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  1. Economics SS3

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Theme 1          Comparative Economics       

  1. Economic Lessons from Asian Tigers, Japan, Europe and America

Theme 2          Population, Labour Market and Human Capital Development      

  1. Human Capital Development

Theme 3          Structure of The Nigerian Economy 

  1. Petroleum and the Nigerian Economy
  2. Manufacturing and Construction
  3. Service Industries

Theme 4          Financial Institutions and Regulatory Agencies      

  1. Agencies that regulate the financial markets
  2. Functions and role of regulatory agencies

Theme 5          International Trade and Balance Of Payments        

  1. International Trade
  2. Balance of Payments (B.O.P)

Theme 6          Development Economics      

  1. Economic growth and development
  2. Economic development planning

Theme 7          International Economic Organizations        

  1. International Economic Organizations

Theme 8          Applied Economics and Contemporary Economic Organizations   

  1. Current Economic plans; MDGs, NEEDS, Vision 2020
  2. Economic Development challenges
  3. Economic reform programs

 

 

Theme 1    Comparative Economics  

  1. Economic Lessons from Asian Tigers, Japan, Europe and America

ECONOMIC HISTORY OF THE ASIAN TIGERS AND JAPAN (1960-2000)

The Asian Tigers, comprising Hong Kong (China), Taiwan, Singapore, South Korea, and Indonesia, experienced remarkable economic growth from 1960 to 2000, earning them the name “Asian Miracles.” These countries displayed a strong commitment to developing their economies, both regionally and globally. Additionally, they prioritized regional economic integration, exemplified by the formation of the Association of Southeast Asian Nations (ASEAN) with the goal of becoming an official Economic Community by 2015.

 

Within a span of 40 years, these five economies transformed into significant players on the global stage. Their progress was so substantial that they became integral to the world’s economic landscape.

 

THE JAPANESE MIRACLE

The Japanese Miracle refers to Japan’s extraordinary economic recovery following the devastation of World War II. Within a few decades after its capitulation, Japan emerged as a prosperous nation.

Long-Term Industrial Policy: Japan’s Ministry of International Trade and Industry (MITI) played a central role in guiding industrial development through targeted policies and investment. This approach helped create globally competitive industries.

Continuous Innovation: Japan’s commitment to continuous technological innovation and improvement (Kaizen) led to the development of high-quality products and manufacturing processes.

Strong Work Ethic: The Japanese work culture, characterized by dedication, discipline, and attention to detail, contributed to the country’s economic growth and competitiveness.

Financial System Reform: After the bursting of Japan’s asset price bubble in the early 1990s, the importance of financial system stability and reform became evident. Lessons learned include the need for effective banking regulation and risk management.

 

DEVELOPMENT STRATEGIES EMPLOYED BY THE ASIAN TIGERS

The Asian Tigers employed various development strategies to fuel their economic growth, including:

  1. Investment in Skills: These countries focused on enhancing the skill sets of their workforce through education and training programs.
  2. Technological Advancement: They prioritized the adoption and advancement of technology to drive productivity and innovation.
  3. Engagement of Special Agencies: Specialized agencies were established to facilitate economic development and provide support to industries.
  4. Setting up Pilot Projects: They initiated pilot projects to test new approaches and encourage experimentation in economic development.
  5. International Involvement: Collaboration with international partners played a crucial role in their economic growth.

 

Europe:

  1. Integration and Cooperation: The European Union (EU) demonstrates the benefits of economic integration and cooperation among nations. The single market, common currency (Euro), and free movement of goods, services, capital, and people have facilitated economic growth.
  2. Social Welfare Systems: Many European countries have established comprehensive social welfare systems, ensuring a certain level of economic security and reducing inequality.
  3. Labour Market Flexibility: Some European countries have successfully balanced worker protection with labour market flexibility, enabling businesses to adapt to changing economic conditions while safeguarding workers’ rights.

 

America:

  1. Innovation and Entrepreneurship: The United States is known for its vibrant culture of innovation, entrepreneurship, and risk-taking. This has led to the development of groundbreaking technologies and industries.
  2. Diverse Economy: America’s diverse and dynamic economy, spanning various sectors such as technology, finance, manufacturing, and entertainment, has contributed to its resilience and adaptability.
  3. Capital Markets and Venture Capital: Robust capital markets and a well-developed venture capital ecosystem have been instrumental in funding startups and driving technological advancements.
  4. Monetary Policy and Federal Reserve: The U.S. Federal Reserve’s role in managing monetary policy and stabilizing the economy through interest rate adjustments and crisis management provides important lessons in macroeconomic management.

 

LESSONS FOR THE NIGERIAN ECONOMY

The Nigerian Economy can learn several valuable lessons from the Asian Tigers, including:

  1. Formulation and Implementation of Deliberate Government Policies: Nigeria should develop and implement well-defined government policies that promote economic growth and stability.
  2. Strengthening Agricultural Development: Investing in and prioritizing the development of the agricultural sector can contribute to sustainable economic growth.
  3. Encouraging Industrial Development: Promoting the growth of industries and manufacturing sectors can diversify the economy and create employment opportunities.
  4. Developing Small and Medium-Scale Enterprises (SMEs): Supporting the growth and development of SMEs can foster entrepreneurship, innovation, and job creation.

 

10 lessons Nigeria should learn from the success of the Asian tigers

  1. Nigeria should prioritize its export policy in alignment with areas where it holds a competitive edge or preference, such as agriculture. By boosting the production and export of commodities like cocoa and groundnut, Nigeria can enhance its foreign exchange earnings, reducing reliance solely on crude oil revenues.
  2. The Nigerian educational system requires stability through policies that curtail frequent school closures. Additionally, a comprehensive reform should shift the focus towards skill acquisition rather than mere certification.
  3. It is crucial to pursue a financial and banking framework that supports savings and fosters business growth. Both governmental and private savings should be encouraged to enhance future investments, a pivotal component of developmental progress.
  4. Embracing effective resource management is paramount. The prevention of resource misappropriation and the resolute addressing of corruption are imperative. No exceptions should be made in tackling these issues.
  5. Establishing numerous domestic manufacturing industries that utilize locally sourced materials is essential. This strategic move would lessen dependence on imported goods, encouraging the consumption of locally-made products, thereby bolstering local manufacturing firms and addressing unemployment and balance of payment concerns.
  6. Effective management of the macroeconomic environment is crucial, encompassing variables such as public debt, deficits, and exchange rates.
  7. Education and technology play a pivotal role in development, as exemplified by the success of the Asian Tigers. Their adeptness with technology propelled their rapid growth. Education, especially, facilitated technological mastery in these economies.
  8. The driving forces of passion and willpower have been instrumental in the success of East Asian economies. Their inquisitive nature and enthusiasm to learn fostered rapid advancement. In contrast, Nigeria faces challenges due to declining interest in industrial skills, preference for performing arts careers, and a lack of scientific zeal.
  9. Factor accumulation, involving the augmentation of fundamental resources like labor, capital, and entrepreneurship, underpins economic growth. Nigeria’s potential lies in the development of its human capital, improvement of its labor force, expansion of its entrepreneurial class, and overcoming challenges to entrepreneurial growth.
  10. Export and import policies significantly influence growth and development. Higher exports lead to a broader revenue base. Diverse strategies were employed by Asian Tigers, involving export incentives and targeted industry promotion. Nigeria must diversify its economy, moving beyond oil dependency, by promoting exports and expanding its global market presence to drive economic transformation.

