The document outlines a course on development policies, focusing on the rationale,
methodology, and major development problems faced by less-developed countries (LDCs).
Overview of Development Problems and Policies Course
The course on development problems and policies is structured into seven major parts, focusing
on various socio-economic issues and their corresponding policies.
Structure of the Course Modules
• The course consists of seven major parts, totaling ten study sessions.
• Major parts include:
o Rationale and Methodology of the Problems Approach
o Macroeconomic Development Problems and Policies
o Agricultural Development Problems and Policies
o Industrial Development Problems and Policies
o Problems of Physical Infrastructure
o Problems of International Trade
o Social and Environmental Development Policies
Study Session 1: Problems Approach to Development Policies
The first study session emphasizes the rationale and methodology behind the problems
approach to development policies.
• Development problems are defined as social concerns like poverty, disease, and
insecurity.
• Development policies are actions designed to address these problems.
• The problems approach is pragmatic, focusing directly on issues rather than theoretical
diversions.
• Key characteristics of less-developed countries (LDCs) include inadequate infrastructure,
monopoly market structures, and non-competitive external economic relations.
Major Development Problems in LDCs
This section outlines the fundamental development problems arising from the structure of
LDCs.
• Major issues include:
o Inadequate physical and social infrastructure.
o Monopoly market structures leading to capital flight and inflation.
o Non-competitive external economic relations resulting in chronic balance of
payments deficits.
• These problems contribute to high poverty rates and income inequality.
Role of Development Indicators
Development indicators serve as measurable aspects of social concerns, linking development
problems to policies.
• Indicators help assess the effectiveness of development policies.
• Examples include child mortality rates, poverty indices, and inflation rates.
• They provide a means to evaluate progress in addressing development issues.
Selected Major Development Indicators
A selection of key development indicators is highlighted for assessing progress in LDCs.
• Industrial output growth rate is a reliable measure of economic health.
• Inflation rate reflects economic stability and income distribution.
• Child mortality and malnutrition rates indicate poverty levels and quality of life.
• Human Development Index (HDI) combines income, education, and life expectancy
metrics.
Summary of Learning Outcomes
The session concludes with a summary of key learning outcomes related to development
problems and policies.
• Understanding the rationale for the problems approach.
• Identifying major development problems in LDCs.
• Recognizing the importance of development indicators in policy formulation and
assessment.
Macroeconomic Model and Equilibrium Conditions
The macroeconomic model establishes the relationship between aggregate supply and demand
to determine GDP.
• Equilibrium condition: Yt = (CPt + CGt) + (IPt + IGt) + Xt - Mt.
• Aggregate supply includes GDP (Y) and imports (M).
• Aggregate demand consists of private and government consumption (CP, CG),
investment (IP, IG), and exports (X).
• Investment expenditure (It) is critical for growth and development, expressed as It = St +
Ft.
• Aggregate savings (St) is defined as St = Yt - Ct, where Ct is total consumption.
Investment Expenditure Financing Sources
Investment expenditure is financed through various savings and foreign capital inflow.
• It is financed by private-sector savings (spYt), government savings (sgτgYt), and foreign
capital inflow (ftYt).
• The equation for investment expenditure is It = (sp + sgτg + ft)Yt.
• Government revenue (R) is dependent on GDP (Y) through tax rates (τ).
Growth Model and Behavioral Equations
The growth model connects investment expenditure to changes in GDP, facilitating development
policy analysis.
• The growth model is an extension of the Harrod-Domar model, relating changes in GDP
(∆Yt) to investment expenditure (It-1).
• The equation is ∆Yt = bIt-1, where b reflects the productivity of investment.
• The incremental output-investment ratio (b) is defined as b = ∆Yt/It-1.
Major Macroeconomic Development Problems
Less-developed countries face significant macroeconomic development challenges that hinder
growth.
• Key problems include inadequate private-sector savings, government savings, foreign
capital inflow, and an unfavorable investment environment.
• Rapid inflation and high nominal interest rates further exacerbate these issues.
• Political instability and corruption contribute to the challenges faced by these
economies.
