ABSTRACT

 

 

This study looks at the impact of tariff on the economic growth of Nigeria. It examines the extent to which tariff has brought about economic growth in Nigeria between the period of 1980-2010. Tariff which is a form of tax or trade restriction levied on imported goods, in order to encourage the infant industries from international competitions, this can boost economic growth. The ordinary least square method of regression was used to analysis the relationship between tariff and economic growth. the T-test was used to determine the individual parameter estimate. The F-test was used to determine significance of the entire regression. Econometric analysis also was used to determine the impact of the tariff and other variables like real gross domestic product as a proxy to economic growth, export, exchange rate and trade openness on economic growth in Nigeria. The findings from the regression result show that tariff has a positive statistical significant impact on economic growth in Nigeria. In conclusion, tariff including the other variables all work together to stimulate economic growth. It was recommended that policy on trade should be made to improve tariff imposition in Nigeria.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

vi


 

 

 

TABLE OF CONTENTS

 

 

 

 

Approval page -

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Dedication - -

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Acknowledgement -

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Abstract - -

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Table of contents - -

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CHAPTER ONE

 

 

 

 

 

 

 

 

 

 

INTRODUCTION

 

 

 

 

 

 

 

 

 

1.1 Background of the study -

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1.2

Statement of research problem -

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1.3

Objective of the research study -

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1.4

Statement of the hypothesis -

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1.5

Relevance of the study -

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1.6

Limitation of the study -

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CHAPTER TWO

 

LITERATURE REVIEW

 

2.1

Literature Review -

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2.2

Theoretical review -

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2.3

Arguments for trade barriers -

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2.3.1

Infant industry arguments -

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2.3.2

protecting consumers arguments -

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2.3.3

National security argument -

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2.3.4

Retaliation argument -

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2.3.5 Protecting domestic employment argument -

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wage protection argument -

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2.3.7

Protection against dumping -

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2.4

Empirical literature -

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2.5

Limitations previous studies

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CHAPTER THREE

 

METHODOLOGY

 

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Methodological

Framework -

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Model -

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Model Specification -

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Economic Aprion (Battery Test) -

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3.4.1

Stationary (Unit Root) Test -

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3.4.2

Co-Integration

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Technique Of Estimation

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3.6

Method Of Result Evaluation

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3.7 Source of Data- - - - - - -- - - -31

 

CHAPTER FOUR

 

EMPIRICAL RESULT

 

4.1

Presentation of regression results -

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Stationary (unit root analysis) -

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4.1.2

Co-integration test -

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4.2

Evaluation of regression result - -

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Evaluation based on economic apriori criteria -

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4.2.2

Evaluation based on statistical criteria -

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4.2.3

Evaluation based on econometric criteria -

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4.2.4

Evaluation of research hypothesis -

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4.3

Research findings -

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CHAPTER FIVE

 

SUMMARY, POLICY RECOMMENDATIONS AND CONCULSION

 

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summary of research findings -

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Policy recommendations -

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5.3 Conclusion-

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Bibliography-

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Appendix- -

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ix


CHAPTER ONE

 

 

INTRODUCTION

 

 

1.1

BACKGROUND OF THE STUDY.

 

 

 

Protection in form of tariff and free trade have

long been

argued

in

economic theory and economic history. However , it is possible

to say

that

the

precise relationship between trade barriers in form

of tariff or free trade

 

in the long run economic growth remains a difficult theoretical issue that is

 

being explored in a variety of ways.

 

Simithian and Ricardian conclusion reinforced by the Hercscher-ohlin theorem

 

recommend free trade

as the best

commercial partners. This doctrine

that

is

focused on improvement in the level of income is based on

static

framework that may limit the interpretation of the long run effect.

 

 

 

Relationship between

economic

growth

and tariffs

depends

mostly

on the

characteristics

of

a

country. Tariff can

benefit

a

country

depending on

whether it is

developed or

developing

or

developed (a developed

one

seems

to lose) either big or

small

country and

whether it

has

comparative

advantage

in sector receiving protection. Tariffs are imposed on imported goods and

are

used to refer

to

schedule

of duties applicable to a list of commodities

as

the

 

commodities imported or exported. These taxes could be assessed either as a percentage of volume of the commodity concerned (ad valorem), or on the

1


basis

of

some

physical

features

as

:

weight,

length, an specific

 

gravity.(Johnson,1971).

 

 

 

 

 

 

 

 

Tariffs rates vary according to the type of goods imported.