 

 

Theme 2    Population, Labour Market and Human Capital Development

  1. Human Capital Development

Meaning

Human capital refers to the collection of skills, training, experience, education, knowledge, technical know-how, and competencies contributed by individuals to the production process.

Characteristics of Human Capital

  1. Mobility: Human capital can move and be employed in different locations or organizations.
  2. Skillfulness: Human capital possesses specific skills and expertise relevant to their respective fields.
  3. Emotional component: Human capital is influenced by emotions, motivations, and personal attributes.
  4. Requirement for innovation: Human capital requires continuous innovation and adaptation to remain effective.
  5. Unpredictability: Human capital is influenced by various factors and can be challenging to predict accurately.
  6. Perishability: Human capital can depreciate if not utilized or updated regularly.
  7. Non-fixed nature: Human capital is not fixed and can be developed and enhanced over time.
  8. Factors Affecting the Efficiency of Human Capital

The efficiency of human capital is influenced by several factors, including:

  1. Education: The level and quality of education individuals receive.
  2. Experience: The practical exposure and knowledge gained through real-world work experience.
  3. Competence: The skills and abilities individuals possess in their respective fields.
  4. Personal attributes: Individual characteristics such as motivation, creativity, and adaptability.
  5. Innovation: The ability to stay updated with new advancements and contribute to innovative solutions.
  6. Skills: The specific abilities and expertise individuals possess.
  7. Health: The physical and mental well-being of individuals, which affects their productivity.
  8. Training: Access to ongoing training and development opportunities.
  9. Differences between Human Capital and Physical Capital

Human Capital:

  1. Human assets contributed by individuals.
  2. Includes skills, training, education, etc.
  3. Controlled by humans.
  4. Can appreciate in value through training, education, experience, etc.
  5. Rewards in the form of wages and salaries.

 

Physical Capital:

  1. Non-human asset used in production.
  2. Includes manufactured assets like machinery, equipment, buildings, etc.
  3. Cannot control itself.
  4. Does not appreciate in value.
  5. Rewards in the form of interest.
  6. Brain Drain and Its Effects on the Nigerian Economy

Brain drain, also known as human capital flight, refers to the emigration or departure of individuals with technical skills or knowledge from one organization, industry, or geographical region to another. Brain drain is a common phenomenon in developing nations. In the context of the Nigerian economy, brain drain has adverse effects, including a loss of skilled workforce, reduced innovation, decreased productivity, and hindrance to overall economic growth.

  1. Strategies to Address Brain Drain

To arrest brain drain in Nigeria, the following measures can be implemented:

  1. Provision of better job opportunities.
  2. Offering attractive salaries and benefits.
  3. Promoting merit-based promotions and opportunities.
  4. Improving research facilities to encourage knowledge creation and retention.
  5. Eliminating quota systems that limit opportunities based on factors other than merit.
  6. Enhancing power supply to support industries and create favourable working conditions.
  7. Ensuring the protection of lives and property, creating a secure environment for individuals.
  8. Enhancing the quality and infrastructure of universities to retain skilled professionals and encourage knowledge development.

 

 

 

Theme 3    Structure of The Nigerian Economy  

Petroleum and the Nigerian Economy

  1. Historical Development of Petroleum in Nigeria

The discovery of petroleum in commercial quantities took place in 1956 by Shell BP at Oloibiri, located in present-day Rivers State. Since 1976, petroleum has remained the primary source of government revenue in Nigeria.

 

  1. Positive Contributions of Petroleum to Nigeria’s Economy

Petroleum has made several positive contributions to the Nigerian economy, including:

  1. Revenue Generation: Petroleum serves as a significant source of revenue for the country.
  2. Employment Opportunities: The petroleum industry has generated employment for professionals such as petroleum engineers, geologists, and chemical engineers.
  3. Infrastructure Development: Earnings from petroleum have contributed to the improvement of infrastructure in Nigeria, such as the construction of flyovers, airports, and roads.
  4. Foreign Exchange: Crude oil exports constitute a major source of foreign exchange for the country.
  5. Oil-Related Industries: The development of the petroleum sector has led to the growth of oil servicing firms and petrochemical industries.
  6. Improved Living Standards: Petroleum has contributed to the improvement of the living standards of Nigerian citizens.
  7. Diverse Product Range: Petroleum provides a wide range of products that are essential for various sectors.
  8. Fuel Supply: Petroleum serves as a major source of fuel, including petrol, diesel, and kerosene.
  9. Global Influence: Nigeria’s position in global politics has been reinforced through its involvement in the petroleum industry.

 

  1. Negative Contributions of Petroleum to Nigeria’s Economy

Despite its positive impacts, petroleum has also had negative effects on Nigeria’s economy, which include:

  1. Environmental Pollution: The Niger Delta region has experienced significant land and air pollution as a result of petroleum activities.
  2. Inflation: The discovery of oil in Nigeria has led to skyrocketing prices of goods and services, causing inflation.
  3. Neglect of Agriculture: The neglect of the agricultural sector, which used to be a major revenue source, has resulted in high food prices in the market.
  4. Increased Crime Rate: The emergence of oil-related crimes, such as advance fee fraud (419), cybercrime, armed robbery, and pen robbery, can be traced back to the prominence of the oil industry.
  5. Civil Unrest: The Niger Delta region has witnessed a breakdown of law and order, accompanied by the kidnapping of oil workers for ransom, making it a volatile area.

Other Mineral Resources in Nigeria

Aside from petroleum, Nigeria possesses various other mineral resources, including:

  1. Coal
  2. Iron Ore
  3. Tin and Columbite
  4. Limestone
  5. Lead and Zinc

 

The Nigerian National Petroleum Corporation (NNPC)

Established in 1977, the Nigerian National Petroleum Corporation (NNPC) is responsible for the exploration, production, refining, and distribution (marketing) of petroleum and petroleum products.

Roles of the Nigerian National Petroleum Corporation (NNPC)

The NNPC fulfills the following roles:

  1. Regulating Oil Company Activities: The NNPC regulates the operations of oil companies, including the issuance of licenses for oil exploration, prospecting, and the operation of filling stations.
  2. Exploration and Production: It engages in the exploration and production of petroleum products.
  3. Refining and Distribution: The NNPC refines and distributes petroleum products for domestic use.
  4. Manpower Development: The NNPC contributes to manpower development in the petroleum sector, exemplified by the establishment of the Petroleum Training Institute in Warri, Delta State.
  5. Implementation of Oil Policies: The NNPC implements oil policies, including the determination of petroleum product prices.
  6. Employment Generation: The NNPC generates employment opportunities through its operations.

 

 

 

  1. Manufacturing and Construction

Manufacturing industries involve the conversion of raw materials into new products through mechanical or chemical processes, either within a factory or at home.

 

  1. Types of Manufacturing Industries

Manufacturing industries encompass various sectors that engage in the processing and transformation of raw materials from primary industries into finished goods. Examples include shoe-making, food processing, plastic processing, and textile processing.

