CHAPTER FIVE EMPIRICAL ANALYSIS
Trade 5.9. Nigeria’s Intra Industry Trade in Intermediate Products
5.3 Discussion of the Results
5.3.1 Extent of IIT in Final Products between Selected ECOWAS Countries and EU (First Objective)
In order to achieve objective 1 of this study, the extent of IIT in final goods between the selected ECOWAS countries and EU as a group is analysed in this section. The calculated unadjusted IIT in final products between ECOWAS and EU is presented in Tables 5.5 to 5.8 and discussed thus.
(i) Analysis of IIT in Final Products between Cote d’Ivoire and EU
Starting with Cote d‘Ivoire, the number of products in which the country has IIT in final products with EU stood at 117 in 2011 as shown in Table 5.5. Moreover, Cote d‘Ivoire IIT in final product with EU ranged from 0.2465 in 2001 to 0.3712 in 2011. The implication of this is that in 2001, 24.6 per cent of the final products Cote d‘Ivoire‘s had IIT with EU were in favour of Cote d‘Ivoire, while the rest 75.4 per cent was in favour of the EU. There was consistent increase in IIT between Cote d‘Ivoire and EU between 2001 and 2011. This further implies that in 2011, the IIT between Cote d‘Ivoire and EU was 37.1 per cent in favour of Cote d‘Ivoire. This trend is consistent with earlier studies such as Liao (2006) recorded increasing IIT between North and South for average of all products.
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Figure 5.1: Trends of Cote d’Ivoire IIT with EU in Final Products (2001 to 2011)
Source: Computed, underlying data from World Integrated Trade Solution (WITS) database
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Figure 5.2 Industrial Composition of Cote d’Ivoire IIT with EU in Final Products 2001
Source: Computed, underlying data from World Integrated Trade Solution (WITS) database
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Figure 5.3 Industrial Composition of Cote d’Ivoire IIT with EU in Final Products 2011
Source: Computed, underlying data from World Integrated Trade Solution (WITS) database
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At industrial levels, IIT in vegetable products was about the highest between 2001 and 2011. In 2011, the intensity of IIT in final vegetable products between Cote d‘Ivoire and EU was 63 per cent, meaning that it was in favour of Cote d‘Ivoire. Although it was low in 2001, IIT in final products of Natural or cultured pearls and precious stone have consistent increase up till 2011. IIT in the sector is equally show that they are in favour of Cote d‘Ivore. The IIT in final mineral products between Cote d‘Ivoire and EU is also high. This implies that the benefit of IIT between Cote d‘Ivoire and EU in final mineral products was majorly in favour of Cote d‘Ivoire. It was 0.8886 in 2001 but declined to 0.6545 in 2011.
The major product in the mineral products sector is petroleum oils and oils obtained from bituminous minerals, other than crude; preparations not elsewhere specified or included, containing by weight 70%. Prepared food stuffs and beverages is another product group that is growing IIT final products. In 2011 IIT in the final products between Cote d‘Ivoire and EU with respect to other industries such as of animal or vegetable fats, chemicals, raw hides and skins leather, wood and fibrous, textile, footwear and headgear and base metals increased substantially during 2001 to 2011. However, IIT in these industries are mainly in favour of the EU rather than Cote d‘Ivoire.
(ii) Analysis of IIT in Final Products between Ghana and EU
Ghana has IIT with EU in only 71 final products spread across industries and the index that reflects the extent of IIT is shown in Table 5.10. Ghana‘s IIT with EU in final products increased from 0.0679 to 0.2722 between the period of 2001 and 2011.
Although this is quite appreciable, it is however low compared with 0.57 reported for trade between the EU and developing countries by Nilsson (1999). The computed index of IIT in final product between Ghana and EU implies that it was only 27.2 per cent in favour of Ghana in 2011. This further indicated that the IIT between them generally favours the EU.
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Figure 5.4: Trends of Ghana’s IIT with EU in Final Products (2001 to 2011)
Source: Computed, underlying data from World Integrated Trade Solution (WITS) database
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Figure 5.5 Industrial Composition of Ghana’s IIT with EU in Final Products 2001
Source: Computed, underlying data from World Integrated Trade Solution (WITS) database
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Figure 5.6 Industrial Composition of Ghana IIT with EU in Final Products 2011
Source: Computed, underlying data from World Integrated Trade Solution (WITS) database
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It should be noted however, that variations occurred in IIT between Ghana and EU in the various industries considered. The performance of Ghana‘s Base Metals and Articles industries in IIT with EU is expected with the presence of a number of Metals firms in Ghana both local and multinationals.
