BACKGROUND OF THE STUDY
The impact of trade on the economic performance of a country is a highly discussed issue in the political debate of both developing and advanced economies. And for the last two decades, trade liberalisation has been a prominent component of policy advice to developing countries. Economic growth has been the most important claim that springs from it, advocates of trade liberalisation state several chains like higher foreign direct investment (FDI) through which trade promotes the growth of income per capita. In general, they back up their hypothesis by referring to the high growth rates of South Asian countries like the Tiger states and China, which aggressively implement outward oriented strategies.
On the other hand, sceptics doubt that trade liberalisation promotes long and sustainable growth. They assume that there are economic situations in which things get even worse if a country liberalises trade. They often refer to the negative growth rates of some countries in Eastern Europe and Africa, which followed the advices of the World Bank and the International Monetary Funds to open up their markets, Stiglitz (2002)
The Nigerian main trade policy instrument shifted remarkably away from tariffs to quantitative import restrictions, particularly import prohibition and import licensing from the mid 1970s. This gave rise to the Nigerian customs legislature establishing an import prohibition list for trade item and an absolute import prohibition list for non trade items, Oyejide (1975). The customs legislation empowered the government to modify this list at its discretion by adding or subtracting items through customs and excise notices and government announcement. And over the years there have been several modifications on this list targeted to protect existing domestic industries and reducing the country’s dependence on imports.
There are three international organisations that have expressed views on Nigerian’s import prohibition policy, these are the World Trade Organisation, the World Bank and the International Monetary Funds. They have advisory role with respect to trade and other policy matters in Nigeria and had advised a more liberal trade policy regime in Nigeria which was initiated in the 1980s. The World Bank and the International Monetary Funds did support this via its lending programme
Prior to the introduction of the structural administration programme (SAP) in 1986 in Nigeria, imports were subjected to quantitative controls implemented through a combination of ban on agricultural and some manufactured goods and a licensing system. But under the SAP, import and export licensing was abolished, price and distribution control on agricultural exports was removed and the prohibited list of imports was reduced.
This issues of whether trade liberalisation would lead to economic growth has become a debate for both pro-traders and protectionists. This has led to a growing change in the trend of world trade. Mostly, African countries have become more careful in embarking in liberalisation of policies.
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