IUIIHHIHHIIWIH‘UIHIHUI“llHIIIII‘IHWIIWUI .1 3 1293 01022 LIBRARY Michigan State University PLACE II RETURN BOX to man this chockout from your record. TO AVOID FINES Mom on or Mon dd. duo. DATE DUE DATE DUE DATE DUE MSU I. An Affirmativ- ActionIEqual Oppommtyl Institution W THE LEADING SECTOR APPROACH TO ECONOMIC DEVELOPMENT: A CASE STUDY OF NIGERIA COMPARED TO VENEZUELA 1971-1990 BY Nicholas I. Nwabueze A DISSERTATION Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Resource Development 1994 ABSTRACT THE LEADING SECTOR APPROACH TO ECONOMIC DEVELOPMENT: A CASE STUDY OF NIGERIA COMPARED TO VENEZUELA 1971-1990 BY Nicholas I. Nwabueze The course of economic development chosen by various countries tends to require structural transformation to achieve economic development. The means of achieving economic development for developing countries evolved into two principal methods: the leading sector approach and the balanced growth method. These two methods differ sharply in their scope and content. This study examined the economic development path chosen by Nigeria in 1974 to achieve its economic development objectives. To understand the nature of the debate between the opposing points of view, a definition of economic development on which to base this evaluation was sought. The debate between the leading sector approach and the balanced growth method lay in the procedure and steps for development. The leading sector scholars and the balanced growth group offered contradictory suggestions and disagreed on what constituted the centerpiece of economic development. The balanced growth group suggested simultaneous investment in different sectors of the economy, while the leading sector approach suggested the concentration of resources in one sector that occupies a strategic place in the production process. Six important economic indicators were chosen and used to develop contrasting hypotheses that identified their respective positions. The intent was to measure the growth or decline of the six indicators and use the results obtained to evaluate the advantages/disadvantages of each approach. The method adopted was a case study of the economic development efforts of Nigeria as compared with Venezuela for a 20-year (1971-1990) period. The results obtained from the analysis led the author to conclude that neither of the two theoretical testing constructs were satisfactory for more definitively testing economic development effort. The "failure" to achieve more satisfactory economic development in Nigeria and Venezuela resulted largely from the lack of a satisfactory, centrally directed implementation of the economic policies in a coherent administration. Supporting the premise is the continued dependence on the petroleum industry for foreign exchange instead of deriving it from a much broader base supported by a diversified economy. DEDICATION To my father, A.B. Nwabueze, my mother Regina A. Nwabueze, for unwavering inspiration and support from the very beginning of life in me to this moment and for evermore. iv ACKNOWLEDGEMENTS It is difficult to fully acknowledge the numerous individuals who, through their support and understanding, contributed in one way or another toward the completion of this study. To everyone, I extend my true appreciation for the time, support, and understanding that was expended on me. A special word of thanks to Professor Paul E. Nickel, Chairperson of my guidance and dissertation committee. I have become a better person from his advice, counselling, encouragement, and support. His diligence, untiring interest, and continued optimism are traits I shall always strive to achieve. I also wish to express my sincere appreciation to Professors Milton H. Steinmueller, Daniel Broinstein, Tom Edens, and Lee James. Their fruitful comments and cordial guidance paved the way for the successful completion of this dissertation. A special word of appreciation is due to Professor Milton H. Steinmueller for his fatherly support and care during my entire period of stay in the graduate school. His urgings for patience, hard work, and perseverance were precious guideposts that I held onto to reach my destination. vi Gratitude is also extended to Professors Frank Fear (Chairperson, Department of Resource Development) and.Manfred Thullen for support and guidance during some very difficult periods preceding the completion of this study. A number of my friend also extended help and understanding' beyond 'the. constraints that are considered normal. Ms. Jill Malusek for patiently typing the many drafts and waiting without grudges for the many changes that became the final copy; Mr. Samuel Johnson for the numerous days offered in computer assistance; and Ms. Barbara Esteves for all the prodding, particularly editing the draft copies and helping me organize my thoughts. Finally, I am thankful and appreciative of the patience and understanding shown by my family, my wife Mrs. Sophie T. Nwabueze; our children, Nicholas, Jr., and Albert Nwabueze, especially through the difficult days imposed by the need for absence from home as I struggled to complete the class requirements, and acquire the numerous data and literature needed to complete this dissertation. TABLE OF CONTENTS LIST OF TABLES O O O O O O O C O C C O O O O O O O O Xi 1 CHAPTER I. INTRODUCTION . . . . . . . . . . . . . . . 1 II. III. IV. 1.1 STATEMENT OF THE PROBLEM 1.2 IMPORTANCE OF THE STUDY REVIEW OF RELATED LITERATURE . . . . . . . 24 2.1 THEORETICAL FRAMEWORK AND BACKGROUND 2.2 LEADING SECTOR APPROACH TO ECONOMIC DEVELOPMENT 2.3 BALANCED GROWTH APPROACH METHODOLOGY 0 O O O O O O O O O O O O O O O 4 4 3.1 HYPOTHESES AND TESTING PROCEDURES 3.2 HYPOTHESES 3.21 EMPLOYMENT 3.22 INCOME DISTRIBUTION 3.23 FOREIGN TRADE 3.24 LINKAGES 3.25 FOREIGN DEBT 3.26 ECONOMIC GROWTH STRUCTURE OF THE NIGERIAN ECONOMY (1900-1960) C O O O O C O C C O O O O O O 77 4.1 BRIEF HISTORY OF NIGERIA 4.2 DEVELOPMENT OF EDUCATION IN NIGERIA 4.3 DEVELOPMENT OF INDUSTRIAL/MANUFACTURING SECTOR 4.4 GLOBAL CHARACTERISTICS OF THE NIGERIAN ECONOMY AFTER INDEPENDENCE (1960-1974) 4.5 INDUSTRIAL DEVELOPMENT vii viii V. STRUCTURAL DEVELOPMENT OF VENEZUELA'S ECONOMY (1498 - 1974) . . . . . . . . . . 117 5.1 GENERAL BACKGROUND 5.2 DEVELOPMENT OF EDUCATION IN VENEZUELA 5.3 SUMMARY VI. NIGERIAN AND VENEZUELAN APPROACH TO ECONOMIC DEVE m PMENT O C O O O O C O O O O O O O O 1 4 1 6.1 FOUNDATION OF THE NIGERIAN AND VENEZUELAN ECONOMIC DEVELOPMENT MODELS 6.2 ROLE OF THE PETROLEUM SECTOR IN THE ECONOMIES OF NIGERIA AND VENEZUELA VII. COMPARATIVE DATA ANALYSIS AND TESTING OF THE HYPOTHESES C O O O O O O O O O O O 17 1 7.1 SECTORAL ANALYSIS OF THE NIGERIAN ECONOMY 7 2 EVOLUTION OF NIGERIA'S ECONOMIC STRUCTURE (1971-90) 7.3 EVOLUTION OF NIGERIA'S ECONOMIC STRUCTURE WITH RESPECT TO VENEZUELA (1971-1990) 7.4 OVERALL PERFORMANCE OF THE MINING AND QUARRYING INDUSTRY (HYDROCARBON INDUSTRY) 7 5 DEVELOPMENT OF AGRICULTURE 7 6 DEVELOPMENT OF TRADE 7.7 EVOLUTION OF IMPORTS 7 8 7 9 7 1 FOREIGN DEBT EMPLOYMENT AND INCOME DISTRIBUTION o EVOLUTION OF NIGERIA'S EMPLOYMENT STRUCTURE (1971-90) 7.11 NIGERIA'S INCOME DISTRIBUTION PATTERN VIII. CONCLUSION . . . . . . . . . . . . . . . . 225 8.1 SUMMARY OF FINDINGS 8.2 DEVELOPMENT PROSPECTS FOR NIGERIA 8.3 POLICY RECOMMENDATIONS APPENDICES SOURCES FOR APPENDICES . . . . . . . . . . . . . . 238 A1 NIGERIA GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLIONS OF NAIRA (1971-1990) 0 C O O O O O O O O O O C O O O 239 A2 A3 A4 A5 Bl BZ B3 B4 B5 C1 C2 C3 C4 C5 C6 ix NIGERIA GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLIONS OF NAIRA (1971-1990), SIMPLE ANNUAL GROWTH RATES (%) NIGERIA GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLIONS OF NAIRA (1971- 1990), PERIODIC GROWTH RATE AVERAGES (%) . . . . . . . . . . . . . NIGERIA GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLIONS OF NAIRA (1971-1990), SECTORAL DISTRIBUTION (%) . . . NIGERIA GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLIONS OF NAIRA (1971-1990), PERIODIC (5 YEAR) SECTORAL (%) DISTRIBUTION . . . . . . . . . . . . . . . VENEZUELA GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLION VENEZUELAN BOLIVARES (1971- 1990) . . . . . . . . . VENEZUELA GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLION VENEZUELAN BOLIVARES (1971-1990) SIMPLE ANNUAL GROWTH RATES (%) . . . . . . . . . . . . . . . . . VENEZUELA GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLION VENEZUELAN BOLIVARES (1971-1990) SECTORAL DISTRIBUTION (%) . . . . . . . . . . . . . VENEZUELA GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLION VENEZUELAN BOLIVARES (1971-1990) PERIODIC GROWTH RATE AVERAGES (%) . . . . . . . . . . . . . . . VENEZUELA GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLION VENEZUELAN BOLIVARES (1971-1990) PERIODIC (5 YEAR) SECTORAL (%) DISTRIBUTION . . . . . . . . NIGERIA SIMPLE GROWTH RATE PERIODIC AVERAGES FOR EXPORTS BY MAJOR GROUPS AND VALUES . . . NIGERIA SIMPLE GROWTH RATES FOR EXPORTS (EXCLUDING CRUDE OIL) BY MAJOR GROUPS AND VALUES (PERCENTAGES) . . . . . . . . NIGERIA EXPORTS BY MAJOR GROUPS, VOLUMES AND VALUES (EXCLUDING CRUDE OIL) (MILLIONS OF U.s. DOLLARS) (THOUSANDS OF METRIC TONS) . . NIGERIA SECTORAL DISTRIBUTION AVERAGES FOR IMPORTS IN PERCENTAGE BY MAJOR GROUPS AND VALUES (5 YEAR PERIODIC CYCLES) . . . . . . NIGERIA PERCENTAGES FOR IMPORTS BY MAJOR GROUPS AND VALUES . . . . . . . . . . NIGERIA SIMPLE GROWTH RATE PERIODIC AVERAGE FOR IMPORTS BY MAJOR GROUPS, VALUES AND VOLUME (1971-1990) 0 O O O O O O O O O D O O 241 243 244 246 247 249 251 253 254 255 256 258 260 261 263 C7 C8 C9 D1 D2 D3 D4 DS D6 D7 DB D9 E1 E2 E3 E4 E5 F1 F2 NIGERIA SIMPLE GROWTH RATES FOR IMPORTS BY MAJOR GROUPS, VALUE AND VOLUME (PERCENTAGES) . . . . . . . . . . . . NIGERIA PRINCIPAL IMPORTS BY MAJOR GROUPS, VALUE AND VOLUME (MILLIONS OF U. S. DOLLARS) (THOUSANDS OF METRIC TONS) . . . . . . . . . NIGERIA CRUDE OIL EXPORTS AND REVENUE (1971-1990) . . . . . . . . . . . . . . . . VENEZUELA SECTORAL DISTRIBUTION AVERAGES FOR IMPORTS BY MAJOR GROUPS AND VALUE (5 YEAR PERIODIC CYCLES) . . . . . . . VENEZUELA SIMPLE GROWTH RATE PERIODIC AVERAGES FOR IMPORTS BY MAJOR GROUPS AND VALUE . . . VENEZUELA PERCENTAGE FOR IMPORTS BY MAJOR GROUPS AND VALUE . . . . . . . . . . VENEZUELA SIMPLE GROWTH RATES FOR IMPORTS BY MAJOR GROUPS, VALUE AND VOLUME . . . . . . . VENEZUELA PRINCIPAL IMPORTS BY MAJOR GROUPS, VALUE AND VOLUME (MILLIONS OF U.S. DOLLARS) (THOUSANDS OF METRIC TONS) . . . . . . . VENEZUELA SIMPLE GROWTH RATE PERIODIC AVERAGES FOR EXPORTS BY MAJOR GROUPS AND VALUES . . . VENEZUELA SIMPLE GROWTH RATES FOR EXPORTS (EXCLUDING CRUDE OIL) BY MAJOR GROUPS AND VALUE (PERCENTAGES) . . . . . . . . . VENEZUELA EXPORTS BY MAJOR GROUPS, VOLUMES & VALUES (EXCLUDING CRUDE OIL) (MILLIONS OF U.S. DOLLARS) (THOUSANDS OF METRIC TONS) VENEZUELA CRUDE OIL EXPORTS/REVENUE (1971-1990) . . . . . . . . . . . . VENEZUELA SECTORAL DISTRIBUTION AVERAGES FOR IMPORTS BY MAJOR GROUPS AND VALUE (5 YEAR PERODIC CYCLES) . . . . . . . . VENEZUELA SIMPLE GROWTH RATE PERIOD AVERAGES FOR IMPORTS BY MAJOR GROUPS AND VALUE . . . VENEZUELA PERCENTAGE FOR IMPORTS BY MAJOR GROUPS AND VALUE . . . . . . . . . VENEZUELA SIMPLE GROWTH RATES FOR IMPORTS BY MAJOR GROUPS, VALUE AND VOLUME . . . . . . VENEZUELA PRINCIPAL IMPORTS BY MAJOR GROUPS, VALUE AND VOLUME (MILLIONS OF U. S. DOLLARS) (THOUSANDS OF METRIC TONS) . . . . . . NIGERIA SIMPLE GROWTH RATE PERIODIC AVERAGES FOR EXPORTS BY MAJOR GROUPS AND VALUES . . . NIGERIA SIMPLE GROWTH RATES FOR EXPORTS (EXCLUDING CRUDE OIL) BY MAJOR GROUPS AND VALUES (PERCENTAGES) . . . . . . . . . . . . 264 266 268 269 270 271 273 275 277 278 280 282 283 284 285 287 289 291 292 xi F3 NIGERIA EXPORTS BY MAJOR GROUPS, VOLUMES AND VALUES (EXCLUDING CRUDE OIL) (MILLIONS OF U.S. DOLLARS) (THOUSANDS OF METRIC TONS) . . 294 F4 NIGERIA SECTORAL DISTRIBUTION AVERAGES FOR IMPORTS BY MAJOR GROUPS AND VALUES (5 YEAR PERIODIC CYCLES) O O O O O O O O O O O O O 296 F5 NIGERIA PERCENTAGES FOR IMPORTS BY MAJOR GROUPS AND VALUE . . . . . . . . . . . 297 F6 NIGERIA SIMPLE GROWTH RATE PERIODIC AVERAGE FOR IMPORTS BY MAJOR GROUPS, VALUES AND VOLUME (1971-1990) . . . . . . . . . . . . 299 F7 NIGERIA SIMPLE GROWTH RATES FOR IMPORTS BY MAJOR GROUPS, VALUE AND VOLUME (PERCENTAGES) . . . . . . . . . . . . . . 300 F8 NIGERIA PRINCIPAL IMPORTS BY MAJOR GROUPS, VALUE AND VOLUME (MILLIONS OF U. S. DOLLARS) (THOUSANDS OF METRIC TONS) . . . . . . 302 G1 VENEZUELA EXTERNAL DEBT MILLION U. S. DOLLARS (1975,1981-1990) (PERCENTAGES) . . . . . 304 H1 NIGERIA EXTERNAL DEBT MILLION U. S. DOLLARS (1975, 1981-1990) (PERCENTAGES) . . . . . . 305 BIBLIOGRAPHY . . . . . . . . . . . . . . . . . . . 306 5. 6. 9. 10. 11. 12. 13. 14. LIST OF TABLES NIGERIA'S FOOD IMPORT BILL FROM 1962 - 1979 INDEX NUMBER OF FOOD PRODUCTION AND IMPORTS IN NIGERIA 1960 - 1975 . . . . . . . . . . AVERAGE STRENGTH OF LINKAGE EFFECT IN FOUR INDUSTRIALIZED COUNTRIES (JAPAN, ITALY, U. S O , AND NORWAY) O O O O O O O O O O O 0 KEY DIFFERENCES BETWEEN THE LEADING SECTOR APPROACH AND THE BALANCED SCHOOL APPROACH TO ECONOMIC DEVELOPMENT . . . . . . . . . EXPORTS OF CRUDE PETROLEUM BY COUNTRY - 1929 PRINCIPAL EXPORTS FROM NIGERIA (1900-1960) . EXPENDITURES ON PRIMARY EDUCATION AND PRIMARY SCHOOL ENROLLMENT IN EASTERN AND WESTERN NIGERIA, 1952-1962 . . . . . . VALUE OF MINERAL PRODUCTION IN NIGERIA, 1936 VALUE OF FOOD IMPORTS (1954-1966) (VALUE C.I.F. IN MILLIONS OF POUNDS, (£)) (RATIOS IN PERCENTAGES) . . . . . . . . . ‘0 PRINCIPAL FOOD IMPORTS (1954-1967) (VALUES C.I.F. IN MILLIONS OF POUNDS) . . ANNUAL RATE OF GROWTH IN FOOD SUPPLY AND DEMAND IN NIGERIA . . . . . . . . . . . . CONSUMER'S PRICE INDEX 1960-1977 (1960 = 100) . . . . . . . . . . . . . . . IMPORT CONTENT OF THE INTERMEDIATE INPUTS OF NIGERIAN INDUSTRIES (1962-73) . . . . . OIL EXPORTS AND INFLOW OF FOREIGN EXCHANGE ATTRIBUTABLE TO THE PETROLEUM INDUSTRY IN VENEZUELA, 1945-65 . . . . . . . . . . . . xii 10 11 32 42 48 81 84 91 99 101 104 106 114 120 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. xiii INCOME OF THE VENEZUELAN PETROLEUM INDUSTRY IN RELATION TO THE TOTAL FISCAL INCOME OF THE VENEZUELAN GOVERNMENT, 1945-65. . . . . GROSS TERRITORIAL PRODUCT OF VENEZUELA BY PRINCIPAL ECONOMIC SECTORS, 1961-65 . . . GROSS FIXED INVESTMENT IN THE AGRICULTURAL AND OTHER SECTORS OF THE VENEZUELAN ECONOMY, 1961-65. . O O C O O O O O O O O O O O O O O COMPARISON OF TOTAL EDUCATIONAL COSTS AND INCREASES IN GROSS TERRITORIAL PRODUCT IN VENEZUELA, 1957-65. . . . . . . . . . . . . VENEZUELAN PETROLEUM FINANCIAL INDICATORS, 1947-1974 (MILLIONS OF BOLIVARES) . . . . . WORLD-WIDE EXPORTS OF CRUDE PETROLEUM BY COUNTRY - 1929 (LONG TONS)* . . . . . . . VENEZUELA GROSS DOMESTIC PRODUCT BY KIND OF ECONOMIC ACTIVITY BY SELECTED YEARS (1950-1985) 0 D O O O O D O O O O O O O O O VENEZUELA GROSS DOMESTIC PRODUCT, REAL INCOME, CONSUMPTION AND INVESTMENT: ANNUAL GROWTH RATES FOR SELECTED PERIODS (1950-64) . . . . NIGERIA'S GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLIONS OF NAIRA (1971-1990) PERIODIC GROWTH RATE AVERAGES (%) . . . . . NIGERIAN GROSS DOMESTIC INVESTMENT (1970-90) (CONSTANT PRICES) MILLIONS OF U.S. DOLLARS . NIGERIA'S GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLIONS OF NAIRA (1971-1990), PERIODIC (5 YEAR) SECTORAL (%) DISTRIBUTION . . . . . . . . . . . . . . . . AVERAGE GROWTH RATES OF GDP BY INDUSTRIAL ORIGIN (CURRENT PRICES) NIGERIA-VENEZUELA (1971-90), PERCENTAGES . . . . . . . . . . . VENEZUELA'S GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLION VENEZUELAN BOLIVARES (1971-1990) PERIODIC GROWTH RATE AVERAGES (%) . . . . . 121 123 128 133 135 162 165 169 174 177 179 181 184 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. xiv NIGERIA - CRUDE OIL EXPORTS/REVENUE (1971-1990) C O O O O O O O C O O O O O O O VENEZUELA CRUDE OIL EXPORTS/REVENUE (1971-1990) 0 O C D D O O O O O O O O O O O VENEZUELA'S GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT CURRENT PRICES, MILLION VENEZUELAN BOLIVARES (1971-1990) PERIODIC (5 YEAR) SECTORAL (%) DISTRIBUTION ANNUAL RATE OF GROWTH IN FOOD SUPPLY AND DEMAND IN NIGERIA. . . . . . . . . . . . ESTIMATED LAND AREA PLANTED WITH MAJOR CROPS IN NIGERIA (1972-82) . . . . . . . . . . . . NIGERIA - SECTORAL DISTRIBUTION AVERAGES FOR IMPORTS IN PERCENTAGE BY MAJOR GROUPS AND VALUES (5 YEAR PERIODIC CYCLES) (1971-90) . VENEZUELA - SECTORAL DISTRIBUTION AVERAGES FOR IMPORTS BY MAJOR GROUPS AND VALUES (5 YEAR PERIODIC CYCLES) (1971-90) . . . . . NIGERIA EXTERNAL DEBT, MILLION U.S. DOLLARS (1975, 1981-1990) (PERCENTAGES) . . . . . . . VENEZUELA EXTERNAL DEBT, MILLION U.S. DOLLARS (1975, 1981-1990) (PERCENTAGES) . . . . . . . POPULATION STATISTICS FOR NIGERIA (1970-90) . PERCENTAGE DISTRIBUTION OF URBAN UNEMPLOYED PERSONS, BY AGE AND GENDER . . . . . . . . . THE LABOR MARKET (1970-85) . . . . . . . . . . REAL MINIMUM WAGES FOR NIGERIA (1980-90) . . . 187 191 193 198 199 201 203 211 212 215 217 219 223 CHAPTER I INTRODUCTION ateme t o t e o em After the colonial era, economic development in the Third World revolved around the export of agricultural products and primary raw materials to the industrial countries of Europe and North America. However, exports from Third World Countries were not enough to generate the level of economic activity necessary to Spur structural transformation and lead to any substantial form of economic development. Because their populations steadily grew and demands on available amenities increased, the economic, social, and political needs of these developing countries were not met. The need to develop a stable economic framework and to meet basic human needs by improving the standard of living necessitated the rethinking of development theories, policies, and methods applicable to the underdeveloped countries of the worLd. Designing specific policies to address the special needs of these underdeveloped countries was especially necessary because the circumstances of Third World Countries were substantially different from those of their successful counterparts in the developed parts of the world. The unfamiliar circumstances of Third World Countries presented serious implementation problems. Issues related to insufficient investment capital needed to make the transfer of available methods and time tested approaches compatible with the. difficult. economic situations they ‘were supposed. to address was highest on the list. These difficult conditions led to the adoption of development approaches which substantially differed from each other conditioned by the economic factor that was most needed.in any one underdeveloped country. Therefore, economic: development for' most of these countries implied doing more than one thing. First, it implied the need to design and implement major structural changes, such as policy modifications to provide incentives for accelerated industrialization and thereby provide employment in order to change the economic bottom line. Second was the need