ABSTRACT
The basic tenet of the study
was that intra-industry trade occurred when commodities of the same industry
are simultaneously exported and imported by partner nations within the
sub-region. The objectives of the study were to review Nigeria’s merchandise
trade, assess the simultaneous exports and imports of agricultural products by
partner nations, evaluate the share of intra-industry trade in agricultural
products between Nigeria and the ECOWAS partner nations, and determine the
effects of national and partners’ characteristics on the intra-industry trade
within the sub-region. The study was carried out on the 15 countries within the
Economic Community of West African States (ECOWAS). However, simultaneous
exports and imports were only prevalent between Nigeria and four of these
countries, namely Benin, Cote d’Ivoire, Ghana, and Togo. These countries have
similarities in factor endowments, tastes and fashions of the partner nations.
Exports and imports of agricultural products were collected from Federal Office
of Statistics, now National Bureau of Statistics, publications. The data on
national and partners’ characteristics such as GDP nominal, GNI per capita,
size (population), foreign direct investment, value added by manufacturing,
agriculture value added, household final consumption expenditure, and
government final consumption expenditure were obtained from the United Nations
Statistic Division as well as from ECOWAS Statistical Bulletin.
Descriptive statistics were used to achieve objectives (i)
and (ii), while objective (iii) was achieved by employing the Grubel-Lloyd
approach of measuring intra-industry trade index. Objective (iv) was achieved
by adopting the binary logistic analytical technique. The results revealed that
the mean value of Nigeria’s merchandise trade with partner nations ranged from ₦201.7,
731.96, 4,480.84, 35,166.6,92, 965.64, to ₦346,029.9
million between 1979 and 2008, respectively. These represent an annual average
of 2.66 and 97.34 percents, respectively, of her total merchandise trade to the
partners and the other parts of the world for the period 1979-2008. Nigeria’s
mean export value of all agricultural commodities ranged from ₦4.35
million between 1979 to ₦2,109.45 million
between 2004 and 2008, while the mean import values ranged from ₦3.43
million between 1979 and 1983 to ₦8,215.73
million between 2004 and 2008. These represent 1.72 and 4.0 percent,
respectively of the exports, and 16.97 and 16.75 percent, respectively of the
imports within the referred periods. The Grubel-Lloyd intra-industry trade
indices were computed for agricultural commodity as a whole, live animals,
chilled meat, coffee/mate, and product of milling industry, preparation of
cereals, miscellaneous edible preparations and residue from food industry for
the 30-year period, for each product. The value of the trade indices were
either zero or one, and formed the dependent variable.
The key results from the binary
logistic model were that the Grubel Lloyd intra-industry trade indices in
agricultural commodities were influenced by national population and average
partners’ final consumption expenditure, while trade indices in live animals
were influenced by partners’ GDP, national agriculture value added, partners’
agriculture value added, and national GDP. Also, intra-industry trade indices
in chilled meat were influenced by GNI per capita, national population, and
national agriculture value added. Trade indices in Coffee and mate were
influenced by national GDP, GNI per capita, and partners’ foreign direct
investment, while intra-industry trade in the products of mill industry were
determined by GNI per capita, partners’ FDI, and national household final
consumption expenditure. In cereal preparations, intra-industry trade indices
were influenced by partners’ GNI per capita and partners’ FDI, while trade
indices in miscellaneous edible preparations were influenced by partners’ GNI
per capita, and partners’ household final consumption expenditure. Trade
indices in residue from food industry were influenced by partners’ GDP,
partners’ population, national value added by manufacturing, national
population, partners’ value added by manufacturing, and national agriculture
value added.
It was recommended that ECOWAS
nations should encourage its member states to continue to incorporate regional
development policy into the national development agenda, sustain macroeconomic
stability, further liberalize the economy, promote private sector activity and
investment, and reduce vulnerability to exogenous shocks. Also, ECOWAS nations
should continue the development of infrastructure and deepen institutional
reforms, so as to realize maximum benefits from globalization through
diversification of its agricultural production base and export commodities that
have value addition. There is the need for ECOWAS policy makers to continue to
make concerted efforts to ensure the effective implementation of the ECOWAS
trade liberalization scheme and to stimulate the private sector to enhance
value addition to the manufactured products of agricultural
origin within the community. There is also the need to sustain horizontal
differentiation (i.e. different varieties of a given good), and vertical
differentiation (i.e. different qualities of a given variety) of agricultural
products, given the level of competition the regional economies will be
subjected to when the economic partnership agreement Economic Partnership
Agreements between the ECOWAS and the European Union (EU) goes into operation.
