THIS PROJECT WORK WAS WRITTEN BY
AND SUBMITTED TO THE DEPARTMENT OF ECONOMICS
TABLE OF CONTENT
Title page……………………………….i
Approval page………………………….ii
Dedication………………………………iii
Acknowledgement…………………….iv
Table of content………………………..v
Abstract……………………………….. vi
CHAPTER
ONE
INTRODUCTION
1.1
Background
of the Study……
1.2
Statement
of Problem………..
1.3
Objective
of the Study……….
1.4
Research
Questions …………
1.5
Hypothesis
of the Study…….
1.6
Significant
of the Study……..
1.7
Scope
of the Study ………….
1.8
Limitations
of the Study…….
1.9
Methodology………………….
CHAPTER
TWO
2.0
LITERATURE REVIEW…..
2.1 Theoretical Literature…………
2.2 Empirical Literature …………
2.3 Export-Led Growth…………..
2.4 Features of Export-Led Growth…
2.5 Export Promotion and Nigerian’s Economy
2.6 Benefits of Export Promotion ………………
CHAPTER
THREE
3.0 Research methodology…………
3.1
Research Design……………………...
3.2 Model Specification ……………………..
3.3 Model Evaluation…………………………
3.4 Sources of Data…………………………..
CHAPTER
FOUR
4.0
PRESENTATION AND ANALYSIS OF RESULT
4.1
Presentation
of Data……………………
4.2
Analysis
of Result………………………
4.3
Evaluated
of Research Hypothesis….
4.4
Implication
of Result……………………
CHAPTER FIVE
5.0
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1
Summary
of findings…………………
5.2
Conclusion……………………………..
5.3
Recommendation……………………..
Bibliography…………………………………..
Appendix
1…………………………………………
ABSTRACT
This
research work examined the Empirical Analysis of Export Promotion and Nigeria’s
Economic Growth. The objective of the study is to find out whether export Promotion
has significant effect on Export as to impact on the level of income in the
economy. In this study, the method adopted was the regression analysis based on
the Ordinary least square (OLS) technique,
F-test, T-test, coefficient of multiple determination (R2), standard
error test (S.E) and Durbin Watson statistics were used for the statistical
tests. The variables used were one dependent
variable (GDP) and the Independent variables are Export rate, Import rate and Exchange
rate (EXP, IMP, EXD).
The hypothesis formulated to guide the major activities of the study were, export
promotion have a significant effect on economic growth of Nigeria and can it be
used as an instrument that will help in the growth and development of the
economy. Furthermore, data was presented and analysed, the result reveals that export
promotion has a significant effect on the Economic growth of Nigeria within the
period 1979-2007 which is the period under study. Based on the policy
implication, some recommendations were suggested which is provision of enabling
environment by government for the manufactures of export goods and
diversification of the mono-cultural economy of Nigeria.
INTRODUCTION - BACKGROUND
TO THE STUDY
The ultimate aim of
the government of any country is to achieve a well developed economy which can
be depicted by the realization of macroeconomic objectives of equitable income
distribution, price stability and economic growth. Consequently, various
policies and strategies can be adopted in the realization of these objectives.
While some countries prefer inward looking import-substitution model because it
enables them to evolve their own styles of development, others believes in the
adoption of export oriented strategy.
Nigeria like many other developing
countries had at one time or the other adopted the policy of import replacement
under the philosophy of economic nationalism, have switched to export promotion
strategy because it was realized that this was more effective than import
substitution in achieving a faster growth and structural upgrading of an
economy.
Export promotion strategy is commonly
referred to by many scholars as governmental efforts to expand the volume of
country’s export through export incentives in form of public subsides, tax
exceptions, special credit lines and other kinds of financial and non-financial
measures designed to promote a greater level of economic activities in export
industries so as to generate more foreign exchange and improve the current
account of the balance of payment (Todaro, 2003).
It has been established that export 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.
In the pre and immediate post
independence era, during the 50’s and 60’s non-oil products dominated the
Nigerian economy. These primary products include such product as cotton,
groundnut, palm oil, cocoa and rubber. The Nigerian economy was dependent on
export of these agricultural commodities for survival and it accounted for more
than 95% of export earning of the country. However, as a result of the setting
up of commodity board by the federal government to act as buying agent, this board went about
fixing prices arbitrarily and below market prices, therefore, farmers moved out
of the business because they no longer found it profitable. The policy effect
was therefore negative development of exports in the agricultural sector.
Moreover, available date revealed that the manufacturing sub-sector of the
economy had often been making minimal contribution to export. The reason that
can be adduced from this had been neglect of the sector by colonial masters
before independence in favour of export to industrial raw materials for their
domestic industries. Even after independence, poor infrastructure, lack of
adequate finance, high cost of production and low market penetration due to
poor quality control were factors constraining the development of manufacturing
exports.
The discovery of exploration crude oil
in the late 1960’s, Nigerian economy became heavily dependent on the oil
sector, as revenue from the oil sector overshadowed that from the agricultural
sector. The petroleum exports became the main source of foreign exchange and
government revenue. Moreover, in 1970s, oil sector experienced price explosion
at the global crude oil market as a result of crisis in the Middle East. The
ultimate effect of this was a massive inflow of foreign exchange (Ajakaiye and
Ayodele, 2000). Eventually, Nigeria became a mono-cultural economy, over
depending on crude oil export for her foreign exchange.
