The impact of export promotion on Nigeria economic growth 1981-2015. Download the full project from chapter one to five with reference and abstract. The impact of export promotion on Nigeria economic growth cannot be overemphasized let review the major impact.
1.1 Background of the study
The impact of export promotion in any society is very vital and cannot be overemphasized. The growth of any nation depends on her ability to produce export goods for the purpose of earning foreign exchange. The true wealth of a nation is not measured in terms of money but in its production of goods and services (Smith, 1776).
The neoclassical school of economists suggests that export make major contribution to the economic growth. Hence, one of the enduring questions in economics involves how a nation could facilitate the pace of its economic growth, development and increase its Gross Domestic Product (GDP). One of the enduring answers to the question is to promote export. By promoting export, development is positively influenced; export promotion permits the accumulation of foreign exchange, which in turn permits the importation of highly quality goods (machines) that will be used to expand the nation’s production possibilities.
Oladipo (2007), chairman, Economic Community of West African States (ECOWAS) committee on Manufacturers Association of Nigerian Export Groups (MANEG), advised the federal government to intensify efforts on the supply side, to ensure increase in production of export goods by way of providing adequate incentives to export oriented manufacturers as well as producers of agro-commodities and solid minerals.
Economists are of the opinion that every nation principally depends on the state for her foreign trade as this will boost foreign exchange earning owing to the incontestable impact of export as “engine of growth”, export promotion has become very essential since no country is ”an island” and as such nations must export for their economic survival.
Foreign trade is composed of export and import. Prior to the static situation in the international market, developing countries export mainly of foodstuffs, minerals and other primary products and imports manufactured goods from the developed countries who are the chief importers of their primary commodities. The static situation has been responsible for the serious advantages suffered by the developing countries during export. It is not that the demand and supply factors for these types of goods tend to turn the terms of trade against the developing countries but also these primary commodities are subject to the sharper price fluctuations than the manufactured goods (Zurekas, 1979). It has been noted by zukrekas, that a developing country wishing to become less dependent on the developed countries still has the need of foreign exchange to finance importation of industrial raw materials, intermediate and capital goods not available domestically.
In the pre and immediate post independence era, during the 50’s and 60’s non-oil products dominated the Nigeria economy. These primary products include such product as cotton, groundnut, palm oil, cocoa, and rubber. These products formed the main stay of Nigeria exports and occupied the pride of place in the country’s economic output structure. In the 1950’s agricultural export goods accounted for community of more than 95 percent of export earning of the country. The Turkish Ambassador Haka Okal has currently commended on the Nigeria’s agricultural export goods saying, that agriculture is an area, if developed to a measurable level of its potential could turn out to be a big foreign exchange earner.
About 70 percent of the population derives its income from agriculture and related activities (Daily Independent, Feb. 1, 2007). In the 1960’s the country witnessed a sight shift in the structure of export with agriculture accounting for just about half of total earnings by 1969. The economy then was so sound that capital project was implemented without the Federal Government resorting to borrowing of funds to finance them. That era also witnessed the establishment and growth of Nigerian export. Industries which were invariably resources- based on cocoa, palm oil, cotton, and groundnut.
Notwithstanding, the discovery of exploitation and exportation of crude oil in the late 1960’s and through to the 1970’s and 1980’s and even up till date, the components of Nigeria export port-folio in the last decades reveals that the export sector has been dominated by oil. The percentage contribution of agriculture declined from about 40 percent in 1970’s to less than 30 percent in 1980. Since the late 70’s non-contributed to less than 10 percent of the total export earnings. Exports of manufactured goods have remained almost insignificant in the nation external transactions. Why? Since the early 1970’s petroleum has constituted the main source of foreign exchange earnings (about 90 percent) and about 80 percent of the federal government revenue.
This shows that there is little or no diversification in the export of the Nigerian economy. The whole scenario is definitely not in the best interest of the economy, especially on declining of the Nigerian currency in the foreign exchange market. The total dependence on a single product for export earnings exposes a country to the dangers of severe external shocks as we can see from our recent experience. It is therefore paramount that Nigeria needs to diversify her export based not only as a hedge against external shocks but also as a means of increasing exports and strengthening the economy.
- Statement of the Problem
The poor state of employment, infrastructural development, high inflation and mass poverty in the country can be attributed to poor export promotion in the country. Export has a vital impact to the development of an economy. This is because the importance attached to the external sector of the economy derived from the fact that exports are referred to as an “engine of growth”. Nigeria need to export for her own economic survival and through export, she can sell what she has and get foreign exchange to finance the purchases of what she requires for her country’s development. She has to export because no country is self- sufficient which means that they have to buy from other countries those things they cannot produce and also acquire for herself special skills that do not exist in her country but exist in some other county.
However, the government of Nigeria has development a number of policy measure to to promote export in the country and thereby create the needed employment and sustained growth in the country at large. In the 1970s government establish the export promotion board council to promote export in the country and also gives tax relief to some exporting companies operating in the country. it is dishearten that despite export promotion strategies in Nigeria’s economic growth and development scheme, her export performance over the years have been relatively poor and below expectation. The attempt at finding out the extent to which Nigerian export promotion strategies have been effective in diversifying the productive base of Nigeria led Onayemi and Ishola (2009) into revealing that non-oil export have performed below expectation under export promotion policy. This outcome supports the argument by Subasat (2002) that export promotion does not have any significant impact on economic growth of low income countries. This same result however contradicts Usman (2010) who discovered that an insignificant non-oil export and exchange rate would slow down economic growth given that non-oil export for previous year positively affects growth.
The relevant question here however is; how do we utilize exports (that is Nigeria’s export potentials and export expansion) to bring about growth and improvement in the country’s income and economy at large.
1.3 Research Questions
The study wishes to answer some research questions such as;
- To what extent does export promotion impacted on the economic growth of Nigeria within the sample period?
- Is there any observed longrun relationship between export promotion and the economic growth of Nigeria?
1.4 Objective of the Study
The major objective of this study is to examine the impact of export promotion on Nigeria economic growth within the sample period. The specific objective of this study is underlined below;
- To evaluate the impact of export promotion on Nigeria economic growth .
- To examine the long-run relationship between export promotion and Nigeria’s economic growth.
1.4 Hypothesis of the study
The following hypothesis has been advanced to guide the researcher in this study.
- H0: Export promotion has no significant impact on the economic growth of Nigeria.
H1: Export promotion has a significant impact on the economic growth of Nigeria.
- H0: Export promotion has no significant long-run relationship with economic growth of Nigeria.
H1: Export promotion has significant long-run relationship with economic growth of Nigeria.
1.5 Significance of the Study
The study can be used to direct future research into the appropriate implementation of export promotion policies in Nigeria. This study can act as an incentive to exporters to export more for the economic growth of Nigeria.
This study can as well be used by government as a guide in budgeting and economic planning.
This study can also be used to wave the operation of mono-product as an export problem in Nigeria. This study will also be useful to the students of banking and finance, economics etc as it will aid them in their further research.
1.6 Scope of the Study
This study is basically concerned with the analysis of export growth through export promotion on Nigeria economic growth while considering the role of imports in income-export relationship in Nigeria’s economic development. It also wishes to use data from 1981-2015 covering a time series of 35 years.
1.7 Limitation of the Study
The limitations of this study are due to the inconsistence and dearth on the collection of data, time constraints and non-co-operative attitude of the librarians and of most libraries consulted and mobility constraints as well as finance.
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