Policymakers in Nigeria must promote the benefits of international trade, liberalize its regulations and from this point of view, the Gross Domestic Product plays a crucial role. Learn more!
The Gross Domestic Product (GDP) of Nigeria measures the monetary value of all goods and services produced over a specific period; it is an indication of the size of the country’s economy at the point of measurement and gives a fair assessment of how the country is doing economically. GDP can be used to gauge how healthy the economy of Nigeria is. It provides data or information that shows whether the economy of the country is improving or dwindling.
Measuring of Nigeria’s GDP is very crucial and can be approached through two ways, namely:
- Through the income approach, by adding up what everyone has earned in a period
- Through the expenditure method, by adding up what everyone spent in that period
Whichever strategy is adopted will give the same answer. What is essential is that Nigerians know how their economy is faring, how international trade contributes to its GDP, and how export and import can be bolstered to contribute more to the GDP.
A change in the GDP, whether up or down, has an impact on the Nigeria economy and everyone that depends on it. A lower GDP means a weak economy because it translates to lower earnings for individuals and organizations and also lower stock prices. An upward swing is beneficial to the economy and Nigerians, and this is what all must work towards achieving.
International trade is defined as a set of activities that aim to exchange capital, goods, and services between countries across their international borders. All advanced countries engage in international trade and derive substantial benefits for it. Amongst these countries, the United State is the largest exporter and importer; this has raised average America’s annual household income by $10,000 or more. Nigeria can follow this example by ensuring its international trade policy serves the public interest; enhances consumer welfare and economic efficiency.
The Nigeria Minister of Trade and Investment Mr Okey Enelamah, while launching the first edition of the Nigerian Annual Trade Policy Reports, said that trade activities, both imports, and exports, employ more than 10.8 million Nigerians. He also noted that the overall value of Nigerian trade between 2014 and 2015 decreased by approximately ₦7.4 billion from about ₦23.7 billion in 2014 to ₦16.3 billion in 2015, and this caused the recession in 2015 and 2016. He also revealed that trade accounts for 18 percent of the Nigerian GDP, second only to agriculture, which accounts for 29.1 percent of the GDP.
Policymakers in Nigeria must promote the benefits of international trade, liberalize its rules and regulations, and put in place mechanisms to encourage more people to participate in it. International trade contributes positively to the Nigerian economy in many ways, and some of them are as follows.
Creates employment opportunities. International trade creates employment in Nigeria by providing opportunities for people who would have been unemployed to engage in international business or its ancillary services and earn a living from it. Lower consumer prices, lower domestic input costs, and increased foreign demand for local products all have employment expanding effects.
Increased economic growth. The Central bank of Nigeria and the Ministry of Trade and Investment have emphasized through numerous ways that international business improves economic growth in the country.
Encourages product variety. International trade promotes product variety amongst trading countries with similar resource gifts and skills. Consumers appreciate it when they have the opportunity to choose from different goods.
Benefits middle and low-income households. International trade boosts specialization and reduces domestic prices. It provides vast opportunities for Nigerians at mid and low-income bracket to have choice and availability of products without spending so much money.
Discourages monopoly. International business contest monopolies by encouraging competition. It ensures that many people or organizations can bring in goods and make them available to consumers to buy.
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