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AN EMPIRICAL STUDY OF THE IMPACT OF TARIFFS ON ECONOMIC GROWTH IN NGERIA (1980-2013)

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Format: MS word :: Chapters: 1-5 :: Pages: 57 :: Attributes: Questionnaire, Data Analysis,Abstract :: 750 people found this useful

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ECONOMICS FREE PROJECT TOPICS, RESEARCH GUIDES AND MATERIALS

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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

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

country. Tariff can

benefit

country

depending on

whether it is

developed or

developing

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

schedule

of duties applicable to a list of commodities

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

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??	local	industries		while	import	tariffs	are

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

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.

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.

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 faced great challenges of cumbersome and

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.

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.

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

To examine the extent to which tariffs imposition has improved

Nigeria?s economy for the period 1980 to 2013.

To identify and analyse the remedy for tariffs impediments inNigeria.

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.

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

RELEVANCE OF THE STUDY

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

It will help us to understand the tariff structure of Nigeria

It will contribute to the literature review

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.

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

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

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

LIMITATIONS OF STUDY

Usually, tariff are in form of excise duties, import tariff and export tariff. inadequate complete reliable data, as data collected from some economic journals and textbooks vary from each other. Time is another limitation encountered by the research.

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