Trade Liberalization and Performance of Nigeria Economy (2000

Trade Liberalization and Performance of Nigeria Economy (2000 – 2019)

CHAPTER ONE

OBJECTIVE OF THE STUDY

The major objective of this study is to analyze the impact of trade liberalization on the performance of Nigeria economy. The specific objectives are

To examine the trend and pattern of agricultural sector in Nigeria.
To examine the impact of trade liberalization on the Nigeria economy.
To recommend policy options to the government base on the findings.

CHAPTER TWO

LITERATURE REVIEW

INTRODUCTION

This chapter is divided into three parts. The first part deals with conceptual definition, the second aspect deals with theoretical literature and reviews of related theories and the third section tackled the empirical literature review

CONCEPTUAL DEFINITION

Liberalization, Openness and International Trade

The concept of trade liberalization, openness and international trade has generated different kinds of argument; definition and conceptual conflict in economics (see Krueger 2006, Soyibo 2005, Ricardo, J.S mill 1886, Adam smith 1776,). Theoretically, consensus in the literature suggest that trade liberalization is a policy and strategy that involves the relaxation of restriction on tradable goods and services between countries (Kume et al 2003, Topolova 2007).

This can be extend in a broader sense to mean a reduction in all the trade barriers such as tariff and increasing openness of import restriction in each economy in order to create and foster competence in the global economy, efficiency in resource allocation and specialization in production through increase in competition of world market force, and tolerance of diverse culture, law and institutional frame work of participating countries. Others, see trade liberalization as a removal of government incentive and restriction from trade between nations (see Ogunlana 2002, World Bank, 2000 etc.).

According to Ogunlana, ( 2002) trade liberalization is a removal of all forms of restriction that could hamper free trade especially in export and adoption of several export incentive and a more realistic exchange rate policy. In developing this general concept, Ajakaiye et al (2005) added that the beginning of trade liberalization episode coincided with the reduction or elimination of quota restriction on trade. Fisher (2004) sees trade liberalization policies as the core of the adjustment package which is expected to enlarge the elasticity’s of export supply, import demand, and import substituting supply with respect to devaluation as well as more directly shift resources into tradable goods sectors, that many factors have been advanced for the incorporation of liberalization in the adjustment package.

The economic case of liberalization is premised on the proposition that govern certain conditions such as perfect competition and free flow of information, free market equilibrium entails the maximization of efficiency in the pare to optimum sense. Helleiner (1993) advocated that openness in economic relations with the rest of the whole world in trade promotes welfare and trade. Owolabi (1998) defined trade liberalization as the concept that has set in as proves (evidence) whereby producers and investors increasingly behave as if the world economy consisted of a single market. Owolabi further stressed that Nations that grows most rapidly today are those that have successfully increases their participation in global economic activities.

CHAPTER THREE

RESEARCH METHODOLOGY

Introduction

The preference of the methodology for this study is informed by the problem of the study, uniqueness of the study, the study objectives and recent theoretical insights and empirical studies on the link between Trade liberalization policy impact and agricultural productivity. Thus, standard procedure adopted for analyzing the impact of trade liberalization on output performance consists of at least three stages. The First is that we conceptualized the relationships between trade liberalization, government policy and agricultural productivity. Second is the formalization of the relationships in the form of theoretical or empirical models and third, is the implementation of the empirical analysis.

The methodology for this study consists of the three frameworks (conceptual, theoretical and empirical) but organized into two subsections: conceptual and theoretical framework and, empirical framework.

CHAPTER FOUR

RESULT PRESENTATION, INTERPRETATION AND ANALYSIS

This chapter estimates and interprets the results of the study base on the data collected from the CBN and National Bureau of Statistics. The study used econometric views 4.0 for the estimation.

Result Presentation

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

Summary

This research work examined the impact of trade liberalization on the performance of the Nigeria economy. The evaluation covered a range from 2000 -2009. The data for the study were got from CBN Statistical Bulletin for various years, CBN Annual Report and Statement of Account, NBS.

To achieve its objective, the study was sub-divided into five chapters. It began with the general introduction, followed by statement of the problem with three basic research questions, objectives and the need that necessitated the study. Within this section, the scope and limitations encountered in the course of execution were clearly stated.Related literatures were reviewed in chapter two. The contending issue was first dealt with, i.e. the conceptual definition of term and argument as viewed from different perspectives. From the literature, it was identified that most of the countries that open up their border with respect to trade liberalization experienced growth in key sectors of the economy which include agriculture and manufacturing sectors.