 

  1. Contribution of Manufacturing and Construction Sectors to Nigeria’s GDP

The manufacturing and construction sectors play significant roles in Nigeria’s Gross Domestic Product (GDP) by contributing to economic growth and development. These sectors are vital for job creation, expanding infrastructure, and fostering the diversification of the economy.

 

  1. Roles of Manufacturing and Construction in Economic Development

The manufacturing and construction industries play pivotal roles in the overall economic development of a nation in several ways:

 

a) Increase in Gross National Product (GNP): These sectors contribute to the growth of the GNP by generating value-added products and services.

b) Provision of Employment Opportunities: Manufacturing and construction industries create job opportunities for the workforce, reducing unemployment rates and improving living standards.

c) Stimulation of Other Sectors: By generating demand for raw materials and intermediate goods, these industries stimulate growth in other sectors of the economy, such as agriculture and transportation.

d) Control of Inflation: Mass production in manufacturing helps regulate inflation by ensuring a steady supply of goods, which can stabilize prices.

e) Infrastructural Development: The construction sector plays a crucial role in building and maintaining infrastructure, such as roads, bridges, airports, and housing, which facilitates economic activities.

f) Diversification of the Economy: Manufacturing and construction sectors contribute to diversifying the economy by shifting focus from traditional sectors, leading to a more balanced and sustainable economic structure.

g) Funding of Educational Research: These sectors often provide funding for research and development activities in educational institutions, leading to innovation and technological advancements.

h) Manpower Development: Manufacturing and construction industries invest in the development of skilled labour through training programs, which enhances human capital and increases productivity.

Overall, the manufacturing and construction sectors are indispensable for economic growth, employment generation, and the overall progress of a nation.

 

 

 

  1. Service Industries

Service Industries and Their Contributions to Economic Development

Introduction:

Service industries, also known as the tertiary sector of industry, play a significant role in economic development. They involve the provision of various services to businesses and consumers. This article explores examples of service industries and highlights their contributions to economic growth.

 

Examples of Service Industries:

  1. Tourism Attractions: This sector encompasses activities related to creating and managing tourist attractions, such as national park guides and tour operators.
  2. Warehousing: Warehouse managers and clerks ensure the proper storage of goods until they are required for consumption or distribution.
  3. Communication: Activities facilitating the rapid transmission of messages, including courier services and telephone operators, fall within this category.
  4. Transportation: Individuals involved in transportation services, such as drivers, pilots, and sailors, are responsible for moving goods and services to their required destinations.
  5. Advertising: Advertising agents play a vital role in providing information about products or services to potential buyers, promoting their existence in the market.
  6. Banking: Bankers assist individuals in meeting their financial needs, provide capital for industrial activities, and offer savings facilities.
  7. Insurance: Insurance brokers, underwriters, and agents provide risk protection for individuals and businesses in their day-to-day operations.

 

Contributions of Service Industries to Economic Development:

Service industries make significant contributions to the economic development of countries like Nigeria, as outlined below:

  1. Employment Generation: Service industries create numerous job opportunities, thereby reducing unemployment rates and improving living standards.
  2. Trade Support: These industries provide essential support services that aid trade activities, facilitating smoother business operations.
  3. Government Revenue Generation: Service industries contribute to government revenue through taxes, licenses, and other regulatory fees, enabling the funding of public infrastructure and services.
  4. Economic Diversification: Service industries help diversify the economy by reducing dependence on traditional sectors, fostering resilience, and promoting innovation.
  5. Infrastructural Development: The growth of service industries often necessitates the development of infrastructure, such as transport networks, communication systems, and financial institutions, benefiting the overall economy.
  6. Stimulating Other Sectors: Service industries drive demand for goods and services from various sectors, leading to increased production and economic growth.
  7. Regional Integration: Service industries promote integration by facilitating the exchange of services and fostering cooperation between different regions, fostering economic development on a broader scale.

 

Conclusion:

Service industries, as a vital sector of the economy, play a crucial role in generating employment, supporting trade, diversifying economies, and stimulating growth. Their contributions to economic development extend beyond their immediate scope, positively impacting various sectors and fostering regional integration. Recognizing the significance of service industries is essential for policymakers and stakeholders seeking sustainable economic progress.

 

 

 

 

Theme 4    Financial Institutions and Regulatory Agencies   

Agencies that regulate the financial markets

Regulatory Agencies for Money Market in Nigeria:

  1. Central Bank of Nigeria (CBN)
  2. Nigeria Deposit Insurance Corporation (NDIC)

 

Central Bank of Nigeria (CBN):

The Central Bank of Nigeria is the highest financial institution in the country and is responsible for overseeing and controlling monetary affairs and financial institutions. It was established in 1959 after Nigeria gained political independence. The functions of the CBN include:

  1. Government Banking: The CBN acts as the banker to the government, maintaining government revenue accounts and making payments on behalf of the government. It also manages the national debt.
  2. Currency Issuance: The CBN has the sole authority to issue paper money (banknotes) and coins in the country.
  3. Banker to Commercial Banks: The CBN serves as a banker to commercial banks, requiring them to maintain deposits with the central bank.
  4. Clearing House: The CBN acts as the clearing house for the settlement of interbank debts.
  5. Lender of Last Resort: In times of financial stress, the CBN provides liquidity support to commercial banks to meet their customers’ demand for cash.
  6. Government Advisor: The CBN advises the government on monetary matters, including methods of raising loans and managing the national debt.
  7. Foreign Monetary Transactions: The CBN manages foreign exchange reserves and advises the government on trends in foreign exchange markets.
  8. Implementation of Monetary Policies: The CBN carries out and implements the government’s monetary policies.
  9. International Relations: The CBN maintains close contact with international financial institutions like the IMF, World Bank, and ADB.

 

Monetary Policy:

Monetary policy refers to the measures taken by the central bank to control the money supply in the economy. The CBN uses various tools to regulate the volume of money and address inflation or deflation. These tools include the bank rate, open market operations, liquidity ratio, special deposits, directives, moral suasion, and funding.

 

Nigeria Deposit Insurance Corporation (NDIC):

The NDIC is responsible for administering the deposit insurance system in Nigeria and safeguarding depositors’ interests. Its functions include:

  1. Issuing Deposit Insurance: The NDIC provides deposit insurance for licensed banks.
  2. Assisting Insured Institutions: In cases of imminent financial distress, the NDIC provides assistance to insured institutions to protect depositors’ interests.
  3. Guaranteeing Payment to Depositors: The NDIC guarantees the payment of insured deposits to depositors in case of bank failures.
  4. Assisting Monetary Authorities: The NDIC assists monetary authorities in formulating and implementing policies to ensure sound banking practices and fair competition.
  5. Undertaking Necessary Measures: The NDIC takes any other measures necessary to fulfill its function as specified by the NDIC Act.

 

Money Market:

The money market is a market where short-term securities are traded. It involves institutions and individuals with surplus funds available for short-term lending or borrowing. The key instruments used in the money market include Treasury Bills, Treasury Certificates, Bills of Exchange, and Call Money Funds. Institutions involved in the money market include the Central Bank, commercial banks, acceptance houses, finance houses, discount houses, and insurance companies.

