International Trade (PART 1): Its Effect on a Growing Nation.

 

In our world today, nothing can be done without an exchange of some value for value, which involves money, ideas, product and technology. Because of this there is direct effect on the economy of any nation, either positively or negatively. Trade can be traced back to the need for exchange, which evolved from the barter system to the money system. Trade in Africa, however, became popular with the advent of the colonial rule that brought in their wares and made Africans their intermediaries. By this, Africans understood the need for trade both domestically and internationally.

International trade can be seen as exchange of goods and services that exists between two or more countries of the world. International trade occurs due to differences in natural resources endowments, technology, demand, existence of economics of scale in production, financial capital and existence of government policies etc.

International trade has been an area of concern to policy makers and economists. Its importance lies on the ability to obtain goods which cannot be produced in the country or which can only be produced at greater expenses. In addition, it enables a nation to sell its domestically produced goods to other countries of the world. The performance of a given economy in terms of growth rates of output and per capital income has not only been based on the domestic production and consumption activities but also on international transaction of good and services. The classical and Neo-classical economists attached so much importance to international trade in a country’s development that they regarded it as an engine of growth

Trade is a vital catalyst for economic development most especially for developing countries like Nigeria, the contribution of trade to overall economic development is immense owing largely to the obvious fact that most of the essential elements for development such as, capital goods, raw materials and technical expertise, are mostly imported because of inadequate domestic supply. However, it is important to note that internal trade complements external trade since domestically produced goods are collected for export, while imported goods are distributed within the country, sometimes into remote areas. It also facilitates internal specialization and the division of labour between the various firms and geographical areas of the country. Therefore, the higher the level of internal trade the greater the level of specialization. This raises the level of efficiency and productivity of the various economic units.

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