Agricultural Sector Development Objectives
The agricultural sector plays a crucial role in national development and food security.
• Objectives include eradicating hunger, providing raw materials for industries, generating
employment, and ensuring foreign exchange earnings.
• Agricultural development is essential for sustainable economic growth and balanced
regional development.
Constraints to Agricultural Development
Several factors hinder agricultural development in less-developed countries, particularly in
Nigeria.
• Traditional land tenure systems limit land acquisition and productivity.
• Primitive low-productivity technology persists, affecting output.
• Inadequate government support and infrastructure contribute to the challenges.
• Insecurity, political instability, and natural disasters further complicate agricultural
progress.
Cornerstones of Agricultural Development Policies
Fundamental policies are essential for effective agricultural development and transformation.
• Key cornerstones include functional land use reform, irrigation, and optimal water
resource management.
• These policies aim to enhance agricultural productivity, ensure sustainable practices, and
promote investment in the sector.
Sustainable Agricultural Development Strategies
The text discusses the importance of sustainable agricultural practices and infrastructure
development for enhancing agricultural productivity and economic growth in Nigeria.
• Emphasis on reforestation and fruit tree cultivation in drought-prone areas to combat
desertification.
• Suitable rural transportation should utilize auto-mobile tricycles for better access to
rough roads.
• Alternative energy systems like bio-gas, solar, and wind power are recommended for
rural electrification.
• Security in rural areas is crucial to encourage agricultural investment and protect
farmers.
• Provision of social services such as schools and health centers is essential for attracting
agricultural entrepreneurs.
Importance of Water Resource Management
The text highlights the critical role of irrigation and water resource management in modern
agricultural development.
• Irrigation allows for year-round farming, increasing agricultural output and productivity.
• Effective water management can help combat desertification in drought-stricken regions.
• Without proper irrigation, agriculture cannot meet the demands of a rapidly growing
population.
Complementary Agricultural Development Policies
The text outlines essential policies that complement agricultural development strategies.
• Effective credit schemes are necessary to provide farmers with the financial resources
needed for growth.
• Farmers should be organized for involvement in policy design and implementation to
ensure accountability.
• Land fertility preservation and promotion schemes are vital for sustainable agricultural
practices.
• Technological development policies should reform research institutes to better serve
farmers' needs.
• Government subsidies and price support are crucial for maintaining agricultural viability.
Indicators for Evaluating Agricultural Policies
The text discusses the need for specific indicators to evaluate agricultural development policies
effectively.
• Agricultural productivity, yield per acre, and agricultural output growth are key
indicators.
• Net food export and per capita income of rural households should also be considered.
• Evaluation must account for inflation and price instability to ensure accurate
assessments.
Challenges Facing Agricultural Development in Nigeria
The text critically reviews the shortcomings of agricultural development policies in Nigeria.
• Agricultural output growth has stagnated at an average of 1.1% from 2000 to 2012.
• Low agricultural productivity, particularly in cereal yields, remains a significant issue.
• The land use and tenure system has not effectively promoted security of tenure for
farmers.
• Inadequate infrastructure, including energy and transportation, hampers agricultural
development.
• Government support for agriculture has been inconsistent and ineffective, leading to
continued food imports.
Summary of Study Session Insights
The text summarizes key learnings from the study session on agricultural development.
• Fundamental policies include land use reform, irrigation management, and rural
infrastructure development.
• Complementary policies involve credit schemes, farmer organization, land fertility
schemes, and technological reforms.
• Appropriate indicators for monitoring agricultural policies are essential for evaluating
effectiveness.
• The review highlights the persistent challenges in Nigeria's agricultural sector and the
need for substantial policy changes.
Overview of Nigeria's Industrial Development Policies
The text discusses the evolution, evaluation, and challenges of Nigeria's industrial development
policies from the 1960s to the present.
Historical Context of Industrial Policies
The industrial policies in Nigeria evolved through various national plans aimed at enhancing
industrial development.
• The 1962-68 National Plan focused on regional plans and substantial infrastructural
development, including the Kainji Dam project.
