The Effect of Foreign Trade on Tthe Nigerian Economy Essay Example for Free

The Effect of Foreign Trade on Tthe Nigerian Economy EssayEveryday, the need for external totallyot is on the increase as the needs of man is unlimited (Adams Smith). This is visible in the splay for consumer goods and services throughout the world especi totallyy with the increase in world population of over 6 billion people. Man with his advancement in social interaction and technology is able to visualize and get the picture in his mind what he desires. This was obvious with the industrial revolution where production take on increased.With the location of bare-ass materials in different geographical zones making them ubiquitous in some(prenominal) areas and scarce in others, the demand for certain goods is on the increase, which gave rise to the concept of foreign employment. . .Foreign switch over exists alongside domestic trade, which has likewise undergone transformation from the old style of trade by barter to business. In the light of this, Nigeria as a nation participates in foreign trade.Foreign trade as defined by Longe, (2008) is the purchasing and selling of goods and services beyond the geographical boundaries of a acres or betwixt one country and the other. Foreign trade also referred to as international trade, can be bilateral or four-sided and involves the use of different currencies. The Economic glossary defines foreign trade as the exchange of goods and services between countries, and as such, it goes ahead to explain that the inclination for one country to trade with another is based in large part on the idea of comparative advantage..Foreign trade is just an consultation of production, exchange and consumption of goods and services that are fundamental part of life. The Wikipedia encyclopedia defines foreign trade (international trade) as the exchange of capital, goods and services across international borders or territories. In such countries, such trade represents a significant share of the GDP. Foreign trade compri ses of imports, exports, and entreports. The economic, social and political importance of foreign trade has been on the rise recently due to specialization in production.Industrialization, advanced transportation, globalization, Multinational Corporation and outsourcing are all having a major impact on the global foreign trade system. Increasing foreign trade is very important to the growth of globalization as international trade assist in bridging the cleft and creates availability of goods and services to other nations. The aim of foreign trade is to increase production and to raise the bill of living of the people. Foreign trade enables citizens of a country tolerate access and enjoy the products of another country. consort to .. reasons for foreign trade are for the following reasons uneven distribution of natural resources due to difference in climate, division of labor and specialization, difference in economic growth rate, theory of comparative cost, availability of all ty pes of goods, increased standard of living, large scale production and stable price. According to the theory of comparative cost, severally country should concentrate on the production of those goods for which it is best suited, taking into account its natural resources, climate, labour supply, technical-know-how and the aim of development.Akeem (2011) explains that foreign trade plays a vital role in restructuring economic and social attributes of countries around the world. acquired immune deficiency syndrome to trade includes banking, warehousing, insurance, transportation and advertisement. According to . , there arises challenges in implementing foreign nations involved in foreign trade is done using exchange of currency Increase in tariff, high duty on some imported goods as well as some export goods.Exposure to risk since they are transported each through the road, air, prepare and sea. 2. deplorable intermodal transport network in developing countries such as Nigeria. 3 . Poor government policies on trade and industrialization. 4. Corruption and unaccountability. 5. Insurgence of terror groups globally acts as a nemesis to foreign trade. 6. Late payment for goods which results to demurrage and high port charges. 7. Language barrier slows foreign trade.With a geographical land mass of about 923,768sqkm, Nigeria is located along the Atlantic coast line. The location of natural resources in almost every part of the country has attracted trade domestically and internationally. These resources include cash crop, food crop, square(p) mineral, livestock and aquatic life. During this period, the industry in existence was the extractive industry and the scale of production was minimal. There existed trade by barter, the use of cowries, and coins as the medium of exchange.Nigeria experienced foreign trade with the insurgence of the British, Portuguese etc, who explored the country and tapped our natural resources. The colonial masters journeyed into the hi nterland and assisted in the construction of the early road networks and later, rail lines which connected major cities to the ports in Lagos, Port Harcourt and Calabar. These routes provided means of transportation for the export of cash crops like ornamentation oil, cocoa, groundnut, rubber, etc to the industries in Europe and America.Between the periods of 2005 and 2010, many industries e. g. Unilver, located in Nigeria relocated to neighboring West African countries and their home base because of the numerous problems such as epileptic power supply, high tariff on import, corruption, inadequate social infrastructure and high tax rates imposed on them by the government. These factors have affected Nigerias foreign trade, especially with her over dependence on crude oil which was notice in Oloibiri, Bayelsa State, formerly Rivers.