to change the old ways of doing things, such as the lack of directed planning that hindered development in their sociopolitical frameworks. The argument was, therefore, for the threshold of economic wellness to be raised so that economic development could be viewed in its global terms and go beyond the mere enhancement of economic factors. In fact, according to Cal Clark and Jonathan Lemco: Economic development is a catch-phrase for a number of different topics. These include the expansion of the scope of exchange, the increase in resource endowments, the organization of human, material and financial resource flows and the application of entrepreneurship. Economic development, therefore, requires structural changes such that aggregate production of goods and services is increased. This view agrees with the established principles and practices of successfully developed countries of the world, and agrees also with D. Bright Singh,2*who defined economic development as: . . . the advancement of a community along the line of evolving new and better methods of production, and raising of the levels of output through development of human skill and energy, better organization and acquisition of capital resources. The above definitions are tempered by the policy goals of the individual countries, as well as the values they perceived as most important for development. What is implicit though is that economic development must be associated with important social, institutional, and organizational changes. The values the individual countries imposed broadened or narrowed the scope of economic development programs and introduced critical components by which their progress was measured. Among many components that defined the important pressure points for underdeveloped countries were issues of capital formation and investments, population growth that 1Jonathan Lemco, "Economic and Political Development in Modernizing States, " in International Stud; es in Sociology and §ocial.Anthropology,‘Vol. 48, ed. Cal Clark.and.Jonathan Lemco (Greenwich, CN: State and Development, 1988). 2D- Bright Sinqh. W (with Special reference to India) (London: Asia Publishing House, 1966) ,p.1. brought along health and nutrition problems, education and skills development, together with employment and labor demands. It is, therefore, apparent that economic development that brings about improvements only in capital formation falls short of the scope of development that must address the total well being of a country. As a matter of fact, economic development is only one important piece of the solution to underdevelopment. The need existed for the adoption of a suitable indicator to serve as a measure for the overall health performance of economic development efforts. In the post-war period when much attention was being given to evolution of the economic development process, persistent growth in the economic activity of any country was understood to be accompanied by the provision of all other requirements that would.assure successful economic:development, such as the availability of affordable credit for both farmers and private industry. Growth which was used by developed countries as the means of keeping in step with economic prosperity also became a. measure of the intensity' of economic «development and progress for the underdeveloped economies of the world. That view changed in the decades of 1960 and 1970 when it became apparent that significant increases in output in some of the major underdeveloped countries of the world failed to resolve problems of equity in income distribution, poverty, and unemployment. In fact, Hollis B. Chenery,3 ill a, study conducted for the World Bank in 1974 summarized his findings as follows: . . . it is now clear that more than a decade of rapid growth in underdeveloped countries has been of little benefit to a third of their population. Although the average per capita income of the third world has increased by 50 percent since 1960. This growth has been very unequally distributed among countries, and socio-economic groups. Several other studies conducted by the International Monetary Fund and other organizations from within these countries, especially Africa, clearly identified the economic situation of Third World Countries to be growing worse. The general agreement was that there was a marked decline in the average income of the poor in under-developed countries. To address the difficulties presented by the decline in average income, another modification was suggested to the concept of capital formation, investment and.growth, as a measure of progress in economic development. Chenery suggested that there was the need for a profound change in economic structure to introduce changes in the composition of consumption, trade, production, and so forth. By his approach, the definition of economic development was given a broader base to include in addition to growth, structural 3Hollis B. Chenery, gedistributign with Growth (London: Oxford University Press, 1974). transformation and a strong desire established by policy modifications to achieve more income equality. C. E. Black,‘ presenting his arguments on the problems of underdevelopment, pointed to the difference between industrialization and economic development and observed that: It may be defined as nothing less than the upward movement of the entire social system, or it may be interpreted as the attainment of a number of the "ideals of modernization," such as a rise in productivity, social and economic equalization, modern knowledge, improved institutions and attitudes, and a rationally coordinated system of policy measures that can remove the host of undesirable conditions in the social system that perpetuated a state of underdevelopment. That view agreed with the one expressed by another 0 O 5 O O advocate of economic development, G. M. Meier. In hIS rev1ew of the "Objectives of Development" while discussing the unimpressive and unsatisfactory results of development efforts in the Third World over the past three decades, stated: . . . the definition that would now gain wildest approval is one that defines economic development as the process whereby the real per capita income of a country increases over a long period of time . . ., subject to the stipulation that the number below an "absolute poverty line" does not increase, and that the distribution of income does not become more equal. We conclude, therefore, that the elimination of poverty through the adoption of an economic development approach that ‘C. E. Black, The Dynamics of Modernization (New York, 1966), pp. 55-60. York: 5G. M. Meier, ad ssues ' co om' e e (New Oxford University Press, 1989. ensures equity in the distribution of wealth and income is the key indicator of the wellness of any economy.‘ With the issue of a comprehensive approach to economic development as relevant to the underdeveloped economies established, the next step was to evaluate the performance of underdeveloped countries given the appropriate opportunity. Such an opportunity presented itself during the 19705 and the 1980s when several underdeveloped countries had the opportunity to reap huge returns from investment in a depletable natural resource--crude cfiJu This unique opportunity was substantially different from the slow approach to capital creation through savings, efficiency, education, and better infrastructure investments, as envisaged by the proponents of economic development theories. The bounty they received from oil sales in the 19708 also placed these countries at an advantage to pursue aggressively their development programs without the normal constraints imposed by the limited availability of capital, which would otherwise have to be borrowed or generated from within their static economies. This study examined the economic development path which was chosen by Nigeria to achieve its economic development goals. ‘W. R. Cline, "Income Distribution and Development," Journal of Development Economlcs (February, 1975). The economy of Nigeria, prior to the importance of crude oil on the world's economic scene, was primarily agrarian. Contributions to the national revenue from other sources, such as mining (minerals and the hydrocarbon sector) , industries and manufacturing were minor. During the colonial period (1900-1960), Nigeria was nearly totally dependent on the agricultural sector with about 80 percent of the available labor force employed in that sector. It was the major source of foreigniexchange earnings, contributing about 70 percent to the national economy. This preeminence enjoyed by the agricultural sector continued until the late 19605. Since then, however, the importance of agriculture has been declining partly as a result of the shortage of farm labor, but most importantly, as a result of the growing importance of the oil sector and due also to the change in directed economic development policy which emphasized the concentration of investment resources in the oil sector.7 The relative contribution of agriculture to the national economy had also been declining. At its peak, in 1960, the time of Nigerian independence, the agricultural sector was contributing almost 64 percent to the national output. That percentage declined to 55 percent in 1965, 44 percent in 1970, and 28 percent in 7Tayo Lambo, Ni gari an Economy; A Iextbaak of Appliaa Egaaamiaa (Ibadan, Nigeria: Evans Brothers (Nigeria Publishers Limited, 1987), p. 14. 