• The Nigerian Industrial Development Bank was established in 1964 to support
indigenous private sector development.
• The 1970-74 Plan aimed for self-reliant industrial development, leading to the Nigerian
Enterprises Promotion Act of 1973.
Performance Evaluation of Manufacturing Sector
The manufacturing sector's performance has been inconsistent, with periods of growth
followed by significant declines.
• Manufacturing growth rates in the 1960s and 70s ranged from 9% to 19%.
• A decline of about 20% in manufacturing output occurred between 1981 and 1986 due
to foreign exchange shortages.
• The sector faced a decline averaging 1.7% per annum from 1990 to 1999.
Challenges Faced by Industrial Policies
Nigeria's industrial policies have faced numerous challenges that hindered effective
implementation and growth.
• The manufacturing sector lacked technological self-reliance and international
competitiveness.
• Inadequate foreign exchange and high dependency on oil revenues led to significant
declines in industrial output.
• Political instability and poor infrastructure further exacerbated the challenges faced by
the industrial sector.
Structural Adjustment Programme (SAP) Impact
The SAP introduced significant changes to Nigeria's industrial policy framework, emphasizing
deregulation and privatization.
• The SAP aimed to promote industrial competitiveness and reduce dependence on oil.
• The manufacturing sector's output continued to decline, with only the Paints industry
showing modest growth during the 1990s.
Infrastructural Development Policies Overview
Inadequate physical infrastructure has been a critical constraint to Nigeria's industrial
development.
• Key components of physical infrastructure include energy, transportation, and
communication systems.
• The lack of reliable electricity and transportation services has severely limited industrial
capacity utilization.
International Trade Problems for Less-Developed Countries
Less-developed countries, including Nigeria, face significant challenges in benefiting from
international trade.
• The structure of LDCs often leads to specialization in primary commodity exports, which
are subject to price and income inelasticity.
• Rapid inflation, political instability, and inadequate infrastructure further hinder
competitiveness in international markets.
Conclusion on Industrial Development Policies
The overall performance of Nigeria's industrial development policies has been disappointing
due to various internal and external factors.
• The lack of substantial investment, appropriate technology, and critical infrastructure
has stunted industrial growth.
• Political instability and corruption have further complicated the implementation of
effective industrial policies.
Terms of Trade and Its Significance
Terms of trade is a crucial economic indicator that reflects the relative price of a country's
exports to its imports.
• Defined as the ratio of the price index of exports (PX) to the price index of imports (PM).
• A rising terms of trade indicates a nation is gaining in commodity exchange, while a
falling index suggests increasing costs for imports relative to exports.
• Less-developed countries (LDCs) have experienced declining terms of trade due to falling
prices of primary commodities and rising prices of manufactured goods.
Factors Determining International Trade Competitiveness
Several critical factors influence a country's competitiveness in international trade, regardless of
its resource endowment.
• Domestic price stability is essential to check inflation.
• The scale of production capacity and its utilization rates significantly affect
competitiveness.
• A favorable investment environment, including infrastructure and political stability, is
crucial for business operations.
• Appropriate trade policies and industrial strategies are necessary for enhancing
competitiveness.
• These factors are often lacking in less-developed countries, which face rapid inflation
and low production capacity.
International Trade Problems of Nigeria
Nigeria's international trade has been heavily reliant on crude oil exports, leading to significant
challenges in diversifying its economy.
• The share of primary agricultural exports has dropped to below 4% since the 1980s,
while crude oil exports peaked at over 98% during 1999-2001.
• Despite being an OPEC member, Nigeria's terms of trade have been adverse for decades,
fluctuating around 100.
• Efforts to diversify the economy have been hindered by corruption, inadequate
infrastructure, and a lack of political will.
• The manufacturing sector's contribution to exports has consistently remained below 3%
since 2000.
Import Substitution and Export Promotion Policies
Import substitution and export promotion are two contrasting trade policies that have been
implemented in less-developed countries.
• Import substitution aims to develop local industries to replace imported goods but has
generally failed due to inefficiencies and high production costs.
