THE IMPACT OF INTERNATIONAL TRADE ON THE ECONOMIC DEVELOPMENT OF NIGERIA (A STUDY OF SELECTED FINANCIAL INSTITUTIONS IN ONITSHA ANAMBRA STATE)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). Industrialization, advanced transportation, multinational corporations, offshoring and outsourcing all have a major impact on world trade. The growth of international trade is a fundamental component of globalization.

An absolute trade advantage exists when countries can produce a commodity with less costs per unit produced than could its trading partner. By the same reasoning, it should import commodities in which it has an absolute disadvantage.^[42] While there are possible gains from trade with absolute advantage, comparative advantage that is, the ability to offer goods and services at a lower marginal and opportunity cost extends the range of possible mutually beneficial exchanges. In a globalized business environment, companies argue that the comparative advantages offered by international trade have become essential to remaining competitive.

Globalization (or globalization) is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture put in simple terms, globalization refers to processes that increase world-wide exchanges of national and cultural resources. Advances in transportation and telecommunications infrastructure, including the rise of the telegraph and its posterity the Internet, are major factors in globalization, generating further interdependence of economic and cultural activities.

Though several scholars place the origins of globalization in modern times, others trace its history long before the European age of discovery and voyages to the New World. Some even trace the origins to the third millennium BCE. In the late 19^th century and early 20th century, the connectedness of the world's economies and cultures grew very quickly.

The term globalization has been in increasing use since the mid-1980s and especially since the mid-1990s. In 2000, the International Monetary Fund (IMF) identified four basic aspects of globalization: trade and transactions, capital and investment movements, migration and movement of people and the dissemination of knowledge. Further, environmental challenges such as climate change, cross-boundary water and air pollution, and over-fishing of the ocean are linked with globalization. Globalizing processes affect and are affected by business and work organization, economics, socio-cultural resources, and the natural environment.

1.2 STATEMENT OF PROBLEM

There are so many problems facing international marketing all over the world in general and Nigeria in particular from the recent happenings, we can decipher that those problems have been preventing international marketing from optimizing its goals of earning sufficient foreign exchange which enhances the per capital income and national reserve of the country.

When we look around the world, we can see the fast changing economic, political and social climate every country (nation) wants to succeed, to be heard, to be seen, to be involved in one reasonable thing or another, in order to succeed. We can see the former union soviet socialist Republic (USSR) disintegrating towards capitalistic reforms, south North Korea going towards industrial cum scientific revolution, South African founds transitional programme that will achieve good will and mutual understanding with the outside world and a lot of others. No matter how large or small, however, every nation in the world, including our own, must take very much into account what its own limited resources, it must gain their co-operation. There is need to get other nations to know more about us, what we are doing and what we have to offer.

In the face of the global economy today, it is on record that Nigeria, is rated to be thirteenth (13^th) poorest country in the world the great “Giant of Africa most foreign countries are scared to do business with Nigerians. Again, we have the current “419” syndrome which is making us look dreadful to our foreign visitors and prospective business associates. The political instability in the country does not help matters. According to recent report by Sunday mail “overseas suppliers have reduce level of shipments of automotive component to Nigeria customers as far has griped them that the present political crisis can lead to civil unrest.

1.3 OBJECTIVE OF THE STUDY

The main objective of this study is to evaluate the impact of international trade on the economic development of Nigeria.

The specific objectives of this research work include the following:

1. To determine the contribution of international trade in the economic development of Nigeria.

2. To examine the relationship between Nigerian economic growth and international trade.

3. To examine the problems of international trade in Nigeria.

4. To proffer possible solutions to the identified problems.

1.4 RESEARCH QUESTION

The following research questions were formulated by the researcher:

1. What are the impact of international trade on the economic growth and development of Nigeria?

2. Does international trade contribute to the economic development of Nigeria?

3. Is there any relationship between international trade and Nigerian economic growth?

4. What are the problems facing international trade in Nigeria?

1.5 RESEARCH HYPOTHESIS

HYPOTHESIS ONE

Ho: International trade does not have significant impact on the economic development of Nigeria.

H1: International trade has significant impact on the economic development of Nigeria.

HYPOTHESIS TWO

Ho: International trade does not contribute to the economic growth of Nigeria.

H1: International trade contributes to the economic growth of Nigeria.

HYPOTHESIS THREE

Ho: There is no relationship between international trade and Nigerian economic growth.

H1: There is significant relationship between international trade and Nigerian economic growth.

1.6 SIGNIFICANCE OF THE STUDY

This study is intended to examine the impact of international trade on the economic growth of Nigeria.

It is important to point out that on completion of this research work by the researcher, it would be of immense significance to the following:

RESEARCHERS: Other researchers on the same or similar topic would find this work helpful as it will form a base of review of related literature and also a stepping-shine for future researchers.

ECONOMY: This work will help to improve the national output and thereby national income. This is because of improvement in the international market and as well as the over all success of Nigerian Economy, which will be achieved through adequate utilization and management of this research work.

CORPORATION: The standard of corporations will be increased as a result of the knowledge acquired from this research work.

SHAREHOLDERS: The wealth of the shareholders will be maximized due to the adherence to the recommendations in this research work.

1.7 SCOPE OF STUDY

This research work cannot possibly treat all aspect of international trade because the field is simply too wide so only those relevant to the research study were dealt with as per the impact of international trade on the economic development of Nigeria. The researcher will restrict his work to selected financial institutions in Onitsha metropolis. Any other reference to materials, place, items, activities, periods is just for purpose of clarity and vivid understanding of the topic and not within the scope.