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  3. The Relative Contribution Of Public Sector And Private Sector Investment To Nigeria’s Economic Development Since 1960

The Relative Contribution Of Public Sector And Private Sector Investment To Nigeria’s Economic Development Since 1960

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THEORETICAL ISSUES
It  is  generally  agreed  that  economic  development  implies  sustained  increases  in  income  per capita  coupled  with positive  structural  changes  (political,  cultural  and  social  etc)  within  an  economy  over  a long  period  of  time.  It  follows  that  economic  growth  may  not  result  in  economic  development.  For  development  to  occur,  there  must  be  visible  positive  changes  to  income  distribution,  quality  and  quantity  of  education,  access to  basic  needs,  modern  technology,  changes  in  political  structures. 

It is  often  argued  that  investment  stimulates growth;  within  a  market  economy,  private  sector  investment  remaining  the  engine  of  growth  with  the  public  sector  providing  the  enabling  environment.  In the  classical  sense,  the  enabling  environment  may  mean  providing  law  and  order to  allow  the free market to  thrive.  In  recent times,  the  public  sector  has  been  know  to go  beyond  provision  of  law  and  order.  The  public  sector  for  the  most  part  regulates,  intervenes in the  system  in order  to  allow  the  market  to  function  properly.  Government  puts  in  place  appropriate fiscal, monetary  and  exchange  rate  policies  to  ensure  the  function  of  the  system.  These  political action  are  crucial  if the  private  sector  is to  play  its  role  properly.  Theoretical, the private  sector  investments  remain  the  engine  of  growth.  Through  capital  accumulation, the  private  sector  can  ensure the  reproduction  and  sustainability  of a  market  system. 

However, the  controversy  centers on the   public  sector  vis  -  a –vis  public  sector  investment.  In  a simple  Keynesian  framework,  high levels  of  government  consumption  are  likely  to  increase  employment,  profitability  and  investment  via  multiplier effects  on  aggregate  demand.  There  are  those  who  maintain  that  government  consumption  will  “crowd  out”  private  investment  by  dampening  any  economic  stimulus  in the  short run  and  in the  long – run  by  reduction capital  accumulation.  Either  way,  the  link  is  between  levels  of  government  spending  and  economic  activity  rather than  factor  productivity. 

There  is  no  general  agreement  regarding the  relationship  between  government  spending  and  economic  growth.  Researchers  have  arrived  at  different  results.  Using  a  sample  of  96 developing  countries,  Landau  (1983)  inferred  that  big  government,  measured  by  the share  of  government  consumption expenditures  in gross  national  product (GNP) or  gross  domestic  product  (GDP),  reduced  the  growth  of  per capita  incomes.  Landau  (1986)  reaffirmed  his  earlier  findings  by  examining  other set of  variable  influencing  economic  growth;  these variable  included  per capita  income,  the  structure of  production,  population and  global  economic  conditions. 

DEVELOPMENT OF INDUSTRY AND MANUFACTURING  
INTRODUCTION 
an  industry  connotes  a  number  of  firms  production  similar  goods.  In  light   of the  foreign,  industrialization  refers to the  process  of  developing  the  capacity  of  a  nation  to  master and  locate  within  its  borders,  the  overall   industrial  process  involving  the  production  of  raw  materials,  production for  intermediate  products  for  further  production,  fabrication  of the  machines  and  tools  needed  for  the  manufacturer  of the  desired  products   and  of  other  machines;  skills  to  operate,  maintain and  reconstruct the  machines and  tools;  skills  to  manage  factories  and  to  organize  the  production  process.  Industrialization  thus  transcends  the  manufacturing  of  consumer  goods  and  when  pursued  genuinely  it  can  transform  structurally  the  economy.  But  what  has  been  found  in  Nigeria  and  most  other  less  developed  nations  (LDCs)  has  not  been  industrial  development  but  manufacturing  and  assembly  activities  carried  out  within  the  ambit  of   import  substitution. 

Developing/  under  developed  nations  strive  to  industrialize their  economies  for  many  reasons.  Among  these are  the  desire  to  increase  national  income,  productivity  and  hence  the  capacity  of the  economic  system  to  deliver  higher  levels  of  wealth  and  welfare  to  the  people;  secure  fuller employment,  expand  the  market for  local  raw  materials  ans  improve  the  stability  of  foreign  exchange  position  through  import  substitution and  export  promotion  industries.  

In light  of  the  important  role  the  industrial  should  play  in the  structural  transformation  of  the  economy, the  Nigerian  government  regards  genuine  industrialization  as  a  sine  qua  non  in  national  effects  to  achieve  the  degree  of  self  -  reliance  and   confidence without which a nation can neither have stability necessary for social harmony at home nor muster the needed respect and he means required for meaningful involvement in international affairs and interaction. Hence, over the years, a number of fiscal, monetary,
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(2014, 12). The Relative Contribution Of Public Sector And Private Sector Investment To Nigeria’s Economic Development Since 1960.. ProjectStoc.com. Retrieved 12, 2014, from https://projectstoc.com/read/5305/the-relative-contribution-of-public-sector-and-private-sector-investment-to-nigeria-rsquo-s-economic-development-since-1960-3700
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