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PROJECT TOPIC : INTERNATIONAL TRADE AS A CATALYST FOR ECONOMIC GROWTH IN NIGERIA (1970 - 2011)

PROJECT PROPOSAL

BACKGROUND OF THE STUDY
This study is basically undertaken to take an objective view of the impact of international trade on the economy of Nigeria. Before her political independence in October 1st 1960, Nigeria has been an active player on the field of international trade, initially with predominately primary agricultural commodities that comprised groundnuts, cocoa beans, palm oil, cotton and rubber (Englama, et al. 2010), but presently dominated by petroleum products. Since the discovery of oil in commercial quantity in 1956 (Englama, et al. 2010) in Oloibiri in the present day Delta State (Afaha and Aiyelabola, 2012) , Nigeria has been an important player in world affairs, economically and otherwise, particularly being the 7th largest producer of crude oil in the Organisation of Petroleum Exporting Countries (OPEC) (OPEC Annual Statistics, 2010/11). Unfortunately, these blessings by nature to Nigerians didn’t reflect in the overall welfare of the citizen made worse (Soderbom and Teal, 2001), by the collapse of world oil market as a result of glut in 1981 (Muritala, et al. 2012). For example, crude oil prices, which rose rapidly from $20.94 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 of $14.85 in 1986. Exchange receipt which rose from $15.7 billion dollars in 1981, fell to $5.2 billion dollars. In 1983 the economy came close to a virtual collapse, real per capita income being about 30 per cent lower than at the onset of the oil price boom, ten years earlier (Soderbom and Teal, 2001).

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. However, Usman, (2011) posits that international trade has not help in promoting economic growth of Nigeria because her economy still experience some element of economic instability and this trade has also turned the country into an import dependent economy. Nigeria is suffering from the “Dutch Disease” going by the impact of petroleum on its economy. 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.

STATEMENT OF THE PROBLEM
The importance of international trade in the development process has been of interest to development economists and policy makers alike. Imports and exports are a 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 reform is expected to affect imports as part of the strategy to restore external balance. However, unless policy makers know what the major components of imports are and how they are determined, such a policy decision can be harmful to investment and output if domestic production relies on imports.

In Nigeria, some people are in favour of protectionist and highly regulated economy and have even criticised the previous Nigerian government, for signing the treaty of the World Trade Organisation (WTO), 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 benefits 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.

OBJECTIVES OF THE STUDY
International trade has, by and large, been an “engine of growth” for global economy (Usman, 2011); Obadan and Okojie, 2010). But there have been large dissenting voices in the 21st century, claiming that international trade only perpetuates the under-development of poor countries due to the fact that there is disproportionate shares of gains from trade that accrues to industrialized countries. 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 exchange policies have impacted on the growth process of Nigerian economy;
(iii) To evaluate the role of external reserve on the Nigerian economy over the years;
(iv) To identify the factors that hinder the international trade progress of Nigeria and make suggestions on how they could be resolved.

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 the external reserve of the country affect it economic growth?
4. What are the factors that hinder international trade of Nigeria?

RESEARCH METHODOLOGY
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 coefficients in different equations. The 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 estimation techniques. The estimation period covers the period between 1970 and 2011.
The data for this study are obtained mainly from secondary sources, particularly from Central Bank of Nigeria (CBN) publications.

MODEL SPECIFICATION
MODEL I

gdpt = f(impt, expt, Eopen)
gdpt = a0 + a1 impt + a2 expt + a3 eopen + Ui
Where gdpt - Gross Domestic Product (GDP) for current year at 1990 Constant Basic Prices
impt - Volume of Import for current year
expt - Volume of Export for current year
eopen - Economic Openness (expressed as (import + export)/gdp)
a0, a1, a2 and a3- Parameters
Ui - Error term

A’PRIORI EXPECTATION
a0 > 0, a1 < 0, a2 > 0 and a3 < 0 or a3 > 0
The constant is expected to be positive because there a number of other factors that determine the gross domestic product aside the ones stated in the model.
It is a fact in macroeconomic theory that import is a withdrawal from the economy and so, is expected to impact negatively on economic activities in the country.
In macroeconomic theory export is regarded as an injection in the economy and so, it is expected to impact positively on the economy.
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 openness 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 verse.