Import

tariffs

will

 

increase

the

cost of importers and increase

the

price of imported goods in

 

the local markets, thus lowering the quantity

of goods imported. Tariffs may

 

be imposed

on export, and in an economy with floating exchange rates,

 

export tariffs have similar effect as import tariffs .However, since export are

 

often

perceived

as

‟hurting‟‟

lo

perceived as helping local industries, export tariffs are seldom implemented

 

(Meier,2000)

 

 

 

 

 

 

 

 

 

 

Protectionists

believe

that infant industries

must be protected in order to

 

allow them growth to a point where they can fairly compete with the larger

 

matured industries established in foreign countries. They believe that without

 

tariffs,

infant

industries will die before they

reach a size of economies of

 

scale, industrial infrastructure, and skill in manufacturing have progressed

 

sufficiently to allow the industry to compete

in the global market. They argue

 

that government have a responsibility to protect their corporations through

 

tariffs as well as their when putting its companies at a competitive

 

disadvantage

by enacting laws

for social

goods .They believe that

these

law

 

 

 

 

 

 

 

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end up destroying domestic

companies and

ultimately hurting

the

citizens,

but these laws were designed

to protect.

 

 

 

Tariffs is always seen as a redress to social

and economic costs

of

trade or

 

as a way of enhancing economic advantages. However, in most cases

 

economists, argue that

erecting barriers on trade

impose costs

in the

economy that exceeds

the benefit gotten. These

costs can rise

from

 

insufficient resource allocation, intractable implementation and foreign

 

retaliation.The precise relationship between tariffs and economic growth has

 

long remained a difficult theoretical issue that is being explored in variety of

 

ways. The question often asked by international and development

 

economists, as well as their supporters is that which one lead to a faster economic growth, is free trade or protected trade?, economists are still in search for the acceptable answer to this question.

 

 

 

1.2              STATEMENT OF THE PROBLEM

 

Tariffs

can be used

to

protect

infant

industries

and this tariff has its

problem

it

creates. High

tariff and

other

forms of

trade

barriers

have been

regarded

as

impediments

to

economic growth. The

use

of tariffs

to protect

 

and to stimulate the production of the import substitution in Nigeria has obvious problem. By protectingthese industries, inefficiency may be encouraged.

 

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High tariffs and

other forms have burdened consumers with high

price

and

 

have shielded producers from international competition.

However

a

safe

 

guard against frequent tariff changes and high tariff rates between 1995 to

 

2005.

Nigeria‟s

tariffs

policy

has

lengthy

imports

procedures, frequent

change

in

tariff.

High

duties

on

 

consumer goods widen the gap between applied and bound rate with their

 

associated negative impact on the economy.

 

 

 

 

 

 

 

The Nigeria government can make adequate and

reliable tariff

policies,

 

and also

encourage this infant industries to produce

those

goods

that tariff

 

has been impose on; the quality of this goods should match those formally

 

imported. This study should be able to expose how the tariff imposed and the

 

structure of this tariff, can make an impact on the economic

growth of

 

Nigeria and how this can improve the economy as a whole.

 

 

 

 

 

 

 

 

 

1.3            OBJECTIVE OF THE STUDY

 

The objective of the study are as follows below;

 

1.

To determine the

nature of the relationship that exist between tariffs

and

economic growth in

Nigeria.

 

2.                 To investigate if tariff actually leads to economic growth in Nigeria.

 

 

 

 

 

 

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3.                     To examine the extent to which tariffs imposition has improved

 

Nigeria‟seconomyfor the period 1980 to 2010.

 

4.                 To identify and analyse the remedy for tariffs impediments inNigeria.

 

 

 

 

1.4              STATEMENT OF HYPOTHESIS

 

 

The working hypothesis for this study is as follow;

 

 

1.

Hi: There is no

significant relationship between tariffs and growth, thus

 

it has not caused

any economic growth in Nigeria.

 

2.                 H0: Tariff has influence and impact on economy growth ofNigeria to an extent.

 

 

 

1.5                  RELEVANCE OF THE STUDY

 

 

This study will be relevant to the Nigeria society in the following ways;

 

 

1.                 It will help us to understand the tariff structure of Nigeria

 

2.                 It will contribute to the literature review

 

3.                 It will provide empirical evidence on the nature of relationship that exist between tariff and economic growth in Nigeria; this will in turn guide policy makers in their policies formulation.

 

 

 

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4.                 Investigating into the tariff regime will enable us to know the positive contributions it has made to improve the export of locally produced goods.

 

5.                 It will help the government and policy makers to be able to formulate adequate policy on trade.

 

6.                 It will help us to know, if tariff can lead to economic growth or not Nigeria

 

 

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