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background
Information
Sequel to the call by the
Organization for African Unity (OAU) heads of state summit on all its member
states to form regional groupings for the purpose of accelerating their
economic development, the treaty establishing ECOWAS was signed in Lagos Nigeria,
in 1965. The overall objective of ECOWAS integration arrangement was to derive
the benefits of co-operation which could be economic, political, and or social.
Trade co-operation objective was to expand the volume of intra-community trade
following the removal of both tariff and non-tariff barriers to trade on goods
originating from member countries. However, intra-ECOWAS trade flows have
remained very low. The trade liberalization process was expected to be
implemented through such interventions like free international trade, common
external tariff wall, consolidation or freezing of custom duties, and
non-tariff barriers to intra-trade. Others include gradual phasing out of
duties on industrial products from community projects over a period of 6-10
years at 10-16.6% annual rates of reduction depending on the classification of
member states based on the level of development, location and importance of
customs revenue.
In addition to the above
measures, enabling institutions were established by the Community. These
include the West African Clearing House (WACH) to handle most of the financial
transactions under the ECOWAS trade liberalization scheme; the ECOWAS bank
(ECOBANK), a commercial bank with branches in at least 5 capitals within the
Community and the capacity to operate on convertible currencies; ECOWAS
Monetary Co-operation Programmme designed to improve and strengthen the WACH
mechanism in facilitating increased intra-Community trade and payments
transactions. In the short-term, this would be achieved through greater use of
national currencies. The medium-long-term objectives are to issue a common
convertible currency and to create a single monetary zone (ECOWAS, 1994). This
body has now created the West African Unit of Account (WAUA) to facilitate payment
and currency convertibility within the Community; The Fund for Co-operation,
Compensation and Development to mobilize financial resources for the
implementation of Community projects and to supervise
In export and import list of
the United Nations Harmonized System (HS) classification scheme codes, sections
and chapter headings, there are 22 product sections; four among which deal with
agricultural products NBS, (2008). These include, live animals and animal
products of HS code 01, chapters 1-5; the vegetable products category
consisting of HS code 02, chapters 6-14; the Animal and Vegetable fats and oils
and other cleavage products that come under HS code 03, chapter 15; the
prepared food stuff category comprising HS code 04, chapters 16-24 (NBS, 2008;
ECOWAS, 2008). So, if Nigeria exported agricultural products to the United
Kingdom and imported high-tech goods from them, inter-industry trade has
occurred, but if Nigeria exported and imported vegetable products from Ghana,
the trade is said to be intra-industry because, all vegetable products are
classified into the same product section by the United Nations Harmonized
System of Trade Classification. It is hypothesized that in a situation where
the pattern of trade reflects comparative advantages based on dissimilarities
of economic structures, the scope for intra-trade is limited in relation to
that in which there is also trade based on similarities of factor endowments.
Put differently, the scope and rate of inter-industry trade expansion are augmented
by intra-industry trade which reflects a similarity of economic structures.
Both exist side by side as major components of international trade. The study
is therefore concerned with horizontal intra-industry trade in agricultural
product subsections i.e. simultaneous exports and imports of different
varieties of agricultural products.
1.2 Problem
Statement
The promotion of intra-trade was predicated on the
danger posed by the protectionist measures adopted by the developed countries.
Indeed, in spite of the various trade negotiations, particularly under the
auspices of the General Agreement on Tariff and Trade, the European Union (the
largest importer of West African products) maintained an average tariff of 9.8
per cent on imports from developing countries up to the Uruguay Round of
negotiations in 1994. To worsen matters, developing countries in whose markets
exports of manufactures from other developing countries were likely to be.....
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