Some of these firms are: Rayray Frontline Ltd, Mazze Group of Companies, Nanametal
& Co, Richstone & Rivers Miner Ltd., Bonte Gold Mines Gh Ltd etc. Although, Ghana‘s IIT with EU is highest in the base metal and articles sector, it is however very low compare to the value of 0.630, Clark and Stanley (1999) got for metals IIT between developing countries and the United States. Appreciable increase was recorded in Ghana‘s IIT with EU in final products between 2001 and 2011. The firms that produce plastic in Ghana are numerous, that might have accounted for the high IIT in the industry. Some of them include: Mazze Group Of Companies, Dwinat Company Limited, Vernurs Ventures Ltd., Crystal Oasis Ltd and Al Rayyan Global and several others.
The value of Ghana‘s IIT with EU in raw hides and skins and leather is higher than the 0.2070 that Clark and Stanley (1999) got for trade between developing countries and the United States. Similarly, Hu and Ma (1999) report 0.8120 for IIT between China and the developed countries trade partners.
(iii) Analysis of IIT in Final Products between Nigeria and EU
IIT existed between Nigeria and EU in about 105 final products. IIT between Nigeria and EU32 was 0.0471 in 2001. However, Nigeria‘s IIT in total final product increased from 0.1369 in 2006 to 0.3851 in 2011 Table 5.6. This result indicates that the extent of IIT in final products between Nigeria and EU is 38.5 per cent in favour of Nigeria, and 61.5 per cent in favour of the EU. Nilsson (1999) reported 0.4700 IIT between the EU and the developing countries. Industrial products such as base metals and articles of base metal recorded the highest IIT in final products between ECOWAS and EU.
32 Nigeria started recording intra-industry trade in both final and intermediate products much earlier than Ghana and Cote d‘Ivoire
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Figure 5.7: Trends of Nigeria’s IIT with EU in Final Products (2001 to 2011)
Source: Computed, underlying data from World Integrated Trade Solution (WITS) database
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Figure 5.8: Industrial Composition of Nigeria’s IIT with EU in Final Products 2001
Source: Computed, underlying data from World Integrated Trade Solution (WITS) database
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Figure 5.9: Industrial Composition of Nigeria’s IIT with EU in Final Products 2011
Source: Computed, underlying data from World Integrated Trade Solution (WITS) database
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As against the other industrial product where IIT was low in the early 2000, IIT in base metals and articles of base metal has been very high since 2000. The IIT in this sub-sector was more than 50 per cent in most of the years between 2000 and 2011. This implies that Nigeria‘s exports to EU in the products where IIT occurred were about the same as her imports in the sub-sector. Similar result of 0.630 was obtained by Clark and Stanley (1999) for IIT in metals between developing countries and the United States 1992 data. The fact that Nigeria recorded IIT in base metals and articles of base metal with her highest trade partner is not unexpected since there are a number of the affiliates of the EU multinational corporations that produces metal in Nigeria, some of them include: Astrazeneca PLC, Sulzer AG, Crittall Holdings LTD, Wishart Investments INC.
Much fluctuation was recorded in IIT involving Chemicals products during the period 2000 - 2011. In 2011, Nigeria‘s IIT in final products of Chemical industry with EU was 0.7606, this implies Nigeria exports to EU in the final products of Chemical outweigh her imports from the union. This index is higher than what Clark and Stanley (1999) had reported (0.3760) as the IIT in chemicals between developing countries and the United States. Similarly, the IIT in final chemical products reported by McMahon (2003) for EU and South Korea was however higher. The IIT in final chemical products between Nigeria and EU might have been occasioned by the presence of several affiliates of the EU multinationals such as PZ Cussons PLC, Astrazeneca PLC, Linde AG, Stichting Administratiekantoor, Unilever N.V., Sulzer AG, Novartis AG, Wishart Investments Inc., Reckitt Benckiser PLC.
The final products of Wood and Articles of Wood industry recoded high IIT between Nigeria and EU in the latter parts of 2000s. That is, Nigeria exchanged higher exports than imports with the EU. The major product in this Wood and Articles of Wood industry is paper and Clark and Stanley (1999) had reported appreciable IIT between Developing countries and United States.
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5.3.2 Extent of IIT (IIT) between ECOWAS and EU Intermediate Products (First