1975. Today, agriculture's contribution to national output is almost insignificant at less than 25 percent. As shown in Table 1, the food import bills for Nigeria showed progressive and significant increases for the period 1962 to 1979 as agriculture continued to show signs of weakness and neglect resulting from the change in the country's development priority. As Table 2 indicates, the decline in agricultural input into the national economy corresponds with the period when crude oil production was made preeminent. As can be observed, the food production index suffered its worst plunge, for the first time in 1972 at 63 and again in 1973 at 72. At the same time, food imports recorded its highest increase at 204 in 1972 and 234 in 1973, as revenues from sales in the world's oil market gathered momentum and national food production situation continued to deteriorate. Another indication of declining activities in the agricultural sector is given by the falling percentage contribution of the agricultural sector to the value of export and hence, to the foreign exchange earnings. From a high of about 85 percent in 1960, it plunged to a mere 32 percent ten years later. By 1975, agriculture's contribution to the economy had fallen precipitously to about 5 percent share. Most of the crops that were once dominant in the export ”basket" were no longer cultivated at the level that went 10 TABLE 1 Nigeria's Food Import Bill from 1962 - 1979 Year Total Amount Percentage Total of Food and over 1962 Import in Animal Import Figure Million (Million tons) Naira* 1962 47.0 100.0 406.4 1963 43.8 93.2 415.2 1964 41.4 88.1 507.4 1965 46.1 98.1 550.1 1966 51.6 109.8 512.7 1967 46.6 90.6 447.1 1968 28.4 60.4 385.2 1969 41.8 88.9 497.4 1970 57.8 123.0 756.4 1971 88.2 187.6 1068.9 1972 95.1 202.1 990.1 1973 126.8 269.8 1224.8 1974 154.8 329.4 1737.3 1975 297.9 633.8 3721.5 1976 440.9 938.8 5148.5 1977 736.4 1566.8 7093.7 1978 1020.7 2117.7 8211.7 1979 766.5 1630.8 7472.5 Spgpga: Tayo Lambo, Nigerian Economv: A Taxtbook of Applied Egonomigs, Evans Brothers (Nigeria.Publishers), Limited, 1987. Pp. 28.- Compiled from various Central Bank of Nigeria's Annual Report, Economic and Financial Reviews. * The Naira, is a Nigerian unit of currency. Rate of exchange in 1987 dollars was 4.01 Naira to a U.S. dollar. 11 TABLE 2 Index Number of Food Production and Imports in Nigeria 1960 - 1975 Food Production Food Import Index Year Index 1964/65 = 100 1965 = 100 1960 82 105 1961 92 106 1962 92 108 1963 103 98 1964 100 118 1965 102 100 1966 89 132 1967 89 99 1968 80 74 1969 90 115 1970 94 150 1971 87 214 1972 63 204 1973 72 234 1974 82 199 1975 79 271 Spa;ga_; Ojo (1977), Food supply in Nigeria 1960 - 1975, in Central Bank of Nigeria Economic and Financial Review, 1977. 12 beyond subsistence needs. These included cotton, groundnut, and oil, palm kernels and oil, cocoa, and timber. As a matter of fact, most of these items now came to be imported. As was mentioned earlier, Nigeria chose to deemphasize its already thriving agricultural sector as a major foreign exchange earner in the early 1970s, in favor of the oil sector. That choice was made because of the ability of the oil sector easily to bring in more foreign exchange. That change in economic development policy from an economic system, based on the advancement of agriculture and the careful structural transformation of the economic base, to a new system based on the directive concepts of the leading sector approach’ to economic development was the basis for this study. The analysis here was of two economic development approaches as indicated by their priorities in the examination of directed change of Nigeria. It also evaluated the merits and tested the objective standards proposed in the prolonged debate between the leading sector school of thought and their 'Theoretical discussions on the leading sector approach :9 agohomic devalopment, may be found in: Albert 0. Hirschman, Iha Spratagy gf Egohomig Qevalopmeht (New Haven: Yale ‘University Press, 1958); Paul P. Streeten, Unbalanced Growth, ‘Vol. 2 (London: Oxford Economic Papers, 1959): J. A. Hanson, Iha Leading Sagror Dayalopment Stratagy and tha lmportance 91‘ Institutional Reform: A Rei nterpretati on Journal of Economic grudi es (May 1976) , _3_, 1; Paul A. Streeten, ev n .EQISPQQEIYES (New York: St Martins Press, 1981). 13 opponents the balanced growth group.9 These two groups of economic development theorists differ substantially in their thoughts and methods of achieving successful economic development in an underdeveloped country. Their disagreement over priorities clearly pointed to a fundamental difference in opinion on how to develop and what appropriate steps to take for directed change. Their positions contrasted with each other over what should be the focal point and relative priorities of development. The leading sector approach viewed underdevelopment and backwardness in the Third World as shortcomings that resulted from an inherent inability to make "forward linking" development decisions that must be dynamic and ongoing. They also believed that for development to occur in these underdeveloped countries, it was necessary that available resources be concentrated in a sector with the most strategic importance in the production process. The intent was for the sector to serve as a hub and engine to energize or shock economic development, forcing the transformation of the existing economic structure. By so doing, it would force ”For a more detailed discussion on the Balanced Growth Theory, see: P. N. Rosenstein-Rodan, "Problems of industrialization in Eastern and Southeastern Europe," Egonomig Journal (June-September 1943), 3; Ragnar Nurkse, Ergblems a: Capital Formation in Underdeveloped Countries (Oxford: Blackwell 1953); H. D. Ellis and H. C. Wallich, eds. . "Notes on the Big Push." WWII: Amariga (London: Macmillan, 1961). 14 active responses from other sectors. Their opponents, the ”balanced growth" group, contended that there were existing limitations imposed by underdevelopment, such as extremely low levels of both internal and external demand that must be recognized as limiting. Those low levels may'ultimately be responsible for'the failure of any positive upward spiral effect to encourage the growth of other sectors. The balanced group argued instead that to overcome any risk of failure due to negative local factors, it is necessary that development be based on simultaneous investments in several or mutually interdependent consumer good industries. That approach would ensure that interdependent industries would keep in step with each other, thereby overcoming demand problems emanating from low income. The common opinion on the subject of development and industrialization as stated by W. W. Rostow,10 in his perspective offered a more comprehensive appraisal: There is said to be a number of certain general preconditions or prerequisites for industrial growth, without which it could not begin. . . . .Abolition of an archaic framework in agricultural organization or increase in the productivity of agriculture; creation of an influential modern elite which is materially or ideally interested in economic change; provision of what is called social-overhead capital in physical form--all these are viewed as necessary preconditions. ‘mW; W. Rostow, The Stagas pf Economic Growth (Cambridge, 1960), p. 118. 15 Rostowu went further and suggested some critical requirements essential to the development of the economies of present-day, underdeveloped countries. His review concluded that if their take-offs are to succeed, the underdeveloped countries: must seek.ways to tap off into the modern sector income above consumption levels hitherto sterilized by the arrangements controlling traditional agriculture. 'They must seek to shift men of enterprise from trade and money-lending to industry. And to these ends patterns of fiscal, monetary, and. other' policies (including education policies) must be applied, similar to those developed and applied in the past. Thus Nigeria's rejection of the balanced approach to economic development in place since the days of colonialism meant the choice of an aggressive leading sector policy of directed development program firmly defined around the fortunes of the oil sector as its lead sector. That choice and its priorities were intended to comply with sharp reallocations in the observations of Rostow mentioned above. The oil sector, during the early to late 1970s, brought in huge financial and foreign exchange revenues to the Nigerian economy. The wealth was manifest in the form of ambitious national government expenditures that rose from $1.7 billion in 1973 to a high of $26.2 billion in 1980 and declined to just over $12 billion from 1981-86. These investment expenditures jprovided. the lead. or’ spur' needed for real uIbid. , p. 139. 16 economic development in the domestic nonhydrocarbon sector, thereby initiating the ‘much desired economic and socio- structural transformation of the country. Taking into consideration that it has been more than twenty-five years since Nigeria decided to cast its fate with the leading sector approach to economic development, as well as the fact that it also Spent many billions of dollars in investments and infrastructural development, it is appropriate to ask the following questions: 14 What results in terms of economic development, did Nigeria achieve in the 1971 to 1990 period covered by this study? 