CHAPTER ONE 1.0 INTRODUCTION 1.1 Background of the Study
Export is a potent strategy for mutual inter-dependence among nations of the world. It is an engine of growth and an instrument for technological and industrial advancement. Practically, all human beings realize that they are not Islands unto themselves, and that they benefit from living with, and trading with other people. The same is true of nations. They too must interact with one another. No nation can be an Island unto itself. The dynamics of the world economy and trading environment is continually being shaped by fierce competition among trading nations under the impetus of revolutionary changes in information and communication technology resulting in significant changes in the structure of exports of leading countries in international trade. The development and promotion of non-oil export on a sustainable basis in Nigeria becomes critical taking into cognizance the huge natural resources in the country and export potentials outside the oil sector that can provide vast employment opportunities and sustain the non-oil economy. Historically, trade has contributed to optimal allocation of resources within countries and the transmission of growth from one part of the world to the other (Iyoha 1995). The growth records of countries like Singapore, China, Malaysia and Thailand are commonly cited as examples of countries that achieved economic growth through trade. (Giles and Williams 2000). Although one cannot conclude that the growth of an economy is caused only by the expansion of exports or increased openness as there are numerous growth determining variables such as investment, saving and technical progress among others. Over the years, successive administrations have pursued the objectives of economic diversification and self reliance. However, the economy is yet to be fully diversified. Crude oil exports account for over 90 percent of foreign exchange earnings. Also more than 50 percent of industrial raw material and significant amount of consumer goods are imported (CBN 2009). Economic diversification implies a conscious effort by the government to improve and restructure the economy thereby creating different avenues of generating revenue which in turn will reduce our dependence on crude oil.
In Nigeria the exports earning is expanding on the average but the composition of the exports is the area of concern. As earlier mentioned, over 90% of Nigeria’s export earning is accrued from the oil exports while the non-oil exports account for less than 10%. (CBN Statistical Bulletin 2009) the disparity is risky to the country’s economy. It is against this background that the government decided to revive the non-oil exports by the liberalization of trade with some incentives to stimulate growth of non-oil exports for a sustainable economic growth of Nigeria. Some of these measures include the federal government’s institutional support through the establishment of the Nigerian Export Promotion Council (NEPC) in 1976 with the mandate to promote non-oil exports thereby diversifying the economy. However, the gap between oil exports and non-oil exports in the country is on the increase.
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