1.1 Background to the Study
Trade is generally accepted as a major engine of economic growth of countries. This has been the experience of Nigeria since 1960s even though the composition of trade has changed over years. Economists have been long concerned with what causes different countries to grow at different rates and achieve different level of economic growth and development. One of such factors is external trade in the work of Edwards (1992) external trade is referred to as buying and selling of goods and services between nationals of different countries, or trade agencies of the government of different counties.
According to Adewuyi (2000) external trade is the exchange of capital goods and services between countries. External trade allows a country or nation to expand her markets for both goods and services that may otherwise not have been available to her citizens.
External trade consists of export and import trade. Export trade involves sale of goods and services to other countries while import trade consists of purchases from other countries. When goods are traded by ways of imports and exports, the transactions are regarded as visible trade. External trade in service is referred to as invisible trade. Thus, for example, if Nigerian exporters avail of British shipping services for transportation of goods, they have to pay for transport services. Hence, services used may be called invisible import by Nigeria sale of services would also regarded as invisible exports. Likewise other services such as banking, warehousing, insurance and railway services are also required in external trade.
Nigeria is basically an open economy with international transactions constituting a significant proportion to her aggregate outputs. To large extent, Nigerias economic development depends significantly on the prospects of her export and import trade with other countries. Trade provides both foreign exchange earnings and market stimulus for accelerated economic growth of countries.
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THE IMPACT OF EXTERNAL TRADE ON ECONOMIC GROWTH IN NIGERIA USING SECONDARY DATA ON GROSS DOMESTIC PRODUCT (GDP) EXPORT (EXP)