 

Functions of the Money Market:

  1. Providing Working Capital: The money market provides capital for day-to-day business operations.
  2. Generating Extra Income: Investing in call money in the money market allows for additional income generation.
  3. Mobilizing Savings: The money market helps in mobilizing savings from individuals and institutions.
  4. Promoting Economic Growth: The money market contributes to economic growth and development by providing necessary funds.
  5. Encouraging Saving Habits: The money market promotes good saving habits among those with surplus funds.
  6. Ensuring Easy Access to Funds: Investments in the money market are easily accessible and can be recalled when needed.

 

Capital Market:

Unlike the money market, which deals with short-term securities, the capital market focuses on long-term securities. It serves as a platform for raising funds for entrepreneurs, government entities, and businesses on a long-term basis.

 

Instruments Used in the Capital Market:

The capital market involves the trading of securities such as shares, stocks, development stock, bonds, and debentures.

  1. Shares: Shares represent units of capital owned by shareholders, allowing them to raise long-term loans for companies through the Stock Exchange Market.
  2. Stocks: Stocks are bundles of shares or mass capital that can be traded in fractional amounts. They are fully paid and quoted based on their nominal value, such as per N100.

 

Functions of the Capital Market:

  1. Long-Term Financing: The capital market provides funds for the long-term financing needs of entrepreneurs, government entities, and businesses.
  2. Capital Mobilization: It helps in mobilizing capital from investors for investment in productive sectors.
  3. Wealth Creation: Participation in the capital market offers opportunities for wealth creation through investments.
  4. Facilitating Economic Growth: The capital market plays a crucial role in promoting economic growth and development by facilitating investment and expansion.
  5. Investor Protection: Regulatory measures in the capital market protect the interests of investors and ensure fair practices.
  6. Providing Investment Options: The capital market provides various investment options to individuals and institutions to diversify their portfolios.

The Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) are the regulatory agencies overseeing the money market in Nigeria. The CBN regulates monetary affairs, implements monetary policies, and manages the banking system, while the NDIC ensures deposit insurance protection and promotes stability in the financial system. The money market deals with short-term securities, while the capital market focuses on long-term securities for raising funds.

 

 

Theme 5    International Trade and Balance of Payments 

  1. International Trade

One of the ways in which our lives have improved on Earth today is through the practice of international trade, which allows for the division of labour on a national, regional, or territorial level. International trade, also known as foreign trade or external trade, involves the exchange of goods and services between two or more countries.

 

TYPES OF INTERNATIONAL TRADE

There are two primary types of international trade:

  1. Bilateral International Trade: This type of trade agreement occurs when two countries exchange goods and services.
  2. Multilateral International Trade: Multilateral international trade involves a country trading with many other countries. For example, Nigeria trades with the USA, Britain, and Japan.

 

REASONS FOR INTERNATIONAL TRADE

There are several reasons why international trade occurs:

  1. Uneven Distribution of Natural Resources: Some countries are naturally blessed with abundant resources, while others have limited resources or none at all.
  2. Differences in Climatic Conditions: Varied climates give rise to the growth of different crops, necessitating the need for exchange.
  3. Differences in Technology: Countries with advanced technology can produce industrial products at reduced costs and sell them to less developed countries.
  4. Expansion of Market for Products: International trade provides access to larger markets, allowing businesses to increase their sales.
  5. Desire to Improve the Standard of Living: International trade allows countries to acquire goods and services that contribute to an improved standard of living.

 

BARRIERS OR PROBLEMS OF INTERNATIONAL TRADE

There are several barriers or challenges in international trade:

  1. Language Barrier: Communication can be hindered due to language differences between trading partners.
  2. Distance: The geographical distance between trading partners can complicate logistics and transportation.
  3. Documentation: International trade involves numerous documents, such as import/export forms and customs declarations.
  4. Currency Fluctuations: Variations in currency exchange rates can impact the cost of imported goods.
  5. Tariffs: Tariffs imposed on imported goods can make them more expensive.
  6. Religion and Cultural Differences: Differences in religious beliefs and cultural practices can affect trade relationships.
  7. Artificial Barriers: Artificial barriers such as bans, quotas, and licensing requirements can limit trade.
  8. Transportation and Communication Issues: Challenges in transportation infrastructure and communication networks can hinder trade.
  9. Government Policies: Policies and regulations set by governments can either facilitate or hinder international trade.

 

DIFFERENCE BETWEEN DOMESTIC AND FOREIGN TRADE

There are several distinctions between domestic and foreign trade:

  1. Language: Domestic trade involves a common language, while foreign trade requires knowledge of a new language.
  2. Weighing and Measuring Systems: Different countries may use different systems of weighing and measuring, while a country typically has only one standardized system.
  3. Transport Costs: Foreign trade can have higher transport costs due to distance, documentation requirements, and the need for insurance.
  4. Legal Systems and Culture: International trade involves dealing with different legal systems and cultures, whereas domestic trade operates within the same legal system.
  5. Currency: In foreign trade, buyers and sellers use different currencies, whereas domestic trade uses the same currency.
  6. Trade Restrictions: Trade across national boundaries can be subject to restrictions such as tariffs, import/export duties, quotas, and embargoes, which are not typically present in domestic trade.

 

Advantages of International Trade:

  1. International trade facilitates the exchange of goods and services among nations, benefiting all participating countries.
  2. It promotes economic development by fostering growth and expanding market opportunities.
  3. International trade creates employment opportunities, contributing to job creation and reducing unemployment.
  4. It encourages international specialization, allowing countries to focus on producing goods and services in which they have a comparative advantage.
  5. International trade leads to an increase in world output, boosting productivity and overall economic growth.
  6. It promotes friendship and cooperation among nations by fostering interdependence and mutual benefits through trade relationships.
  7. International trade contributes to an improvement in the standard of living, as countries can access a wider range of goods and services at competitive prices.
  8. It fosters the equitable distribution of national resources, enabling countries to utilize their resources efficiently and benefit from trade advantages.
  9. Through international trade, countries have the opportunity to acquire new skills, knowledge, and ideas, promoting learning and innovation.

 

Disadvantages of International Trade:

  1. International trade can result in the dumping of goods from developed nations into less developed countries, negatively impacting local industries.
  2. This can adversely affect infant industries, hindering their growth and competitiveness.
  3. Unchecked international trade may lead to the erosion of cultural values in a country, as the influx of foreign goods and practices may contradict local norms and traditions.
  4. There is a risk of importing harmful or dangerous goods into a country due to unscrupulous business practices.
  5. Trade deficits can arise, negatively affecting a country’s economy and overall well-being.
  6. High levels of dumping can lead to unemployment in certain industries as they struggle to compete with lower-priced imports.
  7. Excessive reliance on international trade can reduce efforts to achieve self-reliance and diversification of the domestic economy.
  8. Developed countries may exploit their advantageous position to exploit less developed nations, creating imbalances in trade relationships.

 

The Law of Comparative Cost Advantage:

The theory of comparative cost advantage states that countries benefit from trade when they specialize in producing goods or services in which they have a comparative cost advantage compared to other countries. This principle suggests that a country has a comparative advantage in producing a commodity when its opportunity cost of production is lower than that of other countries. The theory, first proposed by David Ricardo in the 19th century, emphasizes the real cost of production in terms of forgone alternatives.