• Export promotion focuses on increasing exports of manufactured goods but faces
challenges from protectionist policies in developed countries.
• Both strategies have not significantly improved trade performance in less-developed
countries, including Nigeria.
Exchange Rate Policies and Their Impact
Exchange rate policies play a vital role in determining a country's trade balance and economic
stability.
• Fixed exchange rate regimes can lead to chronic balance of payments deficits due to
excess demand for foreign exchange.
• Deregulated foreign exchange markets may promote balance of payments equilibrium
but can also lead to currency depreciation and instability.
• Currency devaluation is often ineffective in less-developed countries due to the inelastic
demand for imports and exports.
Regional Economic Integration and Bilateral Trade
Regional economic integration and bilateral trade agreements can enhance trade and
development prospects for less-developed countries.
• Such integrations allow for intra-regional specialization and access to larger markets,
promoting economies of scale.
• Successful regional integration requires efficient transportation, security arrangements,
and equitable development among member countries.
• Bilateral trade agreements can also facilitate trade by allowing countries to exchange
goods of mutual advantage.
Social and Environmental Development Policies
Addressing social and environmental issues is essential for sustainable economic development
in less-developed countries.
• Social development problems include poverty, inequality, unemployment, and
inadequate access to education and healthcare.
• Environmental issues encompass pollution, deforestation, and urban overcrowding,
often exacerbated by economic growth.
• Effective policies are needed to tackle these challenges and ensure long-term
sustainability of development efforts.
Social and Environmental Development Problems
The text discusses the interrelated issues of social and environmental development,
emphasizing their impact on economic growth and sustainability.
• Social development problems include poverty, joblessness, income inequality, and
health hazards.
• Environmental issues such as gas flaring, oil spills, and pollution have devastated
agricultural land and increased health risks.
• The consequences of neglecting social and environmental issues lead to unsustainable
development and political instability.
Major Social Development Policies
The text outlines essential policies aimed at addressing social development challenges like
poverty, disease, and inequality.
• Food and agricultural development is crucial for ensuring food security and affordability
for all citizens.
• Job creation initiatives and subsistence allowances for the unemployed are necessary to
reduce urban migration.
• Infrastructure development should focus on equitable distribution, particularly in
transportation and energy sectors.
• Increased government budget allocations to education, agriculture, and healthcare are
essential for effective social policies.
Major Environmental Development Policies
The text categorizes environmental policies into those requiring global and national action to
combat environmental degradation.
• Global action is needed for forest preservation, promotion of sustainable production
patterns, and alternative energy systems.
• National policies should promote mixed farming, discourage deforestation, and
encourage pollution-free transportation methods.
• Heavy taxation on hydrocarbon fuels and strict regulations on tree felling and bush
burning are necessary for environmental protection.
Environmental Problems in the World and Nigeria
The text identifies significant environmental challenges faced globally and specifically in Nigeria.
• Global issues include global warming from carbon emissions and deforestation driven by
timber demand.
• Nigeria's unique problems involve urban congestion, oil pollution in the Niger Delta, and
inadequate waste management.
• Desertification and environmental degradation are exacerbated by bush burning and
deforestation practices.
Social and Environmental Development Indicators
The text emphasizes the importance of development indicators in assessing the effectiveness of
social and environmental policies.
• Key indicators include urban population growth rates, prevalence of diseases, child
mortality rates, and access to safe water.
• Carbon dioxide emissions per capita and unemployment rates are also critical for
evaluating social and environmental health.
• The prevalence of top notifiable diseases serves as a significant indicator of overall social
and environmental policy success.
Assessment of Nigeria's Development Policies
The text evaluates Nigeria's performance in social and environmental development, highlighting
persistent challenges.
• Child mortality rates remain high, with over 120 per thousand, and malaria prevalence is
increasing.
• Urban population growth has risen to 47% from below 40% in 2005, indicating
ineffective urban management.
• Overall, Nigeria has not succeeded in improving social and environmental development
policies, as many indicators show stagnation or decline.