2. To what degree was Nigeria able to achieve the desired economic goals of rapid industrialization and better living standard set forth by the planners or proponents of their new economic development policy? 3. Perhaps most important, what are the development and investment lessons learned from the Nigerian experience? Importance of the Study The importance of the study lay in the useful knowledge for planners of an analysis of the Nigerian experience, especially in a case where economic development ‘was not ‘unduly' or' at all hampered. by limited financial resources. The period covered by the study, (1971-90) , presented a sharp contrast with other underdeveloped economies 17 in that Nigeria's total revenue from the sale of crude oil offered the country the rare opportunity to leap into sustained, continuous growth that would otherwise have been impossible, given the static and traditional state of her economy. The period chosen for this study also provided a tool by which the development efforts of Nigeria could be compared to the development experience of another country, namely Venezuela, which also benefitted from huge wealth from the oil industry but chose to continue the balanced approach to economic development. Efforts to plan the Nigerian economy date back to colonial times (1946) with the submission of a prioritized 10- year development plan to the British colonial office to guide it in the allocation of colonial development and‘welfare funds to Nigeria. Since independence in 1960, there have been five development plans up to 1990. The successive plan objectives continually identified the need for rapid development. The objectives of the various plans differed because of availability of foreign exchange that was necessary to ensure the completion of planned projects. The first and second national development plans (1962-68 and 1970-74) achieved only very modest results because of insufficient funds. The 1975- 80 plan period was distinctive in that it coincided with the surplus of foreign exchange provided by the mining sector-- petroleum. 18 The support provided by the availability of normally scarce capital from the sale of crude petroleum and the presence of a strong private sector capable of contributing to a viable development program, are some of the reasons why Nigeria was supposed to have done well in its bid for economic development. The argument that Nigeria may have faltered because of its choice of leading sector approach--forward linked-economic development model--stems from the fact that the choice to adopt the leading sector approach to development gave rise to a variety of state-owned projects and establishments that were centrally planned and therefore assumed inefficient.u These institutions were charged with the responsibility to oversee the redistribution of capital and benefits emanating from the growth of the petroleum industry. One example was the creation of the Nigerian Industrial Development Bank which had as its principal mandate the responsibility to cater to the financial needs of small- to medium-sized businesses and entrepreneurs. From the viewpoint of the proponents of the leading sector approach to economic development, these types of establishments will produce, in a relatively short period of time, many of the benefits other countries achieved by a more “Ola, Oni, and Bade Onimode, Ecgnomig Develophehr pf Nigaria: The Socialist Alternative (Lagos, Nigeria: The Nigerian Academy of Arts Sciences and Technology, March, 1975). 19 efficient use of scarce resources through the process of balanced growth. Their objective was to expand aggressively the domestic base by using the opportunities created by the petroleum sector, thereby affecting the local markets through backward linkages that would, in turn, spur multisectoral growth and employment, income, and aggregate demand of goods and services. The creation of these intervening institutions was derided by some, but cannot be dismissed as completely ineffective. They contributed, to a respectable extent, to the disbursement of the funds allocated by the central government for development efforts. Secondly, they were useful in coordinating ventures by external investors interested in participating in the development efforts of the country. Nigeria is now an oil-based economy which depends on the oil sector for a substantial percentage of its foreign currency investments and purchases. Its funding fortunes, therefore, fluctuate with the rise and fall of oil prices in the international market which is consistent with most of the 13-member states of the Organization of Petroleum Exporting Countries (OPEC). The investment of about $190 billion, received from the sale of crude oil over a very short period brought with it sudden increases in income levels. The disadvantage of increased ‘wages without accompanying productivity and the increased aggregate demand accompanying r H \Au.‘ .5. 20 it was very quickly witnessed in the form of inflationary pressures and the issue of increased imports. The latter caused Nigeria yet another problem--that of increasing debt and balance of payment problems arising from extensive importation of finished goods and food items.13 The once important agricultural sector, the mainstay of the economy before crude oil came to the scene, had been deemphasized. The result was that the country became dependent on foreign sources for its food. These problems were later exacerbated by the fluctuation of crude oil prices in the decade of the 1980s. The loss of surplus foreign exchange earnings which had permitted an aggressive investment agenda forced the economy into stagnation and even a drop of industrial production, increasing unemployment and increased balance of payment problems. Nigeria's effort to push the limits of its oil- generating revenues capacity using a directed, accelerated, and selective investment program obviously had encountered the consequences of the "appalling opportunities" inherent in resource based economies. Efforts to spend extensively to develop infrastructure to ensure the effective absorption of oil revenue met with some initial success, but later ran into 13Gabriel 0. Olusanya, Bassey E. Ate, and Adebayo 0. Olukoshi, eds., The Nigerian Institute of International Afiraira (Lagos: Economic Development and Foreign Policy in Nigeria, 1988). 21 jerky discontinuities when revenues dwindled. Thus, many projects were left unfinished or' were delayed. with the resulting increase in costs and loss of production. It is interesting to note that the experience of Nigeria in the late 19805 was similar to those of other OPEC member states such as Algeria and.Venezuela which had similar domestic difficulties or were faced with the same pressing needs to pursue a course of rapid development. An important issue at this point became: how much of the entire array of problems Nigeria encountered can be attributed to the economic development policy it adopted? How much was causal? Doubtless, the debate between the opposing schools of thought improved our knowledge base about different economic development approaches, but the analysis of the Nigerian situation will clarify a useful reference point about implementation. The appropriateness of conducting the study was underlined by the following: First, Nigeria's case is unique because it is a Third World country that is confronted not only with the problems of underdevelopment, but also with the opportunities afforded one product economies. Second, being a member of OPEC, Nigeria overcame the limitations imposed by the availability of capital, and chose to pursue economic development outside the rigidly prescribed approach. of structural transformation, based first on. a successful agricultural sector, as widely recommended by 22 several international organizations, such as the International Monetary Fund. Third, the sheer size of Nigeria's population (approximately 100 million) may have contributed to the need for an immediate higher level of economic performance and success because of the desire to meet the demands of improved standard of living. In addition to addressing the questions identified earlier, this study attempted.to demystify Nigeria's choice of planned change by addressing the following questions: 1. What useful results did Nigeria achieve from its development policy from 1971 to 1990 (period covered by the study) 2. To what degree was Nigeria able to achieve the desired economic goals of rapid industrialization and improved standard of living set forth by the planners or proponents of their new economic development policy 3. What were the development and investment lessons from the Nigerian experience. Nigeria's case is unique and of considerable interest to scholars because of its position as Africa's most populous nation and one that has the means to lead by example. The lessons learned from this analysis may aid the understanding of the limits and consequences of adopting a single focus or priority, such as the leading sector model, 23 for economic development. The study may also lay the groundwork to enable developing countries understand the need for some flexibility and careful tracking in their own development efforts to direct planned change that will help them correct oversights and errors in making their choices. CHAPTER II REVIEW OF RELATED LITERATURE The concepts of economic growth and economic development in underdeveloped