ABSTRACT
This research work is focused on the effect of government regulations on export business in Enugu Metropolis.
Microfinance provides people with capital to start and or expand their businesses as small businesses with microfinance support have grown into Medium Enterprises creating employment opportunities for others.
The general conceptual framework, theoretical framework, empirical literature methods were used by the researcher during the course of gathering data. Research design, sources for data collection, tools for data collection, population of the study, sample and sampling technique, instrumentations, reliability and validity of data and test instruments, data analysis, and percentage were the research methods adopted by the researcher.
This research finds out that there are different types of export products that are exported by organizations in Enugu metropolis; also they are various forms of government regulations on export business in Enugu Metropolis. The study also found out that there are many reasons for government regulations on export business in Enugu metropolis. Also from the findings, it was discovered that Government regulations affect export business in Enugu Metropolis. It was concluded that Government regulation has a positive effect on the export business Even though there are some negative effect of government regulation on export business but the benefit outweigh the negative effect by far, therefore it is recommended that Governments should encourage exports business and try to amend those regulations that have negative effect on export business since exporting increases jobs opportunities and brings in higher wages and raises the standard of living for residents.
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
The continuous agitations and frequent debate by World Trade Organization (WTO) and other economic experts, that free trade among the countries in the world would be an engine for growth and development is still an on-going debate in the field of management sciences. Prior to this, Nigeria went through a series of trade reforms in order to grow her economy and be self-reliant in industrialization strategies that can encourage development and growth. Shortly after the independence in 1960, Import Substitution Industrialization (ISI) strategies were the most prevailing strategies during these periods. The idea was to imitate some countries in Latin America such as Brazil, Mexico, who observed import substitution industrialization strategies during the 1950s. Nigerian government embarked on these strategies on a real large scale with the hope of gaining an autonomous power in terms of manufacturing, production of consumable imported goods and improves the development status of the country. In order to achieve a huge success in terms of Import Substitution Industrialization (ISI) strategies, according to Ogujiuba (2011), protective tariffs such as; high import quotas, special preferential licensing for capital goods imports, subsidized loans to local infant industries, and so forth were introduced. This is a calculated effort to replace major consumer imported goods with domestic production. However, this ISI strategy of industrial development policy failed generally in Africa region including Nigeria because of the stronger structural domestic constraints and external limitations (Mendes, 2014). In the light of the failure of Import Substitution Industrialization Strategy, a further step was taken by Nigeria to adopt outward-oriented development strategy in the mid-1980s which was also termed as structural adjustment programs (SAP) or economic recovery programs (ERP). The effect of these plans was to abolish direct state control in the production, distributive sectors and achieve overall trade liberalization of the country’s economy, especially the external sector.
Trade liberalization is the process of reducing or removing restrictions on international trade. This may include the reduction or removal of tariffs, abolition or enlargement of import quotas, abolition of multiple exchange rates, and removal of requirements for administrative permits for imports or allocations of foreign exchange. In Nigeria, the term “trade liberalization” became pronounced through the adoption of the IMF Structural Adjustment Programme (SAP) in 1986, which its primary aim was to restructure and diversify the productive base of the economy. In addition, the SAP was also designed to establish a realistic and sustainable exchange rate for the Naira through trade and payment liberalization, tariff reforms, commercialization and privatization of public enterprises (Oyejide, 1990).
Trade policy reform especially trade liberalization has been a regular feature of developing economies since the mid 1980s. The general belief was that trade reforms, especially when combined with exchange rate reforms, and better domestic macroeconomic policies, could enhance trade-induced economic expansion and consequently reverse the downward trend of developing African economies (Ekpo,2005). Prior to this time, particularly between the early 1960s and the early 1980s, many African countries operated highly interventionist and protectionist trade regimes on both the import and export sides. On the import side trade regime was characterized by restrictive import licensing systems, and tight foreign exchange controls. For the export side, substantial implicit and explicit taxes, as well as the prohibition of certain export items and other non-tariff barriers were common features of the trade regimes.
Trade liberalization policy is one of the policies adopted by the developing countries in the late 1980’s following the World Bank Report (1987) which argues that“ outward oriented countries performed better than inward oriented countries even under unfavorable market condition, as a solution to their economic crisis. The policy is also part of contemporary globalization policies pursued by both the developed and developing countries to promote world economic integration. Free trade is considered by some economist as most relevant for economic development.
According to Haberler (1961)“free trade is economically advantageous because it maximizes the output of social products”. However a counter argument holds that although the derivable benefits of free trade are laudable, they are to some extent hypothetical, effective only under the conditions of full employment, full allocation of resources and free competition in the economy. For instance, Singh (1985) argued that“ the applicability of free trade is limited in the case of a developing economy, where a vast segment of the productive resources are still unexploited, with acute problem of unemployment. A free trade regime will further compound these problems by weakening the domestic industries, especially those that lack sufficient competitive power.
Interestingly, these arguments do not in any way negate the fact that international trade plays a vital role in the economic development of any country. Perhaps the conclusion one could draw from the two schools of thoughts is that for a developing economy, trade intervention policy is preferable. When the economy has attained full capacity, then the idea of adopting free trade option could be considered. Trade intervention is practiced in every country, except that the degree of intervention varies from country to country. Official intervention in trade processes is made possible through the implementation of trade policies. For Developing Countries that have adopted National Development Plan as a development strategy, trade policies are the instruments used for effective channeling of resources to appropriate sectors of the economy towards meeting plan objectives.