 

Assumptions of the Principle of Comparative Cost Advantage:

The principle of comparative cost advantage is based on the following assumptions:

  1. There are only two countries involved in the trade.
  2. Both countries produce only two items using their available resources.
  3. There is free flow and mobility of factors of production.
  4. No transport costs are involved.
  5. Constant costs prevail in production.
  6. Technology remains constant.
  7. Labor is the only factor of production considered.

 

The Principle of Absolute Advantage:

The principle of absolute advantage, proposed by Adam Smith, suggests that a country should specialize in producing commodities or services in which it has an absolute advantage over other countries. Absolute advantage means that a country can produce a commodity or service more efficiently and at a lower cost compared to other countries. According to this principle, a country can produce two commodities at a lower cost given the same unit of resources.

 

Instruments of Trade Protection:

Governments can control or restrict trade using various instruments, including:

  1. Import duties or tariffs: Taxes imposed on imported goods to reduce trade volume.
  2. Foreign exchange control: Government control exercised through the Central Bank over gold and foreign exchange transactions.
  3. Import licensing: Commodity imports require individual licenses issued by the government.
  4. Devaluation: Deliberate reduction in a country’s currency value to address imbalances in the balance of payments.
  5. Quota: Quantitative restrictions imposed on the quantity of commodities allowed to enter a country within a specified period.
  6. Embargo: Prohibition or complete ban on the importation of specific goods.

 

Reasons for Trade Protection:

Several reasons are put forward in support of trade protection measures:

  1. Maintenance of full employment within the country.
  2. Protection of infant industries from competition.
  3. Development of domestic import substitutes.
  4. Correction or elimination of imbalances in the balance of payment accounts.
  5. Revenue generation through taxation on imports.
  6. Prevention of dumping practices by foreign companies.
  7. Protection against the importation of harmful or non-essential goods.
  8. Strategic reasons, such as retaliatory measures against foreign states, may prompt governments to protect trade.

 

 

 

 

  1. Balance of Payments (B.O.P)

BALANCE OF TRADE

The balance of trade refers to the comparison between a country’s total visible exports and its total visible imports. It is determined by the monetary value of these exports and imports. When the monetary value of visible exports equals the monetary value of visible imports, the balance of trade is said to be in balance. A positive or favourable balance of trade occurs when a country’s exports exceed its imports in monetary terms. Conversely, a negative or unfavourable balance of trade occurs when a country’s imports exceed its exports in monetary terms.

 

BALANCE OF PAYMENTS

The balance of payments is a statement or record that shows the relationship between a country’s total payments to other countries and its total receipts from them in a given year. It is divided into three main parts:

  1. Current Account: The current account comprises receipts and payments for both visible and invisible services. Visible services include tangible products such as cars, computers, clothing materials, and electronics, while invisible services include insurance, banking, transportation, interest payments, and tourism.
  2. Capital Account: The capital account deals with the inflow and outflow of capital in both the long and short term. It includes investments, loans, and grants related to a country setting up businesses in other countries or vice versa.
  3. Monetary Movement Account: The monetary movement account is responsible for settling the differences between the current account and the capital account.

 

TERMS OF TRADE

Terms of trade refer to the rate at which a country’s exports are exchanged for its imports. It is expressed as a relationship between the prices received for exports and the prices paid for imports.

Terms of Trade (TOT) = (Index of export price / Index of import price) x 100

Favourable terms of trade occur when the average price of exports is higher than the average price of imports. This situation benefits the country as its exports are more valuable than its imports. Conversely, unfavourable terms of trade occur when the average import price is higher than the average export price, resulting in more expensive imports than exports and a decline in the terms of trade. An index value of less than 100 indicates unfavorable terms of trade, which reduces the real national income.

 

DEVALUATION OF CURRENCY

Currency devaluation refers to a deliberate policy aimed at reducing the value of a country’s currency relative to other currencies. It is characterized by a decrease in the exchange value of a country’s currency in relation to other countries’ currencies.

 

EFFECTS OF CURRENCY DEVALUATION

  1. Cheaper exports: Devaluation makes a country’s exports more affordable in foreign markets.
  2. More expensive imports: Devaluation leads to increased costs for importing goods and services.
  3. Increased export sales: Cheaper exports can stimulate higher demand and sales in foreign markets.
  4. Balance of payment improvement: As export sales increase, the foreign exchange earnings can improve a country’s balance of payments.
  5. Industrial growth and employment: Increased exports can lead to the growth of industries and, subsequently, higher employment rates.

 

CONDITIONS FOR IMPROVING BALANCE OF PAYMENTS THROUGH DEVALUATION

  1. Elastic demand for imports: Devaluation can reduce the demand for imports if their prices increase due to devaluation.
  2. Elasticity of exports: The country’s exports must be able to respond to increased foreign demand.
  3. Absence of other countries’ devaluations: Devaluation is most effective when other countries do not devalue their currencies simultaneously.
  4. Stable wages and incomes: If wages and other incomes increase following devaluation, the benefits may be negated.

 

ECONOMIC INTEGRATION

Economic integration is a form of international cooperation among nations aimed at fostering their economic interests. It involves the pooling of resources to achieve greater efficiency. Examples of economic integration include regional organizations like the

Economic Community of West African States (ECOWAS), the European Economic Community (EEC), African Development Bank (ADB), the Chad Basin Commission, and the International Monetary Fund (IMF).

 

OBJECTIVES OF ECONOMIC INTEGRATION

  1. Market enlargement: Economic integration aims to create a larger market that encourages economies of scale and increased production.
  2. Efficiency enhancement: Integration promotes greater efficiency in production units, leading to improved productivity.
  3. Resource mobility: Economic integration facilitates the movement of resources, such as capital, labor, and technology, across member nations, optimizing their utilization.
  4. Specialization: Integration allows countries to specialize in producing goods and services in which they have a comparative advantage, leading to increased efficiency and trade.
  5. Global market participation: Integration aims to empower member nations to participate more effectively in the global market, enhancing their economic influence and competitiveness.
  6. Job creation: Economic integration can create job opportunities through increased trade, investment, and economic activities within the integrated region.
  7. Improved living standards: Integration seeks to raise living standards by promoting economic growth, trade, and investment, leading to higher incomes and better access to goods and services.
  8. Accelerated economic development: Economic integration aims to accelerate economic development in the integrated region through increased cooperation, investment, and resource utilization.

 

FORMS OF ECONOMIC INTEGRATION

  1. Free trade area: Member countries eliminate trade barriers, such as tariffs and quotas, among themselves but maintain individual trade policies with non-member countries.
  2. Common Market: In addition to the elimination of trade barriers, a common market allows for the free movement of goods, services, capital, and labor among member countries.
  3. Economic union: An economic union involves deeper integration with a common market and further harmonization of economic policies, including monetary and fiscal policies.
  4. Customs union: A customs union involves the elimination of trade barriers among member countries and the establishment of a common external tariff on imports from non-member countries.