countries presented a problem which transcended the availability of finance. One very important component was the need for these countries to have understood. the consequences of the choice of using one economic development model over another. That understanding on its own would have ensured benefits, to a large extent, from the forms of development projects they choose to satisfy their needs or their ability to sustain a particular model in the future. Underdeveloped countries required a defined economic development approach with needs and consequences which are amenable to management, and also which lead predictably to the much desired result. That approach would represent planned or directed change. A clear distinction between "growth" and "development" was not possible given the base from which these countries began. For purposes of clarity, one view held that "growth" was applicable only to economically advanced countries where most of the natural resources and wealth are already known and developed. On the other hand, "development" related to the 24 25 possibility of developing and using hitherto unused natural resources;“ The problem of economic development in Nigeria as well as most Third World Countries that are members of OPEC, lay in their thoughtful choice of a development model or pathway. It also involved their ability to identify reasoned objectives ahead of time and alternative means of achieving them. This chapter examined the debate in the literature between the proponents of the "leading" sector school of thought and that of their opponent, the "balanced" growth group. Areas of conflict and disagreement concerning economic development and the means of encouraging growth was identified. The concepts of the leading sector approach to economic development, the subject of analysis of this study was examined in its application in one product economies to achieve designated structural adjustment. Theoretical Framework and Background The argument between the opposing sides was clearly based on what each country defined as the best approach to economic development. The leading sector school of thought considered economic development as a series of discontinuous steps characterized by the identification and removal of Constraints or the sources of stagnation, thereby creating a :“Hicks, Laarhing about Economic Developmenr, 1957. p.123 26 suitable atmosphere for anticipated capital formation and subsequent increase in output in a particular direction. The leading sector approach bred development in some fashion in a selected, designated, and already existing developed sector of the economy, that was, the capital forming sector, through a series of complimentary effects by creating greater investment capacity. Ordinarily, the road from investment to more investment was considered to be rather indirect: investment increases capacity and when the economy expands in such a way as to accommodate the newly created capacity, the additional income Ibased. on ‘the increased capacity ‘would result in additional investments. Also, according to the leading sectors doctrine of induced investment, if there was an increase in investment activity from one period to another, induced investment in capital goods industries and services would result. The complimentary or "pull" effect of investment was, therefore, the essential mechanism by which new energies were channeled towards the development process and through which the circle of stagnation and underdevelopment would be broken. Leading Sector Approach to Egonomic Development As viewed by the architects of the leading sector approach, the objective was to create a focal point to serve 27 as the driver for the fundamental transformation and modernization of the economy through the creation of some carefully designed investment policies and goals. One goal was to overcome the fear of change which had been largely responsible for the stationary difficulties encountered by underdeveloped countries. The intent was to foster decision making by focusing on known constraints in forward linkages and by so doing put the dynamic wheels of change in motion. According to Hirschman: Our diagnosis is simply that countries fail to take advantage of their development potential because, for reasons largely related to their image of change, they find it difficult to take decisions needed for development in the required number and at required speed. He added that, if backwardness is due to insufficient number and speed of development decisions and to inadequate performance of development tasks, then the fundamental problem of development consists in generating and energizing human action in a certain direction. It, therefore, became necessary for development theory and. policy to face the task. of determining ‘under what conditions.development decisions could.be made in spite of the difficulties imposed by inefficient decision- making processes and poor implementation of development tasks. In underdeveloped countries, development was held back not only 15Hirschman, Srraregy of Eggnomic Development, p. 56. “18161., p. 61. 28 by the inability to make and implement decisions, but also by the difficulties of channeling existing or potentially existing savings into available productive investment opportunities. The norm by convention was that the ability to invest was acquired and increased primarily by practice; the opportunity to practice depended generally on the size of the modern sector of the economy. What. was needed. was a :modern sector that could generate investment ability and force the creation of, and hence visible imbalances which would inevitably and automatically induce other investment actions. The argument was that capital accumulation was the prime mover of economic development. It had a dual role in economic development: on one hand, it generated income; on the other hand, it created productive capacity for the economy. The strategy, as laid down by the proponents of the leading sector approach, waS to encourage growth within the sector with the highest opportunity for capital formation. That sector'would, in turn, through.a‘variety of complimentary effects (linkages), pull along other sectors. The principal tool for achieving this was by a carefully chosen set of investments which would be considered as development <1river(s). In fact, from Hirschman's point of view: The ability to invest.is of course more directly related to investment activity. It comprises the ability to perceive investment opportunities, and since, in an underdeveloped country, a large supply of such 29 opportunities presumably exists, the expanding ability to invest may be considered to supply the necessary and sufficient conditions for Investment to come about. This principal choice of investment, such as investing in the manufacturing, industrial, or agricultural sectors, varied country by country depending on what presented the best opportunity or met their most pressing needs. The method of implementation may be through a lead industry or through the form of needs for investment in a social overhead". These overheads of leads and lags were defined and applied in a variety of ways which included: 1. A development approach via excess capacity that implied increases in the supply of capital and investment in public utility goods, examples; highways, railway lines, public housing, etc. 2. A development approach via shortage, that implied increases in investment applied directly in the production process, examples; machinery and Skilled manpower. An important component for achieving the required inducement effect in a development program was the ability to identify economic sectors or subsectors that would receive high ratings because of their ability to generate the required forward linkage effects. The main argument for unbalanced '"Hirschman, Strategy or Economic Development, p. 74. :"Roy Harrod, ed., assisted by Douglas Hague, Intarhatiohal Trade Theory in a Qeveloping Couhtry (London: Macmillan, 1963). 30 growth within the theory was that it would help create necessary pressures and inducements. To illustrate this point, an important question became: How does unbalanced growth create these pressures and inducements? Suppose, for example, a comparatively big investment was made in a particular industry and its output abruptly increased substantially. Then there would be a sizeable increase in the demand for those products of other industries which are used as inputs in the first industry. Thus, unbalanced growth of one activity would put pressures on other activities and it would be hoped that these other induced activities would also expand following the same pattern. The pressures created are transmitted through what have been called "backward" linkages. By symmetry, there are also "forward" linkages. The product of the first industry was quite possibly an input of some other industry. The increased availability of this product was likely to create inducements for expansion of this forwardly linked output. According to Chenery and Watanabe,19 these linkages represented in their aggregate form the strength of the changes. They illustrate in Table 3, by the use of a comparison chart, the nature of interdependence in production, as revealed by the pattern of interindustry flows, of four 1”Hollis B. Chenery and Tsunehiko Utatanabe, International WWW: St ctu odu tio . W. 26(4) (October 1958): 485- 522. 