MODEL II
iindt = f(impt, expt, Eopen)
iindt = b0 + b1 impt + b2 expt + b3 eopen + Ui
Where iindt - Index of industrial production for current year at 1990 base
impt - Volume of Import for current year
expt - Volume of Export for current year
eopen - Economic Openness (expressed as (import + export)/gdp)
b0, b1, b2 and b3- Parameters
Ui - Error term

A’PRIORI EXPECTATION
b0 > 0, b1 < 0, b2 > 0 and b3 < 0 or b3 > 0
Again the constant is expected to be positive because there a number of other factors that determine the Gross Domestic Product.
Importation is a withdrawal from the economy and so, is expected to impact negatively on economic activities in the country.
In macroeconomic theory export is regarded as an injection in the economy and so, it is expected to impact positively on the economy.
The Economic openness could either be positive or negative as explained above.

STATEMENT OF HYPOTHESIS
H0: That international trade does not contribute to the growth of Nigerian economy.
H1: That international trade contributes to the growth of Nigerian economy.

SCOPE 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 in essence this study will be as broad as possible. The study will be using economic data from 1970 to 2011.

PLAN OF THE STUDY
The study will be structured into five (5) chapters.
CHAPTER ONE
This chapter will basically introduce the study by a brief background, the objective and scope of the study. Present a statement on the research problem and define the various concept involved and also the structure of the study.
CHAPTER TWO
Chapter two focuses on the literature review on international trade as well as the theoretical framework. The pattern and structure of Nigeria’s participation in international trade shall also be examined.
CHAPTER THREE
This chapter is going to concentrate on the research methodology stating the model formulation, technique of data analysis etc.
CHAPTER FOUR
This chapter shall be devoted to the empirical analysis i.e data presentation and econometric analysis of the data and observation.
CHAPTER FIVE
Chapter five, which is the last chapter shall present the summary of findings, conclusion and recommendations.


REFERENCES
Afaha, J. S. and Aiyelabola, O. O. (2012) Foreign Trade and Economic Growth: Evidence from Nigeria. Arabian Journal of Business and Management Review (OMAN Chapter). Vol. 2, no. 1, pp. 26-48.
Englama, A.; Duke, O.; Ogunleye, T. and Isma’il, F. (2010) Oil Prices and Exchange Rate Volatility in Nigeria: An Empirical Investigation. Central Bank of Nigeria Economic and Financial Review. Vol. 48/3 September, pp. 31-48.
Muritala, T., Taiwo, A. and Olowookere, D. (2012) Crude Oil Price, Stock Price and Some Selected Macroeconomic Indicators: Implications on the Growth of Nigeria Economy. Research Journal of Finance and Accounting. Vol. 3, no. 2, pp. 42-48.
Obadan, M. I. and Okojie, I. E. (2010) An empirical analysis of the impact of trade on economic growth in Nigeria. Jos Journal of Economics. Vol. 4, no.1, pp. 1-23.
Soderbom, M. and Teal, F. (2001) The Performance of Nigerian Manufacturing Firms: Report on the Nigerian Manufacturing Enterprise Survey 2001. United Nations Industrial Development Organization (UNIDO) and Centre for the Study of African Economies, University of Oxford.
Usman, O. A. (2011) Performance Evaluation of Foreign Trade and Economic Growth in Nigeria. Research Journal of Finance and Accounting. Vol. 2, no. 2.

 

 

PROJECT PROPERTIES
Project Status
Available
Number of Chapters
5
Number of Pages
93
Number of Words
14,436
Number of References
36
Project Level
B.Sc.
Price
N10,000 (Non-Negotiable)
Abstract, Regression Data and Results are included
How to Pay for this Project . . . .CLICK HERE

Keywords: international trade, import, export, economic growth, development, economic openness, economic independence, economic progress

 

 

 

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