally measure such growth as the percent rate of increase in the real gross domestic product, or real GDP.

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