31 major industrial powers --Japan, Italy, U.S., and Norway--the different roles played by the various economic sectors in the total process of production. The economic significance of the pattern of interdependence was that the effects of change in final demand spread through the economy from higher to lower sectors, and that reactions in the opposite direction, resulting in a continuing series of effects, were quite limited. What was noteworthy was that the resulting patterns of interdependence could have taken an infinite form and assisted the extraction process from the lead industry thereby increasing the influence of linkage effects. Another important observation was that if the pattern of interdependence among sectors was sufficiently similar, then the results of the comparison found application in other countries where similar production processes were present. A probable source of difficulty in the economy of an underdeveloped country is the absence of an extensive production base which would readily exchange and absorb the complimentary linkage effects that will accelerate the development program. For example, in Table 3, the fOrward linkage numbers for agriculture and forestry, coal mining, petroleum, natural gas and nonmetallic minerals would each be above 65 to demonstrate some reasonable level of forward linkage activity instead of what they Show, namely 31, 23, 15, and 17 which are considered too low. 32 TABLE 3 Average Strength of Linkage Effects in Four Industrialized Countries (Japan, Italy, U.S., and Norway) Forward Backward Sector linkage linkage Total Intermediate primary mm Agriculture and Forestry 31 72 103 Coal Mining 23 87 100 Petroleum and Natural Gas 15 97 112 NonMetallic Minerals 17 52 69 Electric Power 27 59 86 Intermediate Manufacrure Iron and Steel 66 78 144 Paper and Products 57 78 135 Petroleum Products 65 68 133 Nonferrous Metals 61 81 142 Chemicals 60 69 129 Coal Products 63 67 130 Rubber Products 51 48 99 Textiles 69 57 124 Printing and Publishing 49 46 95 Source : H01 1 is B . Chenery and Tsunehiko Watanabe , "International Comparisons of the Structure of Production," Egongmatrica, 26(4) (October 1958): 485-522. Note: Forward Linkages are shown as percentages of intermediate purchases to total production by each industry. Backward Linkages represent percentage of intermediate sales to total production by each industry. 33 This limitation was imposed not only by the absence of the production capacity but also by the scarcity of suitably educated manpower, appropriate technology, and adequate social and institutional arrangements . These di f f iculties constituted the principal areas of criticism as presented by the opponents of the leading sector approach to economic development. Their argument revolved around the issue of giving too much emphasis to an economic sector under the pretence of its importance. According to Amlan Datta, those who pleaded for it argued that it created productive capacity.20 What was forgotten or given little or no attention was the extent of discord that it imposed on the other sectors of the economy such that Table 3 would also be 80 for nonferrous metal for forward linkage at the intermediate manufacture stage. Another suitable example was in the relationship between the development of agriculture and growth of heavy industry which in Table 3 would be at least 70 and not 31 for a forward linkage to show satisfactory linkage activity. From Amlan Datta's perspective, "food is needed to support industrial workers and raw materials to feed the machines."21 Therefore, agriculture was at least basic to 20Amlan Datta, Parspegrives gf Economic Davalopnenrz Shraregi es or Egononic Qevelopment (India: Macmillan Company, 1973), pp. 98-105. 21Datta, Earspectives of Economig Development, p. 100. 34 development. Also, since new Skills and techniques were needed, education was equally important. It is true, however, that food, raw materials, and technicians could be imported, as well as machinery. What was useful and of immense importance for the leading sector theory was induced backward linkages (see Table 3 for petroleum products at the intermediate manufacturing level) with a strong and almost equal tendency to encourage both forms of linkages. It was also important that food and raw materials be produced at home, so as to ensure that the development process could be sustained without the risks and consequences of excessive exposure to the vagaries of external dependence and use of limited foreign exchange. What was strongly evident, according to Meier", with respect to the disadvantages of the leading sector approach was that: For countries embarking on development, unbalance is inevitable, whether they want it or not. . . . All investments creates unbalances because of rigidities, indivisibilities, sluggishness of response both of supply and demand and because of miscalculations. Meier further observed: "the theory of unbalanced growth, concentrates on stimuli to expansion, and tends to neglect resistances caused by unbalanced growth."23 nMeier. W. P- 379- ”Ibid., pp. 379-381. 35 These arguments, therefore, compelled us to examine economic development in the context of balanced growth as proposed by that opposing school of thought, the balanced growth group. Balanced Growth Approach The concept of balanced growth, or of the maintenance of some kind of equilibrium during the process of economic development, means different things to different people.“ As applied to the underdeveloped economies of the world, the theory stressed the need for different parts of a developing economy to remain in step to avoid supply difficulties. For example, in this version, the requirement of balanced growth was derived from the demand side.25 It was argued that a new venture which gets underway in an underdeveloped country was likely to turn into failure because its workers would obviously not be able to buy all of its output, while other 2‘The areas of need may be as varied as the list presented in Table 3. For most underdeveloped countries where the source of income is, to a large extent, dependent on the availability' of’ an elaborate 'natural resource Ibase, the intermediate primary production section from Table 3, must strive to Show an equally developed forward and backward linkage factors in order to meet essential needs at.home. 'The same is not true for industrialized countries where capital formation is already well developed and the natural resource is properly utilized. The need for an across-the-board development of linkage effects is necessary in order to ensure satisfactory exchange and absorption of complimentary effects. :fiHirschman, The Strategy of Economic Development, pp.70- 74. 36 citizens of the country were caught in an underdevelopment equilibrium where they were just able to afford their own output. These developing countries, struggling with the problem of raising their standard of living, found themselves caught up in What has been termed a "vicious circle of poverty."“ According to this concept, the low productivity of labor of these countries was attributable to the low income, which was in part a function of an inadequate supply of physical capital. But the shortage of capital resulted partly from the persistently low levels of savings, thus completing the circle. The doctrine of balanced growth was proposed by Ragnar Nurkse” and R. N. Rosenstein-Rodan”, as a means of breaking this vicious circle and stimulating economic development. For it to be successful, it must be applied to the production of a variety of products in accordance with income elasticities. The reason was that low income and a consequent lack of demand generally spelled failure for any heavily concentrated 2‘Bernard Okun, and Richard W. Richardson, "The Underdeveloped Countries: Modern Approaches to Development, in firngias in Ecgnomic Qevelopment (New York: Holt, Rinehart, & Winston, Inc., 1961) pp. 123—125. 2"Ragnar Nurske, Problems of Capital Fomati on in gnQerdevelopeg Countries (Oxford: Blackwell, 1953): Eggilihrinn and Qroflh in rha World Economy (Cambridge, MA: Harvard University Press, 1961) . 2'Rosenstein-Rodan, "Problems of Industrialization of Eastern and SouthEastern Europe," 1943. 37 investment in a single consumer goods industry. It was suggested that investment be diversified over a broad range of such industries. Each industry would then generate, through its factor payments, (backward linkages), a demand for the goods of the other industries sufficient to keep all of them viable. Investment projects that might be individually unprofitable would, taken collectively, be profitable. For this reason, the approach of balanced growth was also annexed to the "theory of the big push."29 Professor Allyn Young, in his celebrated discussion of the "theory of the big push," clearly stated that: There is a minimum level of resources that must be devoted to . . . a development program if it is to have any chance of success. Launching a country into self- sustaining growth is a little like getting an airplane off the ground. There is a critical ground speed which must be passed before the craft can become airborne.3° Proceeding bit by bit would not add up in its effects to the sum total of the single bits. A minimum quantum or threshold of investment was a necessary, though not sufficient, condition of success. This, in a nutshell, was the contention of the theory of the big push. A big push ‘nR, N. Rosenstein-Rodan, "Notes on the Theory of the Big Push," paper submitted to the Rio Roundtable of the International Economic Association, 1957. 