Theoretical issues were reviewed and one theory was adopted for the study. The vent-for surplus theory of international trade stands as the theory in which this research work will build up this is important since Todaro (1977) and Iyoha (1995) agreed that this theory provide a better realistic analytical framework of the past trading experience of the developing countries than that of classical and neo-classical theories. On the basis of the above theoretical background, the empirical model of this study will start with a Cobb –Douglas production function, given the fact that Todaro (1977) and Iyoha (1995) agreed that vent –for surplus theory is a better model for developing countries therefore, researcher adopted the aggregate production function framework model developed by Michael et.al. (1991) which incorporates export shares as a proxy for changes in openness with some modifications, in terms of inclusion of some vital variable. Empirical literatures were reviewed to give momentum to the study

Relevant data for the study, its sources, procedures for its generation and methodology used in presenting and analyzing it were identified. Given the objectives of the study and it uniqueness ordinary least square (OLS) regression was found to be more appropriate. Justification for using OLS as method is because of it un-biased properties, efficiency and completeness. The study found that trade liberalization on an aggregate exact a significant positive impact on the Nigeria economy. It impact on an average is about 14 percent in increase on agriculture output. In the disaggregated model the study found significant impact difference. For example, the positive effects of trade liberalization on agricultural sub-sector such as crop production, livestock and forestry are slightly significant., but the impact of trade liberalization on fish production output is highly significant. It exact about 28 percent on the output of fish production.

Conclusion and Policy implications

The agricultural sector that consists of sub-sectors namely, crops, livestock, fishery and forestry has had a very slow growth. It was discovered among the sub-sectors that fish had major contribution to the agricultural sector with livestock following closely. Crop and forestry subsectors have very low average growth rates. From the results so far, agricultural growth has been slow. The result of this study raised fundamental concerns about the role of trade liberalization in boosting the Nigeria economy.The data available to this study showed that Nigeria had complied with the policy of open trade through adoption of the structural adjustment program. Which conform World Bank proposal that developing countries like Nigeria would likely benefit from opening up their border.

The following policy implications are deduced from the study. The result of the study seems to suggest the importance as well as the imperative for Nigeria to embark on comprehensive trade liberalization policies in order to accelerate and sustain growth in agricultural sector.

It was observed from the results so far, a slightly slowdown in agricultural growth which not only affects agricultural income and growth of the economy but also affects self – reliance and selfsufficiency in the economy this was probably because what is actually released for agricultural production is not what is budgeted. This may be also being due to the fact that the loan goes to unintended rather than intended beneficiaries. If loans are received atall by farmers, they may be untimely. It is therefore recommend that the loan disbursement activities of financial institutions, be monitored.

Furthermore, the study revealed that for domestic agricultural production to improve, a number of issues need to be addressed. These include:

Embarking on measures that improve poultry, forestry and crop sub – sectors of the economy whose contribution to agricultural production has been slightly low over the years ii.Empowering farmers to market their produce at reasonably good prices. This may require government buying excess of the farmers’ produce particularly during the season at guaranteed minimum prices.

Recommendations

The study proffered the following recommendations. First, there is need to revive and rebuild the agricultural sector of the economy to raise output for exports. This can be achieved by providing the sector with appropriate incentives, like provision of infrastructural facilities and provision of modern farm implement and others. Secondly the study recognizes the need for trade liberalization as a strategy for achieving economic growth on one hand. In view of these, the study recommends the following policy line for the Nigerian economy

Making deliberate efforts by government to increase small scale enterprises in Nigeria. This is because most enterprises in Nigeria are likely to agro-allied that may require raw materials from agriculture and also increase in per-capita productivity of the people through improved technological innovation.
The monetary authorities should adopt a mechanism that will lead to the stability of the exchange rate. Erratic changes in the exchange rate have a long-term negative effect on the production of agricultural output. Therefore, to boost production through cost reduction, the naira exchange rate policy of government would need to be re-examined. Since the period covered in this research work, naira exchange rate has further depreciated if not arrested, this would further aggravate the problem of production cost in agriculture.
There is a dire need for adequate infrastructural development in the country. Nigeria has been recently noted to be one of those Africa countries that have poor infrastructural condition and infrastructural facilities in Nigeria are at serious decay.
In general it is important that developing countries and indeed Nigeria should seek greater concessions in the next trade round in the use of support measures and effective implementation of agreements on agriculture. Nigeria should adopt a tactical implementation of agreements on agricultural reforms.

REFERENCE

Adebiyi M.A (2002): “Trade Liberalization Policies and Industrial Growth Performance in Nigeria”.
Adenikinju, A and Cheto, L. (1994): “Trade policy and productivity Growth, Evidence from Nigeria” Final Report presented at a workshop by the African Economic Research consortium (AERC), may 28-June 2.
Adenikinju, A. and Cheto, L (1999):“Trade Liberalization, Market structure and productivity in Nigeria”. The Nigeria Journal of economic and social studies vol. 41.
Adeolu A.O. (2003): A paper presented at the 44^th Annual Conference of NES on
“Globalization and Africa economic Development” held at premier Hotel
Agiobeneb T.J. (1995): “Trade Theory and Development. A new theory in old Religion” selected papers for the 1995 Annual Conference
Akinyosoye V.O, (2000): “Agricultural Development prospects (ADPs) and Food Crops Production in Nigeria.”
Alabi (2008): “Effect of Economic Liberalization on Chicken Meats Production in Nigeria”
Aliyu R.S. (2008): “Openness and Growth in Sub- Saharan Africa”A time series and cross – country analysis.

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