Nigeria and the Oil Industry Essay Example | Topics and Well Written Essays - 1250 words

Nigeria and the Oil Industry - Essay Example The paper also includes governmental policies with respect to oil industry. Trade Theory The companies do not necessarily trade to take advantages of the difference in their production and manufacturing capabilities but also to get benefit of the increasing returns. International trade has emerged over a period of time to be recognised as a key component in a nation’s growth and to enhance its economic performance. The new trade theory as introduced included a concept of ‘interindustry trade’. This allowed the trading practice between various industries belonging to different economies (Menipaz & Menipaz, 2011). The trade theory also states that the government of the nations can adopt necessary measures in developing the economic conditions of the citizens. The government of Nigeria is needed to take necessary steps involving the international trade practices (Bergoeing, 2003). A company is said to have achieved absolute advantage if it is capable of producing mor e goods than its competitors with the utilisation of same amount of resources or manufactures same quantity of goods with the utilization of minimum resources compared to its competitors. In this context, it is worth mentioning that Nigeria being one of the largest reserve nations of natural resources could have gained this advantage but due to the lack in advanced amenities and structures, and adequate law enforcement, the nation is deprived of this advantage (Bergoeing, 2003). In the era of international business, economic as well as social importances of international trade have played their role as the deriving theories influencing the international trading business (The Economy Watch, 2010). The Nigerian oil industry is facing instability with respect to declining condition of Niger delta adversely affecting the national economy and the sustainable growth of the related industry. Nigeria is included among the top ten nations that are considered to have richest reserves of oil o r natural resources. The main problem of Nigeria is that it has certain lacking in terms of advanced technology and infrastructure related to oil industry. As one of the major impacts of globalisation, the industry is facing tremendous competition from the outsiders (Foreign competitors). As stated by Adolor Uwamu, CEO of Seawolf Oilfield Services, the drilling for oil and gas is being carried out by the foreign companies in Nigeria and this has been a factor for the past 40 years (CNN, 2011; The Economy Watch, 2010). Participation of Nigerian Oil Industry in International Trade Nigeria’s international trade and export is significantly dependent on the oil and natural gas industry. After the introduction of economic reforms which was in the year 2005, the government of Nigeria has paid adequate attention in diversifying the nation’s export related profile. Oil and natural gas are considered as the primary products that are being exported of Nigeria. The nation is noted to export about 2.327 million of barrels daily, according to statistics of the year 2007 (The Economy Watch, 2010) as illustrated in the below figure: Nigeria’s Export Volume Source: (The Economy Watch, 2010). Globalisation and Regionalisation Nigerian government has taken necessary steps to reduce the exploitation of oil of Niger delta and declination of oil