Trade liberalization is one of the major conditions adopted by the international lending agencies such as World Bank and international monetary fund (IMF) for granting aid and other kinds of external economic assistance to Developing African countries, Onafowora and Owoye (1997).
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 liberalization 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 liberalization 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 Tiger states and China, which aggressively implement outward oriented strategies.
On the other hand, skeptics doubt that trade liberalization promotes long and sustainable growth. They assume that there are economic situations in which things get even worse if a country liberalizes 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 custom 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 the list targeted to protect existing domestic industries and reducing the country’s dependence on imports.
There are three international organizations that have expressed views on Nigerian’s import prohibition policy, these are the World Trade Organization, the World Bank and the International Monetary Fund. 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 adjustment 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 liberalization 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 on liberalization of policies.
1.2 Statement of the problem
After the World War II, many less developed countries (LDCs) followed the path of Import Substituting Industrialization (ISI).In the process of rapid domestic cindustrialization under the ISI strategy African countries required increased imports of machines and technology and devoted most new resources to import-competing activities. These resulted into more rapid growth in the demand for foreign exchange that surpassed the growth in export earnings. In the process they were faced with balance of payments problems. This situation demanded increased export drive to pay for imports.
Moreover, to finance the balance of payments deficit these countries became dependent on the richly industrialized countries and International Institutions such as, the IMF/World Bank, dominated by the rich countries. When seeking their help they were often advised to open up their economies not only to tide their crises but also to experience high rate of growth. The policy response was that most African countries left the course of inward-looking growth as ISI and started following Outward-Oriented Development Strategy. Since then the importance of foreign trade in the level of economic activities of the countries has been rising. The increased openness was hailed in IMF/World Bank Development Reports (World Bank,1987,1991,1999-2000) tried to show that outward-oriented trade policies have been more successful in promoting growth than inward-oriented trade policies. In particular, the World Development Report (1987) which argued that “outward-oriented countries performed better than inward-oriented countries even under unfavorable market conditions”
However, trade reforms, even if beneficial for a country overall, may negatively affect some industries or some jobs and many commentators worry about negative effects on the environment. For developing countries the first possible effect of trade liberalization is the reduction in revenue accrued to tariffs which is a major source of income in most developing countries. It is also perceived to deteriorate primary export, lead to excessive dependency and will be detrimental to less developed countries (LDCs) industrialization. But to most international organization like IMF it is the condition for granting aid to LDCs. However, it should not be viewed as flooding the market with imported goods rather, it should be understood as the procedure of removal of import licenses, rationalization of export control exchange rate and provision of revenue.
1.3 Objective of the study
The main objective of this research is to investigate the effect of government regulation on export trade in Nigeria businesses with reference to Enugu Metropolis. To achieve this, the following specific objectives were formulated as follows:
1. To identify export products that is exported by organizations in Enugu metropolis.
2. To identify various forms of government regulations on export businesses in Enugu metropolis.
3. To examine the reasons for government regulations on export business in Enugu metropolis.
4. To ascertain the extent to which government regulations affect the export business in Enugu metropolis.
5. To determine whether government regulations are beneficial to export businesses in Enugu metropolis.
1.4 Research Questions
This study seeks to answer the following research questions:
1. What are the types of export products that are exported by organizations in Enugu metropolis are involved?
2. What are the various forms of government regulations on export business in Enugu metropolis?
3. What are the reasons for government regulations on export business in Enugu metropolis?
4. To what extent does government regulation affect export business in Enugu metropolis?
5. How have government regulations benefited export business in Enugu metropolis?
1.5 Hypothesis of the study
In carrying out this study, the following hypotheses would be tested.
1. Ho: There are no export product that are exported by organization in Enugu metropolis.
2. Ho: government regulations have no effect on export business in Enugu metropolis.
3. Ho: The various forms of government regulations on export business in Enugu metropolis are insignificant.
4. H0: Government regulations have not benefited export business in Enugu metropolis.
1.6 Significance of the study
First, government and its agencies: The Nigeria Export Promotion Commission (NEPC), Small and Medium Enterprises (SMEDAN) Agency of Nigeria would benefit from the findings of this research. It would bring to the fore the impact of policies/regulations on export business promoters in Nigeria, as it will enable them to identify the effect their various policies have on export business.
Second, the students in Business Management and Economics, it will benefit future researchers as it will serve as a reference point to their research.
Lastly, it will benefit various business organization that are into exportation as it will enable them to understand the effect government regulation has on their business.
1.7 Scope of the Study
The scope of this study covers the effect of government regulations on export business in Enugu metropolis.
1.8 Definition of terms
Government regulation: Government regulation is a rule of order having the force of law, prescribed by a superior or competent authority relating to the actions of those under the authority’s control.
Export: Export means the sending of goods or services produced in one country to another country.
Export Promotion: Export promotion is the incentive programs designed to attract more firms into exporting by offering help in product and market identification and development, pre-shipment and post shiptment financing, payment guaranty schemes, trade fairs, trade visits, foreign representation, e.t.c
Business: Business is an organization or economic system where goods and services are exchanged for one another or for money.
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Item Type: Project Material | Size: 78 pages | Chapters: 1-5
Format: MS Word | Delivery: Within 30Mins.
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