The Impact of Infrastructure on Economic Growth: A Case Study of Nigeria (1980-2011)
Chapter One
OBJECTIVE OF THE STUDY
The broad objective of this study is to ascertain the role of infrastructure in the actualization of a sustainable economic growth in Nigeria. A way of doing this is to measure the effects of socio-economic infrastructure facilities on the growth process of the economy expected to hold for a very long term so much so that it catapult into the pace of economic growth.
The specific objectives are:
- To examine the influence of government expenditure on health and economic growth in Nigeria.
- To examine how education has been able to influence economic growth.
- To analyze the trend of economic growth and infrastructure growth in Nigeria.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INFRASTRUCTURE AND GROWTH
The study of infrastructure investment in economics has been prone to recurring and then fading ‘speculative bubbles of economics research’ (Gramlich, 1994, p. 1176). David Aschauer (1989a,b,c, 1993) triggered the most recent of these bursts of activity, particularly in the empirical literature. His series of papers sought to establish an econometric link between macro-level infrastructure investment and aggregate productivity. Paul Krugman’s (1991) theoretical model, in which infrastructures such as road and rail lowered transport costs enabling increasing returns, strengthened the intuition underpinning Aschauer’s empirical work. Alicia Munnell’s work (1990, 1992) buttressed Aschauer’s findings. Munnell (1990, p. 70) argued: The conclusion is that those [US] states that have invested more in infrastructure tend to have greater output, more private investment, and more employment growth. This evidence supports results found in earlier studies. The empirical work also seems to indicate that public investment comes before the pickup in economic activity and serves as a base, but much more work is required to spell out the specifics of the link between public capital and economic performance. Aschauer and Munnell’s macro-level studies and the ‘new economic geography’ à la Krugman set the tone for a slew of publications in the next two decades in academic journals in economics that, notwithstanding their nuances, advanced the primary claim that more public investment in infrastructure is better. Sanchez-Robles (1998, p. 106), for example, found ‘a positive impact of public capital on the growth rate of output during the transition to a steady state’ in two different samples of countries. Fernald (1999) found that the US interstate highway system was highly productive. Vehicle-intensive industries benefited from road building in particular. Similarly, Fan and Zhang (2004) and Donaldson (2010) advanced the proposition that infrastructure supported increased income and productivity: Using data on rural infrastructure, Fan and Zhang (2004, p. 213) found that: [First] investing more in rural infrastructure is key to an increase in overall income of the rural population. Second, the lower productivity in the western region is explained by its lower level of rural infrastructure, education, and science and technology. They proposed increasing the level of public capital ‘to narrow’ the difference in productivity between poorer regions and other regions. Similarly, using observations on trade flow data between 45 regions in India, Donaldson (2010, p. 1) advocated that more investment in railroads ‘reduced trade costs, reduced interregional price gaps, and increased trade flows’. Despite its broad appeal, the Aschauer and Munnell line of thinking was not universally accepted even among other macro scholars. A series of papers e.g. Eisner (1991); Gramlich (1994); Evans and Karras (1994); Holtz-Eakin and Schwartz (1995) though generally sympathetic to the basic argument, brought into question the research design, methods, and the robustness of causal inference of the Aschauerstyle studies. Instead of overturning the results of the earlier studies, macro scholars took the discussion in a different direction. Where direct productivity effects were found to be weak or not found at all, the macro-studies began to insist on indirect impacts through spillover effects. Using aggregate and regional-level data from Spain, Pereira and Roca-Sagalés (2003, p. 238), for example, argued: aggregate effects of public capital cannot be captured in their entirety by the direct effects for each region from public capital installed in the region itself. . . . Ultimately, the aggregate effects are due in almost equal parts to the direct and spillover effects of public capital. Using evidence on fixed-line telecommunications networks, Röller and Waverman (2001) argue that such networks have a positive causal link on economic growth but typically only when a near universal service is provided. This characteristic they attribute to ‘network externalities: the more users, the more value is derived by those users’ (ibid., p. 911). Vickerman (2007, p. 598) similarly argues that the cost–benefit analysis (CBA) of large-scale infrastructure projects, ‘needs to be able to incorporate network impacts which are notoriously difficult to identify and model’.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to the impact of infrastructure on economic growth: a case study of Nigeria (1980-2011)
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information the impact of infrastructure on economic growth: a case study of Nigeria (1980-2011). 200 staff of national bureau of statistics was selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the impact of infrastructure on economic growth. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of the infrastructure on economic growth
Summary
This study was on the impact of infrastructure on economic growth: a case study of Nigeria (1980-2011). Three objectives were raised which included: To examine the influence of government expenditure on health and economic growth in Nigeria, to examine how education has been able to influence economic growth, to analyze the trend of economic growth and infrastructure growth in Nigeria. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of national bureau of statistics. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made statisticians, accountants, administrative staff and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
The linkage between infrastructural development and economic growth outcomes is one of the most popular topics for debates in recent scientific literature and economic research. The role of infrastructure is widely analysed as very vital to household and firms as availability and quality of infrastructure result in different decisions to invest and may influence migration, business establishment location. Although, the result of the two estimations speak that infrastructural development has a positive linkage with our economy growth but, the researchers believe this is in term of availability and quality of infrastructure in our economy .And also, the magnitude of the contribution leaves a lot to question. This questionable contribution or lack of quality infrastructural development has been seen in the relocation of some firms out of Nigeria to other neighbouring countries like Ghana etc. The relocation of some firms out of Nigeria which is as a result of weak quality of our infrastructure base has not only affected the economy negatively in the short run but also in the long run which are manifesting in a lot of social/ youth restiveness like Niger Delta militancy, boko haram in the North to mention but a few.
Recommendation
Infrastructure development is one of major elements of structural reforms in developing economy like Nigeria because of its expected large economic and social impact. As can be inferred from the studies by other researchers, infrastructure investments alone do not have a significant influence on economic growth. The institutional environment is a very important complement, allowing infrastructure investments to be translated into economic growth. Based on this, the following are the recommendations of this study: In the area of transportation, more roads should be constructed and the existing one adequately maintained particularly the ones already taken over by gully erosion as it will lead to the reduction of production of firms as well as inability of the firms to evacuate consumables both final and intermediate from rural to urban centers.
REFERENCES
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