CHAPTER ONE

1.1. BACKGROUND TO THE STUDY

International trade deals with the economic and financial interdependence among nations. International trade is a part of our daily life, which plays a vital role in shaping economic and social performance and prospects of countries around the world, especially those of developing countries. No country has grown without trade. However, the contribution of international trade to the development of commerce and industry in Nigeria depends a great deal on the context in which it works and the objectives it serves.

International trade is the exchange of capital goods and services across borders or territories. Through international trade countries supply the world economy with the commodities that they produce relatively cheaply and demand from the world economy the goods that are made relatively cheaper elsewhere. The positive effects of international trade on the development of commerce and industry in Nigeria were first pointed out by Smith (1776). This idea prevailed until World War II, although with relative hibernation during the Marginalist Revolution”. Economic theories have argued that countries engage in international trade to reap the gains that arise from specialized production with each country concentrating on producing those goods and services that involve the least opportunity cost.

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