However, as a result of the
protectionist policies of the developed countries and the increases
substitution of synthetic for primary products in the technically advanced
countries, the world oil market collapsed in mid 1980s, resulting in a sharp
drop in crude oil prices in the international markets. Consequently, there was
a significant decline in foreign exchange earnings from crude oil. As a result,
there was a rapid depletion of Nigeria’s foreign exchange reserve and worsening
unfavourable balance of payment position, there was high rate of unemployment
as investment rate was low, massive importation of various types of food items
as local production was low. The manufacturing sector could no longer produce enough
goods and services as essential raw materials were not available. It became
clear then, that crude oil export should not be looked upon to guarantee
sustained growth of Nigeria’s economy in the long-run (Ojo, 1996). Therefore,
additional source of foreign exchange earnings to finance the gap between the
demand for and the supply of foreign exchange must be sought.
All policy measures designed to
improve the situation, including stabilization measures in 1982 as well as the
restrictive monetary policy and the stringent exchange control measures in 1984
proved ineffective. Consequently, the Structural Adjustment programme (SAP) was
introduced in July 1986. Other policies which includes: The establishment of
Nigerian Export-Import Bank (NEXIM), Nigeria Export Promotion Council (NEPC),
Nigerian Processing Zone Decree etc which was charged with the main objectives
of attaining overall export growth, to diversify export from dependence on
crude petroleum through the promotion of non-oil exports and to assist
intending exporters in creating conducive environment for the production and
exportation of non-oil product.
Against this background, that this
work is aimed at finding out the effect of export promotion on Nigerian
economic growth. The work will also give the government the most viable options
to current account surplus without depending much on foreign investors or
borrowing.
STATEMENT OF PROBLEM
The problem in Nigeria is that of too
much importing without exporting which have placed the economy in balance of
payment deficits. As Todaro (1988) rightly pointed out, the overall balance of
payments deficits will pose severe strains on an economy and greatly restricts
its ability to continue to import needed capital and consumer goods.
He also contended that the nation has
to imports to feed its population and posses very limited stocks of monetary
reserves. Balance of payment deficits spell disaster for many millions of
people. Measures taking by government to improve the situation are usually aimed
at improving export expansion or limiting imports.
Moreover, it is dishearten that
despite export promotion in Nigeria’s economic growth and development scheme,
her export performance over the years have been relatively poor and below
expectation. This is to say that without the strengthening of her potentials to
exports. It is difficult for contemplate bright prospects for rapid economic
development.
OBJECTIVE OF THE STUDY
The main objective of this study is to
test and find out the effect of export promotion on Nigerian’s economic growth.
Specific
objectives:
1.
To
find out the effect of export promotion on export growth in Nigeria.
2.
To
give the government the most viable options to current account surplus without
depending much on foreign borrowing.
RESEARCH QUESTIONS
The study wishes to answer some
research questions such as:
1.
Why should export expansion and
diversification be considered as a major factor in the globalization process
and integration of Nigeria into the world markets?
2.
How can the policies for export promotion and
tax adjustment be utilized effectively?
HYPOTHESIS OF THE STUDY
The hypotheses of this study, which
are empirical and conditional statements assumed to be tested are as follows:
H0:
b1 = 0 Export
promotion has no significant effect on Nigeria’s economic growth.
H1:
b1 ≠ 0 Export
promotion has significant effect on Nigeria’s economic growth.
SIGNIFICANCE OF THE STUDY
The study can be used to direct future
research into the appropriate implementation of export promotion policies in
Nigeria.
The study can act as an incentive to
exporters to export more for the economic growth of Nigeria.
This study can also be used to wave
the operation of mono-product as an export problem in Nigeria.
SCOPE OF THE STUDY
This study is basically concerned with
the empirical analysis of export growth through export promotion and income
growth while considering the role of imports in income-export relationship in
Nigeria’s economic development. It uses a time series data from 1979 to 2007
covering a period of (29) years.
The data for the study are reports
from National Bureau of Statistic (NBS) and Central Bank of Nigeria (CBN) of
various years.
LIMITATIONS OF THE STUDY
The following form a
setback to the study:
The time allotted for the study was short
to enable extensive research for the study. And also, lack of fund to enable
the researcher carryout the research to all levels it required.
METHODOLOGY
The
data for this research work was sourced from secondary sources which include
text books, data and literatures collected from Central Bank of Nigeria (CBN),
annual reports, central bank of Nigeria quarterly economic review, annual
statistical bulletins and internet sources. The ordinary lease square (OLS)
method was employed in analysis of data since it is fairly simple with
non-excessive requirement. Statistical tools such as R2, F-test,
t-test and Durbin Waston were applied in the analysis of the data in this
project work.
OKEAGU, CHIAMAKA .N.
EBSU\ECO\2006\37179
BEING A RESEARCH PROJECT SUBMITTED TO THE
DEPARTMENT OF ECONOMICS,
IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR
THE AWARD OF BACHELOR OF SCIENCE DEGREE (B.Sc) IN ECONOMICS.
FACULTY OF SOCIAL SCIENCES,
EBONYI STATE UNIVERSITY
ABAKALIKI
DECEMBER 2010