Academic journal article Journal of Sustainable Development

The Developmental State Debate: Where Is Nigeria?

Academic journal article Journal of Sustainable Development

The Developmental State Debate: Where Is Nigeria?

Article excerpt

Abstract

There is a renewed interest in the idea of the developmental state in Africa. This is partly a reaction to the failure of the pro-market reforms under the Washington Consensus to deliver socio-economic progress. Nonetheless, the Nigerian economy, after fifty years of political independence and economic governance and management, has suffered from fundamental structural defects and has remained in persistent stagnation. Many features in Nigeria's economy combined with other non-economic factors have produced a weak private sector that is largely oriented towards distributive activities. The productive and technological base is weak, outdated, narrow, inflexible and externally dependent. Furthermore, infrastructure is poor, inadequate and lacks maintenance. Thus, the effectiveness of incentives has been generally low, giving rise to inadequate utilization of the factors of production. The paper blames the country's overdependence on single product export-crude oil-without profound efforts to diversify the economy as a key weakness. Questions that the paper tries to address are; is Nigeria at present, making enough efforts to move towards the identified features of a developmental state? Does it require a sound re-thinking into the development agenda with regards to the various key issues relevant to developing countries? How can we break out of this vicious cycle? Correcting this scenario forms the crux of this paper. The paper suggests different solution scenarios to many of the problems on the platform of the developmental state paradigm. As such, the country should develop a class of entrepreneurs that possess the tacit knowledge required for rapid industrialization and development of the manufacturing sector. This proactive stance with capable institutions would move Nigerian economy to the desired direction.

Keywords: Market, Developmental state, Industrial policy

1. Introduction

The financialisation of the Nigerian economy resulted in distorted concentration of investment on short term liquid assets to the detriment of investment in the real economy, is a major challenge to the country. As a result, the country does not have a class of entrepreneurs that possess the tacit knowledge required for rapid industrialization. In this regard, the current inflation targeting framework is not enough and further unguided liberalization could stifle the efforts to develop the real economy (Note 1). Due to the policy errors of the past, the Nigerian economy, after fifty years of political independence and economic governance and management, has suffered from fundamental structural defects and remained in a persistent state of stagnation. The huge earnings from the enormous crude oil deposits are monetized giving rise to unequal distribution of income. Corruption is endemic and has eaten deep into every facet of national life. The productive and technological base is weak, outdated, narrow, inflexible and externally dependent. The infrastructure is poor, inadequate and lacks maintenance. The effectiveness of incentives has been generally low, giving rise to inadequate utilization of the factors of production. Furthermore, policy instability and summersaults is discouraging foreign investment despite the huge domestic market and the strategic location of the nation. The obvious effects have produced a weak private sector largely oriented towards distributive activities. How can we break out of this vicious cycle? It requires a sound re-thinking of the development agenda with regards to the various key issues relevant to developing countries. African countries including Nigeria have passed through series of policy regimes - import substitution strategy, export-oriented policies, structural adjustment programmes, privatization and commercialization, and most recently, liberalization policy among others. These policies have not augured so well. The reason for this is largely because any intervention has to be all embracing for it to make impact (Note 2). …

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