 

PROBLEMS OF ECONOMIC INTEGRATION IN WEST AFRICA

  1. Fear of domination: Smaller countries may be concerned about being dominated by larger countries within the integration framework.
  2. Revenue sharing: The distribution of generated revenue among member countries can be a contentious issue, leading to disagreements and challenges.
  3. Differences in ideology: Economic and political differences among member nations can hinder decision-making and consensus-building.
  4. Language barriers: Language diversity among member nations can slow down the decision-making process and hinder effective communication.
  5. Sovereignty concerns: Member countries may be reluctant to surrender their sovereignty to larger countries within the integration framework.
  6. Political instability: Frequent changes in government within member nations can disrupt decision-making processes and hinder integration efforts.
  7. Lingering colonial ties: Some member nations may still have strong ties to their former colonial powers, which can impact decision-making and integration efforts.
  8. Inadequate capital: Limited financial resources within the integration framework can hinder the implementation of planned initiatives and projects due to countries’ inability to fulfill financial obligations.

 

 

 

 

Theme 6    Development Economics  

  1. Economic Growth and Development

Economic Growth: Economic growth is achieved by a nation when there is an expansion in production, resulting in an increase in the volume of national output (national income). This growth is observable through heightened income levels, a larger labor force, increased total capital stock, and greater trade and consumption activities.

 

Economic development, on the other hand, encompasses economic growth while also focusing on elevating the living standards of a country’s populace. This improvement stems from the fair distribution of national income. Economic development encompasses all dimensions of economic activities and places a stronger emphasis on the equitable allocation of resources among different regions.

 

Key Characteristics of Economic Development:

  1. Enhancement of the overall well-being of the population.
  2. Equitable distribution of national income.
  3. Reduction in unemployment rates.
  4. Rise in real income for citizens.
  5. Augmentation of the total capital resources.

Economic growth underscores the augmentation of national output, while economic development underscores growth combined with the betterment of general welfare through just distribution of national income.

Underdevelopment: A nation is considered underdeveloped when it lacks the necessary human and material resources to enhance the well-being of its citizens.

 

Reasons for Categorizing Countries as Underdeveloped or Developing:

Many countries in West Africa and parts of Asia are designated as underdeveloped or developing due to these factors:

  1. Heavy reliance on primary production sources, such as agriculture.
  2. Significant dependence on foreign nations for survival.
  3. Low living standards, including inadequate housing and hunger.
  4. Insufficient healthcare facilities.
  5. Inadequate infrastructure.
  6. High illiteracy rates.
  7. Escalating unemployment.
  8. Inequitable income distribution.
  9. Political and economic instability.
  10. Limited savings and investment caused by low per capita income.

 

Causes of Underdevelopment:

  1. Limited savings due to low per capita income.
  2. As mentioned earlier, low savings lead to low investment, resulting in underdevelopment.
  3. Political instability leading to frequent changes in economic policies.
  4. Ineffective planning and implementation.
  5. Corruption and misappropriation of funds by public officials.
  6. High population growth rates.
  7. Excessive reliance on imports.
  8. Inadequate capacity building.
  9. Weak infrastructure.
  10. Limited technological advancement.

 

Solutions to Underdevelopment:

To eradicate poverty and attain development, a nation should consider these steps:

  1. Promote capital accumulation by encouraging savings for investment.
  2. Focus on capital formation, investing in social infrastructure and businesses.
  3. Engage in foreign trade while negotiating favorable terms. Prioritize industrialization to boost exports.
  4. Secure loans from financial institutions, both domestic and international, and ensure the funds are channeled into value-adding projects.
  5. Invest in capacity building by establishing vocational centers, colleges, and universities to enhance citizens’ technical expertise.
  6. Consider adopting socialist ideologies to bridge the wealth gap, as excessive capitalist ideologies might exacerbate disparities.

 

Strategies for Economic Development:

  1. Diversify the economy, reducing dependence on a single sector (e.g., oil in Nigeria).
  2. Develop essential social infrastructure like roads, railways, schools, and hospitals.
  3. Ensure political stability.
  4. Promote exports.
  5. Enhance workforce skills.
  6. Encourage capital accumulation.
  7. Foster market growth.
  8. Obtain foreign loans with favorable interest rates.

 

 

 

  1. Economic Development Planning

The significance of economic development for any nation was highlighted. To achieve this, it becomes necessary to influence key economic factors such as production, distribution, inflation, and imports/exports in order to attain predetermined goals and objectives. Consequently, Economic planning can be succinctly defined as a conscious endeavour by the government to manipulate key economic variables like production, distribution, inflation, and trade to realize specific goals and objectives.

 

DIFFERENT PLAN CATEGORIES

Several categories of economic planning exist:

  1. Financial Economic Planning
  2. Strategic Planning
  3. Comprehensive Economic Planning
  4. Partial Economic Planning
  5. Controlled Economic Planning

 

  1. Financial Economic Planning involves the allocation of the National Income among different sectors of the economy.
  2. Strategic Planning is devised to address particular economic objectives.
  3. Comprehensive Economic Planning encompasses all major facets of the national economy.
  4. Partial Economic Planning focuses on specific segments of the national economy, like boosting agricultural production.
  5. Controlled Economic Planning is prevalent in socialist economies, wherein the government formulates and executes economic plans. It’s also referred to as authoritarian planning.

 

CHALLENGES OF PLANNING

  1. Political instability due to frequent changes in government.
  2. Lack of sufficient capital to implement the projects outlined in the plan.
  3. Misallocation of resources, sometimes directed towards unproductive ventures.
  4. Inaccurate statistical data and information.
  5. Shortage of skilled personnel.
  6. Dependence on foreign aid.
  7. Rapid population growth.
  8. Corruption and embezzlement.
  9. Exchange rate volatility, leading to fluctuations in exchange rates.

 

 

 

Theme 7    International Economic Organizations   

ECOWAS

Established on May 28th, 1975, in Lagos, Nigeria, the Economic Community of West African States (ECOWAS) comprises all 16 independent nations of West Africa. Abuja and Lome serve as its administrative and fund headquarters, respectively. The organization was founded under the leadership of General Yakubu Gowon and President Eyadena.

 

MEMBERSHIP

ECOWAS membership is categorized into:

  1. Anglophone countries: Nigeria, Ghana, The Gambia, Sierra Leone, and Liberia.
  2. Francophone countries: Senegal, Guinea, Togo, Mali, Benin Republic, Burkina Faso, Cote d’Ivoire, Mauritania, and Niger Republic.
  3. Portuguese-speaking countries: Cape Verde and Guinea Bissau.

GOALS AND OBJECTIVES OF ECOWAS

  1. ECOWAS aims to foster cooperation and development across various economic fields such as transport, energy, agriculture, and telecommunications among member states.
  2. The organization seeks to facilitate trade liberalization within the region.
  3. ECOWAS promotes economic stability.
  4. The removal of trade barriers and restrictions is another key objective.
  5. It strives to integrate fiscal and monetary policies among West African states.
  6. ECOWAS aims to establish a common fund within the sub-region.

 

ACHIEVEMENTS

  1. ECOWAS successfully eliminated customs duties, enhancing free trade among member nations.
  2. The organization established a common fund to aid member countries in times of need.
  3. It has played a mediation role in resolving conflicts among member states, such as Nigeria and Chad, Liberia, Sierra Leone, etc.
  4. ECOWAS created ECOMOG to restore peace in Liberia and Sierra Leone, contributing to regional stability.
  5. The organization contributed to the eradication of apartheid and neo-colonialism in South Africa.
  6. ECOWAS facilitated market growth and expansion within the region.
  7. The organization played a vital role in promoting unity in diversity among member nations.

