A STUDY INTO THE DETERMINANTS OF BALANCE TRADE IN NIGERIA
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CHAPTER TWO - LITERATURE REVIEW
2.1 Theoretical Literature
Balance of payments of a country is a systematic record of all its
economic transactions with the outside world in a give year. It is a
statistical record of the character and dimensions of the country’s
economic relationships with the rest of the world (Johnson H 1958:113).
Determinants of balance of payment have been and are still a topic
of interest to many people and nations. Because of its usefulness,
many writers have contributed towards its meaning, causes and
solutions. Some people have given little contributions as regards
balance of payment equilibrium or disequilibrium. Others however, who
seem to have understood the subject better have made more encompassing
and well thought out contributions.
In these contributions, Enuenwosu (1982:25) observed that our
balance of payments problem is connected with a narrow export base and
increased imports. In other words, our economy imports more than it
exports and it also relies on every few export items. The effect of
this is that Nigeria spends more foreign exchange than it receives.
THE MERCHANDISE (TRADE) BALANCE
This balance involves imports and exports of goods only. In other
words, this balance has nothing to do with intangible items. The items
include in trade or merchandise balance are only those ones that can be
physically seen leaving and entering a country’s borders. These types
of goods are known as tangible goods or visible items of the balance of
payments. If the monetary value of imports. (tangible or visible)
equates the monetary value of exports (tangible or visible) we say
there is a balance of trade. When the latter is less than the former.
A STUDY INTO THE DETERMINANTS OF BALANCE TRADE IN NIGERIA
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