ABSTRACT
The advancement of the economic situation of a country is the main aim of the Government of the state.
How the various Governments of the states go about this business of advancing the economic situation of the country has been an area of focus to many scholars. In analyzing how the Government fares in its pursuance of this lofty objective, the growth rate of the Gross Domestic Product of the, country is normally used as the major criterion for such analysis. This study is an extension of the existing views and theories on the subject.
To accomplish this, the government fiscal actions, that is, its expenditures and revenue, are correlated to the Gross Domestic Product, to show how such Government fiscal actions advance this objective of economic development. In a similar vein, unemployment rate and inflation rate are also correlated to the fiscal actions of the government, to show how these actions of government affect these indices of economic performance.
From the result of the regression analysis, the study proved that government fiscal actions are positively related the level of Gross Domestic Product and that Unemployment rate and inflation rate are significantly affected by Government's fiscal actions.
The significance of the hypothesis tested suggests that the theories are valid and relevant to improving Government fiscal actions.
CHAPTER ONE
1.1 INTRODUCTION
The good economic performers of the 1960s, 70s and early 80s in Africa turned out to be disappointments in nearly all cases, in large part due to increasing inefficiencies bringing growth and investment to a halt. On the contrary, the recent improvement in economic performance in several African countries have been fuelled by the removal of market distortions and to a lesser extent by structural change, while significant progress in terms of higher investment rates has been absent (see, for example, Fischer, Hernandez-Cats and Khan,1998).
Nigeria has been a country of paradoxes. It is a country abundantly blessed with natural and human resources but in the first four decades of its independence, the potentials remained largely untapped and even mismanaged. With a population estimated at about 140 million, Nigeria is the largest country in Africa and one-sixth of the black population in the world. Nigeria is the 8th largest oil producer and has the 6th largest deposit of natural gas in the world. Currently, barely 40 percent of the arable land is under- cultivation. With over 100 tertiary institutions producing more than 200,000 graduates per annum, the basic human capital for progress is there. There are abundant solid mineral deposits that remain largely untapped. It is estimated that over 5 million Nigerians live outside of Nigeria, with tens of thousands as world class medical doctors and other professionals. In the midst of these resources, Nigeria (on the average) stagnated over the period up to 1999. The poverty situation worsened consistently such that by 1999, the incidence of poverty was estimated at 70 percent.
A classic example to underscore the scope of our misfortune is to compare Nigeria with Indonesia and even Malaysia. By 1972 before Nigeria and Indonesia had the first oil boom, both countries were comparable in almost all counts: agrarian societies; multi-ethnic and religious societies; with comparable size of GDP; etc. Both experienced oil boom in 1973 and thereafter, but took different policy choices. The outcomes of the differences in policy regimes are such that today, while manufactures exports as percentage of total exports is about 40 percent in Indonesia, it is less than one percent in Nigeria where we were in the 1970s. We hear of how Malaysia got their first palm seedlings from Nigeria in the early 1960s when oil palm produce was already a major export of Nigeria. In the 1990s, it was estimated that Malaysia's export of palm oil produce earned it more than Nigeria earned from oil exports, and Nigeria had become a net importer of palm produce.
In economic terms, the decade of the 1990s witnessed an average GDP growth rate of 2.8 percent- just about the rate of growth of the population (2.83). This means that on a per capita basis, growth was zero during the decade of the 1990s and no wonder poverty incidence worsened to 70%. All basic infrastructure was in a state of crisis, with barely 1700MW of electricity being generated for a country that needed at least 40,000. Needless to recount the dilapidated transportation infrastructure and the nascent, albeit fragile financial system that was ill suited to the demands of socio-economic transformation. Unemployment and poverty were the twin faces of the economy. Real wages were declining precipitously since the 1970s until the wage increases in 2000 that began to reverse the trend but not yet recovered to the mid 1970s levels in real terms.
Nigeria has had lost decades of stagnant growth and has been one of the slowest growing economies in the world on a per capita basis in the last 30 years despite receiving about $300 billion from oil exports. For several years, the development challenge for Nigeria became the diversification of the productive base away from oil. Successive governments took up this challenge in the design and implementation of several plans and policies. However, the attempts at achieving a more rapid growth of the industrial sector led to investment in several projects that turned out to be "white elephants".
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