 

CHALLENGES OF ECOWAS

  1. Some member nations still have strong ties to their former colonial powers.
  2. Differences in official languages create language barriers among member nations.
  3. Ideological differences hinder unity within the community.
  4. Political instability, exemplified by coups, affects some member nations.
  5. Concerns about domination by larger nations exist.
  6. Inadequate funding due to members’ inability to contribute to ECOWAS funds.
  7. Deciding where to allocate investments poses a challenge for the organization.

 

IMF

The International Monetary Fund (IMF) was established during an international conference in Bretton Woods in 1944 and commenced operations in 1947, headquartered in the United States. It currently has 138 member countries. The primary goals of the IMF include promoting balance of payment equilibrium and stabilizing exchange rates among member countries.

OBJECTIVES AND FUNCTIONS OF IMF

  1. Stabilizing exchange rates among member nations is a central role of the IMF.
  2. The IMF assists members in financing balance of payment deficits.
  3. Member nations receive economic policy recommendations from the IMF.
  4. The IMF facilitates settlement of debts in foreign transactions.
  5. The organization promotes cooperation among member countries on financial matters.

IMF CHALLENGES

  1. Fluctuations in the value of key currencies, such as the US Dollar and British Pound, lead to exchange rate volatility.
  2. Developing nations struggle to repay obtained loans.
  3. IMF-recommended policies, like privatization and wage freezing, can lead to uneven wealth distribution.
  4. High interest rates on loans make repayment difficult for developing nations.
  5. Criticism arises regarding IMF’s interference in countries’ economic affairs, seen by some as imperialistic.

ACHIEVEMENTS

  1. IMF’s interventions have aided nations in overcoming economic challenges.
  2. Exchange rate stability has been promoted, especially for the US Dollar in relation to other currencies.
  3. Debt forgiveness has occurred, alleviating financial burdens on some nations.
  4. The IMF has contributed to the promotion of international trade.

 

IBRD

The International Bank for Reconstruction and Development (IBRD), known as the World Bank, was established in 1944 alongside the IMF at Bretton Woods. The World Bank is headquartered in Washington, USA. Beginning with 45 member nations, its membership grew to 178 by 1992.

IBRD OBJECTIVES

  1. Providing long-term loans for infrastructural development.
  2. Offering expert advice on development issues.
  3. Providing training for experts.
  4. Conducting feasibility studies related to economic development.
  5. Assisting in the development of productive resources in member nations.

IBRD ACHIEVEMENTS

  1. IBRD has supported infrastructural development in both developed and developing nations.
  2. Educational development, particularly in developing nations, has been aided by World Bank programs.
  3. Long-term loans have facilitated socio-economic development in developing nations.

IBRD CHALLENGES

  1. Limited capital availability.
  2. Difficulty in loan repayment for some nations.
  3. Financing projects that do not yield desired outcomes (unproductive projects).
  4. Unequal distribution of loans, favoring developed nations over less developed ones.

 

ADB

The African Development Bank (ADB) was established in 1964, headquartered in Abidjan, Cote d’Ivoire. Owned by African countries, ADB aims to support social and economic development across the continent.

ADB FUNCTIONS/OBJECTIVES

  1. Providing loans for the social and economic development of member nations.
  2. Funding agricultural development.
  3. Supporting infrastructural facilities such as electricity, water, transport, and telecommunications.
  4. Fostering economic integration in Africa.

ADB CHALLENGES

  1. Limited capital due to low economic activity in member nations.
  2. Poor infrastructural base in many African nations.
  3. Lack of technical expertise.

 

ECA

The Economic Commission for Africa (ECA), part of the United Nations, was established in 1958 in Addis Ababa, Ethiopia. Its objectives include promoting economic development, fostering cooperation, and conducting research for the advancement of Africa.

ECA OBJECTIVES/FUNCTIONS

  1. Ensuring economic development of the African continent.
  2. Fostering cooperation among African nations.
  3. Developing manpower for Africa.
  4. Accelerating economic growth and integration.
  5. Harmonizing economic policies across Africa.
  6. Conducting research to aid economic development.

ECA CHALLENGES

  1. Limited capital for executing projects.
  2. Differing economic policies due to ideological disparities.
  3. Accelerating economic development in Africa.
  4. Conducting research in production and technology for economic growth.
  5. Modernizing agriculture and industry in Africa.

 

UNCTAD

The United Nations Conference on Trade and Development (UNCTAD) was established in 1964, headquartered in Geneva, Switzerland. It was formed to promote trade and economic development in developing countries.

UNCTAD OBJECTIVES/FUNCTIONS

  1. Promoting international trade in developing countries.
  2. Assisting with balance of payments difficulties in developing nations.
  3. Accelerating economic development in underdeveloped countries.
  4. Solving balance of payment deficits.
  5. Promoting trade for developing countries.

 

EUROPEAN ECONOMIC COMMUNITY (EEC)

The European Economic Community (EEC) was established in 1957 by six European countries, including France, West Germany, Italy, Belgium, the Netherlands, and Luxembourg.

EEC OBJECTIVES

  1. Adopting a common currency (Euro).
  2. Ensuring economic

 

 

 

 

 

Theme 8    Applied Economics and Contemporary Economic Organizations  

  1. Current Economic Plans; MDGs, NEEDS, Vision 2020

The Millennium Development Goals (MDGs) consist of eight global development objectives that were formally established subsequent to the Millennium Summit of the United Nations in 2000.

MDG OBJECTIVES

Goal 1: Eliminate extreme poverty and hunger.

Target 1: Reduce the proportion of individuals earning less than one dollar per day by 50% between 1990 and 2015.

Target 2: Decrease the percentage of people experiencing hunger.

Goal 2: Attain universal primary education.

Target 3: Ensure the enrollment and completion of primary education for all children by 2015.

Goal 3: Foster gender equality and empower women.

Target 4: Eliminate gender disparity in primary and secondary education, with a preference for achieving this by 2005 and extending it to all education levels by 2015.

Goal 4: Decrease child mortality rate.

Target 5: Reduce the under-five mortality rate by two-thirds from 1990 to 2015.

Goal 5: Enhance maternal health.

Target 6: Reduce the maternal mortality rate by three-quarters between 1990 and 2015.

Goal 6: Combat HIV/AIDS, malaria, and other diseases.

Target 7: Halt and reverse the spread of HIV/AIDS by 2015.

Target 8: Halt and reverse the incidence of malaria and other significant diseases by 2015.

Goal 7: Ensure sustainability of the environment.

Target 9: Incorporate sustainable development principles into national policies, reversing environmental resource loss.

Target 10: Halve the proportion of people without access to safe drinking water by 2015.

Target 11: Achieve notable improvements in the living conditions of at least 100 million slum dwellers by 2020.

Goal 8: Establish a global development partnership.

Target 12: Address the debt challenges of developing nations through national and international measures to ensure sustainable debt management.

Target 13: Collaborate with the private sector to provide the benefits of new technologies, particularly information and communication technologies.

 

NATIONAL ECONOMIC EMPOWERMENT AND DEVELOPMENT STRATEGIES (NEEDS)

NEEDS emerges from the pressing need for a value-based approach, aiming to communicate that business cannot continue as usual. The foundation of NEEDS is rooted in its vision for Nigeria, built on new values and principles that facilitate the realization of national objectives encompassing wealth creation, employment, and poverty reduction.

