Project Description

CHAPTER ONE
1.0 INTRODUCTION
1.1 Motivation
Trade is widely accepted as a major engine of economic growth. This has been the experience of Nigeria since the 1960s even though the composition of trade has changed over the years.
International trade has been an area of interest to decision makers, policy makers as well as economists. It enables nations to sell their locally produced goods to other countries of the world. International trade is the exchange of capital, goods and services between countries.
Foreign trade allows a country or nation to expand her markets for both goods and services that otherwise may not have been available to her citizens. Foreign trade means per capita income has been based on the domestic production, consumption activities and in conjunction with foreign transaction of goods and services.
It has been established in the literature that export trade is an engine of growth. It increases foreign exchange earnings, improves balance of payment position, creates employment and development of export oriented industries in the manufacturing sector and improves government revenue through taxes, levies and tariffs. These benefits will eventually transform into better living condition for the nationals of the exporting economy since foreign exchange derived would contribute to meeting their needs for some essential goods and services. However, before these benefits can be fully realized, the structure and direction of these exports must be carefully tailored such that the economy will not depend on only one sector for the supply of needed foreign exchange.
According to (Grossman and Helpman 1997) a theoretical view and (keller 2002) an empirical view has argued that openness is important for growth because it generates channels for technology diffusions, which makes the less developed countries to import such goods from the developed countries.
International trade has been regarded as an engine of growth (Adewuyi, 2002). Foreign trade as it has been regarded as an engine of growth must lead to steady improvement in human status by expanding the range of people‟s standard and preference. Since no country has grown without trade, foreign trade plays a vital role in restructuring economic and social attributes of countries around the world, particularly the less developed countries. Before 1972, most of Nigerian exports were agricultural commodities like cocoa, palm produces, cotton and groundnut. Thereafter, minerals, especially petroleum, became significant export commodities. By 1960, imports were valued at N432million. They increased to N758.99million and N8.132million in 1970 and 1978 respectively, rising to N124, 162.7million in 1 and N681, 728.3million in 1987.
Food import became noticeable in Nigeria foreign trade. The country had an unfavorable trade balance from 1960 to 1965, partly because of the aggressive drive to import all kinds of machinery to stimulate the industrialization strategy pursued immediately after independence.
Thereafter, export of crude petroleum guaranteed a favorable trade balance. The oil sector dominates export while the non-oil sector dominates import.
Growth performance of the Nigerian economy has been determined by both domestic production and consumption activities as well as foreign transactions in goods and services. . Before her political independence, Nigeria has been an active player on the field of foreign trade, initially with predominately agrain products, but presently dominated by petroleum products.
Since the discovery of oil in commercial quantity in Oloibiri in the present day Delta State,,….

1.2 Statement of the Problem
The importance of international trade in the development process has been of interest to development economists and policy makers alike (Arodoye and Iyoha, 2014). 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 favor of protectionist and highly regulated economy and have even criticized the previous Nigerian government, for signing the treaty of the World Trade Organization (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.
1.3 Research Questions
This work will be guided through the following questions;
(i) What is the impact of international trade on the economic growth in Nigeria?
(ii) To what extent exchange rate policy impacted on the economic growth in Nigeria?

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