Does Incentive Improve Export Performance of Firms? An Evidence

Bernadette C Onah ,Fidelia N Onuigbo ,Joseph I Amuka ,Fredrick Onyebuchi Asogwa ,Chukwudi Fidelis Ezeudeka

doi:10.32996/jefas.2022.4.1.27

Abstract

Trade is an engine of growth, and favourable international trade is essential to attain internal and external stability. In recent times, many developing countries, including Nigeria, have chosen the path of export incentives as the means of achieving a favourable international trade balance. The paradigm shift is a pointer that globalization has made international trade very competitive and firms in less developed countries are at the receiving end. The present study examined the effect of export incentives on the export performance of Nigerian firms. Data were collected through a survey of 60 firms that benefited from export expansion grants (EEG). The Fixed Effect method was adopted in the study. The result shows that the export performance of the firms improved significantly with the export expansion grant. It then suggests that if the country implements all its incentive programmes, the country's external trade will improve significantly.

Highlights

International trade is very important to every nation because no country produces all its citizens need
The present study examined the effect of export incentives on the export performance of Nigerian firms
Of more than 10 export incentives outlined to help Nigerian exporters, only an export expansion grant was accessed by many firms

Summary

Introduction

International trade is very important to every nation because no country produces all its citizens need. A country can have access to what it does not produce, and through the same trade, it can dispose of what it produces in excess of needs. Good trade policy determines how well a country's external trade performs. Smith advocated for free trade because it makes it possible for countries to enjoy different variety of goods, but the problem is the fear of domination. Protected trade encourages the growth of the domestic enterprise, but it breeds incompetence and limits consumer preferences (Jayanthakumaran, 2000). Countries use incentives to encourage their domestic firms to increase export or use tariffs to regulate imports, all in an effort to maintain internal and external stability

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