 

NEEDS OBJECTIVES

NEEDS strives to create a common platform for economic actors in Nigeria to interact in a sustainable and healthy manner. The primary objectives are as follows:

  1. Alleviating Poverty
  2. Generating Employment
  3. Creating Wealth

 

VISION 2020

According to the VISION 2020 Economic Transformation blueprint (2009), Nigeria envisions a robust, diversified, competitive, and sustainable economy by 2020. This economy harnesses its citizens’ talents and resources responsibly, ensuring a high standard of living and quality of life. Achieving this objective requires a Gross Domestic Product of no less than $900 billion.

 

VISION 2020 OBJECTIVES

  1. The societal dimension: Aims for an equitable society with a life expectancy of at least 70 years.
  2. The economic dimension: Foresees a dynamic economy where the manufacturing sector contributes a minimum of 25% to the GDP.
  3. The institutional dimension: Expects democratic governance.
  4. The environmental dimension: Envisions effective management of natural resources. These objectives collectively underscore the ambitious nature of Vision 2020.

 

 

 

  1. Economic Development challenges

POVERTY

Poverty is frequently associated with the lack of material possessions owned by individuals. It can be defined as the absence of material ownership for a person. According to the World Bank, poverty is characterized by an individual’s income being below two dollars per day.

 

IMPACTS OF POVERTY

Poverty can lead to the following consequences:

  1. Insufficient access to food
  2. Malnourishment
  3. Limited access to healthcare
  4. Unemployment
  5. Reduced life expectancy
  6. Incidences of domestic violence
  7. Larger family sizes
  8. Prevalence of HIV/AIDS

 

STRATEGIES FOR POVERTY REDUCTION

  1. Utilizing appropriate combinations of mineral fertilizers alongside green manures to improve soil quality, planting fertilizer trees, returning crop residues to the soil, implementing measures to control soil erosion and conserve water, and using nitrogen-fixing seeds can enhance soil health and boost agricultural productivity. This, in turn, can create employment opportunities and alleviate poverty.
  2. Enhancing infrastructure such as water, sanitation, roads, and energy sources, like kerosene for cooking and rural electrification. Empowering women by reducing the time they spend on basic tasks like collecting firewood and water can lead to improved gender equality, increase women’s job opportunities, and contribute to poverty reduction.
  3. Implementing programs such as providing nutritious school meals, promoting better farming practices, educating communities on sanitation and hygiene, and offering nutrition education can collectively enhance nutrition, subsequently leading to improved overall health.

 

AGENCIES INVOLVED IN POVERTY ALLEVIATION

  1. National Poverty Eradication Programme (NAPEP): Established in 2001 in Nigeria, NAPEP aims to reduce poverty through vocational training for youth, support for micro-credits, and job creation in industries such as the automobile sector.
  2. Directorate of Food, Roads, and Rural Infrastructure (DFRRI)
  3. Better Life Programme
  4. National Directorate of Employment
  5. Family Support Programme (FSP)
  6. Poverty Eradication Programme (PEP)
  7. Community Bank

 

HIV/AIDS AND THE NIGERIA ECONOMY

HIV/AIDS poses a significant threat to the Nigerian economy, particularly affecting the younger working population. This demographic should constitute a major portion of the productive workforce. However, the prevalence of HIV/AIDS among this group can lead to decreased productivity, slowing down the nation’s growth and development.

 

CORRUPTION AND ECONOMIC IMPACT

Corruption involves the unethical or illegal use of power to accumulate wealth that rightfully belongs to individuals, the state, or the government. In Nigeria, corruption has deeply ingrained itself within society. Funds intended for development often end up misappropriated by a select few in positions of power. This practice undermines economic progress.

 

ENERGY SHORTAGES AND ECONOMIC GROWTH

Insufficient power and energy supply, especially in terms of electricity, pose significant challenges to a nation’s economic growth. Inadequate power supply hampers productivity and becomes a barrier to rapid economic development.

 

 

 

  1. Economic Reform Programs

Before June 2004, Nigeria had a total of 89 banks with a network of 3,382 branches. However, the banking sector at that time had several structural and operational weaknesses, including the following:

  1. Limited capital base with a few dominant banks.
  2. Instances of insolvency and illiquidity.
  3. Overreliance on public sector deposits and foreign exchange trading.
  4. Poor quality of assets.
  5. Weak corporate governance leading to low depositor confidence.
  6. Banks unable to adequately support the real sector of the economy, contributing only 24% to GDP, compared to an African average of 78% and 272% in developed countries.

 

Under the leadership of Professor Charles Soludo, the Central Bank of Nigeria undertook significant reforms. This resulted in the reduction of the number of banks to 25, each with a minimum capital base of N25 billion. This move prompted mergers and acquisitions within the banking industry.

 

The objectives of this bank recapitalization effort

  1. Ensuring a strong financial foundation for banks.
  2. Increasing depositor confidence in banks.
  3. Enhancing the liquidity and solvency of banks.
  4. Boosting lending to the real sectors of the economy.
  5. Encouraging banks to engage in genuine retail banking rather than relying on public sector funds.

 

Indigenization, Nationalization, Commercialization, and Privatization Policies:

Indigenization can be defined as a government-led process aimed at increasing the participation of citizens (indigenes) in the ownership and management of business enterprises within the country. This policy seeks to reduce foreign dominance in certain sectors.

Nationalization refers to the transfer of privately owned businesses to government ownership, often for economic, social, or political reasons. Compensation is typically provided to the previous owners.

Commercialization involves restructuring state-owned enterprises to operate profitably and explore various avenues for generating income.

 

Privatization is the transfer of ownership and control of government-owned enterprises to private individuals or entities. This shift from public to private ownership aims to improve efficiency and competition.

Advantages of these policies include enhanced participation of citizens in the economy, reduced foreign control, promotion of industrialization, creation of job opportunities, and improved living standards. However, disadvantages can include discouraging foreign investment, concentration of wealth, potential for economic instability, and challenges in management.

 

Economic and Financial Crime Commission (EFCC):

Established in 2003, the EFCC is tasked with investigating financial crimes such as advanced fee fraud and money laundering. Its roles include sanitizing banks, aggressively investigating and prosecuting financial evasion cases, combating cybercrime, and advocating legislative changes to support anti-corruption efforts.

Independent Corrupt Practices Commission (ICPC):

The ICPC, established in 2000, aims to combat corrupt practices. Its functions include receiving and investigating public complaints about corruption, assessing practices of public bodies, advising on fraud prevention, educating the public, and reducing incidents of bribery and corruption.

 

National Agency for Food and Drug Administration and Control (NAFDAC):

NAFDAC is responsible for regulating and controlling the import, export, manufacture, advertisement, distribution, sale, and use of drugs, cosmetics, medical devices, bottled water, and chemicals. It conducts tests, ensures compliance with quality standards, registers products, establishes laboratories, and inspects imports.

 

Standard Organization of Nigeria (SON):

SON oversees standards in Nigeria, investigating materials and products, ensuring proper measurements, promoting standardization, distributing standard samples, registering and regulating marks and specifications, and fostering industry and public interest in maintaining

acceptable standards. It operates under the Nigeria Standard Council and aims to uphold quality and standardization in the country.

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