The Impact of Export Instability on Nigeria Balance of Payment

Abstract

The major concern to less develop countries (LDC’s) is the problem of fluctuation in their export earnings. Export earnings of LDC’s depend on only a few number of commodities and their sales are geographically concentrated. Nigeria as a less developed country is endowed with abundant mineral and natural resources. It is a major producer of oil with petroleum products accounting for 90 percent of her foreign exchange receipt and about 70 percent of government revenue. Prior to the oil boom in the 1970 Nigeria depended on primary commodity export for its national income, the country at that time was self-sufficient in food production and even a net export of agricultural produce. But globalization of trade has forced less developed countries (LDC ’s) into the production of primary products with inelastic demand with respect to both price and income. The study which examines the impact of export instability on Nigeria balance of payment found that instability in export has negative implications on the country balance of payment. Based on the research findings, certain policy recommendations were made to reduce the country instability in export and improve the balance of payment.