Several countries have achieved growth through an export–led strategy. Small economies in particular have very little opportunity to achieve productivity and efficiency gains to support growth. Without tapping into larger markets through external trade, Nigeria’s relatively large domestic market can support growth but alone, cannot deliver sustained growth at the rates needed to make a visible impact on poverty reduction. Hence Nigeria has continued to rely on foreign markets as well (World Bank, 2002). Many economists generally agree that openness to international trade accelerates development.
The more rapid growth may be a transition effect rather than a shift to a different steady state growth rate. Clearly, the transition takes a couple of decades or more, so that it is reasonable to speak of trade openness accelerating growth rather than merely leading to a sudden one time adjustment in real income (Dollar and Kraay, 2001). Economic growth means an increase in the average rate of output produced per person usually measured on a per annum basis. The relationship between trade and growth is envisaged through an export – led growth strategy, following the theory that sustained trade is the main engine of economic growth.