3°C- e t vso U ' e- a e E o o 'c ssist. c _' °°_:IJ= (Washington, D.C.: MIT, Center for International Studies, 1957), p. 70. 38 could, of course, result from one or a few big projects or from a large number of projects of varying size that dovetail with each other. As mentioned earlier, the need for harmony in development was important if development could be realized. According to Ragnar Nurkse, "the case for balanced growth rests on the need for a balanced diet."” For developing countries, the controversy on balanced growth presented itself in what was perhaps its most challenging form on the question concerning the place of agriculture in economic development. Some recommend a policy of allowing industry to run ahead of agriculture. Experience in a number of countries suggested that it is easier today to develop industry, in relatively backward economies than it is to initiate steady agricultural improvement. Some industrial countries in the nineteenth century were able to depend on substantial imports of food and raw materials. Others, such as the Soviet Union under Stalin, [provided a classic example of what happens if heavy industry tries to take a great leap forward before the pace of .agricultural development has quickened sufficiently. The evolution of Communism in the Soviet Union in the early part of the century was characterized by the suppression 31Nurske, grghlena of Qapital Formation in Underdevalopeg 99331311213. PP- 4-26- 39 of private trade and sale of surplus farm produce by farmers. In 1921 Lenin introduced a new economic policy that partially restored the right of the peasant to sell excess farm produce after paying an agricultural tax; By 1926 the prewar level of output, both in agriculture and in industry, was more or less restored. The amount of marketed grain was, however, somewhat less than.thejprewar average. .After the restoration of output to normal prewar level, Soviet leaders wanted to accelerate greatly' the pace of industrial development. with special emphasis on heavy industry. The issue became how their desire could be achieved without a concomitant increase in agricultural output? An interesting method based on a 37-63 relation was devised by Groman, a distinguished Soviet economist.32 Groman maintained that, on the basis of an extrapolation of past tendencies, a crisis-free development of the Soviet economy must rest on a value—relationship of that order between the marketed surplus of agricultural and industrial products. While there was room for difference of opinion on this point, it was clear to all that a decisive acceleration of the pace of industrial development could not be achieved without a new strategy for agriculture. What could this strategy be? ”Amlan Datta, Eerapegtivaa pf Economig Qayalopnanr, pp. 102-103. 40 The great debate on economic policy which started at this time illuminated the alternatives before the Soviet Union. It had also a wider significance and continues to be relevant for other countries, especially the underdeveloped ones, even today. The cultural and economic impediments to the development of agriculture are often more formidable than those for industry. Indeed, from H. Myint's33 perspective The expansion of the industrial sector should depend on the growth rate of agriculture . . . the allocation of investments to induce growth, the production of consumer goods and the development of suitable infrastructure that will facilitate the development process, constitute the bare essentials that are needed for a sustained development. From another perspective, the difficulties imposed by the lack of planning and directed change in underdeveloped countries made the march toward development very cumbersome. A sound administrative system, a stable government, well- organized financial agencies, a legal system that is capable of ensuring the security of person and property, efficient organization of the means of production, a simple and well- defined system of land holdings and inheritance and a favorable social attitude are usually considered, among others, as prerequisites to achieving economic development. Opponents of the balanced growth approach contended that their concern rested only with the creation of complementary 33H. Myint, Tha Egononigs a: rhe Qevelgping Cgunrriaa, (London: Hutchinson University Press, 1964). 41 domestic markets as an inducement to invest, whereas markets in the countries of the region can usually be created by import restrictions, and where possible, expansion of exports. To aid the process of understanding, Table 4 below, presents a summary of the basic differences, as developed by the author, between the two different approaches to economic development described above. It is evident from the review that the controversies between the balanced group and their principal critics, the leading sector school of thought, are quite extensive. The economic development process inevitably involved the search for an appropriate balance between the two major sectors of the economy, mainly industry and agriculture. 'This was necessary because of the need for the production of adequate levels of foodstuff and the general maintenance of the population and the economy. The complexity of the development process and the importance of the interaction between the industrial sector and growth of the agricultural sector underlined the need and importance for the examination of the main issues related to the economic development process. Within this context, the two different schools of thought have advanced conflicting methods as summarized above for'achieving economic development. 42 TABLE 4 Key Differences Between the Leading Sector Approach and the Balanced School Approach to Economic Development W a. Underdeveloped countries tend to be unable to make . forward linking investment ; decisions at the required : amount speed and time. . b. They suggest that investment must necessarily ~ begin with a focus industry . that occupies a place of prime importance in the , production process--the :engine. . c. The growth process is encouraged by the unbalanced nature of investments. Balanced School Approach _—.. __ _____ __ _fi Lack of appropriate demand levels due to poverty and deprivation are the main obstacles to a progressive investment program. They contend that the best approach lies in simultaneous investments in several or mutually interdependent industries as dictated by demand elasticities. Growth is the result of an orderly approach to investment along a carefully defined line with the aim of overcoming poverty and ensuring equity. j d. Unbalanced development :virtually guarantees development of capacity to meet future demands. They emphasize building demand and capacity concomitantly through Simultaneous investment. e. Assumes that their approach will be more ‘ favorable to industries 3 with the highest potential “ to generate active linkage effects. Assumes that their approach will be more favorable to primary and intermediate sectors that will benefit from the complimentary effects of develo ment. 43 This study carefully examined the results presented by the experience of Nigeria and compared it with that of Venezuela, as both countries struggled to implement conflicting approaches to economic development. CHAPTER III METHODOLOGY Hypotheses and Testing Procedures To appreciate fully the consequences of the choice of method used.to estimate the success.of an economic development plan, it was necessary to re-examine the stated positions of the two sides to this argument. The position of the leading sector approach to economic development as summarized by Hirschman concluded that: Our diagnosis is simply that countries fail to take advantage of their development potential because, for reasons largely related to their image of change, they find it difficult to take decisions needed for development in the required number and at the required speed. According to Hirschman, development in the Third World was hindered not only by the unavailability of capital or the potential to generate it, but. most importantly, by the apparent inability and difficulties encountered in making the necessary decisions to direct change. To spur industrial development and thereby create a viable industrial sector, the leading sector group suggested the concentration of available :resources in a single sector that occupies the most strategic 3‘Hirschman, Strategy of Economic Qevelopment, 1958, pp. 25-26. 45 position in the production process, and thereby, have the ability to rally other sectors to develop forward linkages. These linkages were achieved through demand pressures and resulting imbalances created by the lead industry. This form of integration was intended to lead to the development of a network of industries that may possess some similarities to each other, but may also lead to the evolution of other industries that would serve as useful spin-offs from the development process. The desired outcome was that the process identified above would ultimately lead to the improvement of both social and economic conditions, as measured by improved standard of living and higher Gross National Product (GDP), since the increased level of industrial activities would spur greater productivity. In fact, that line of reasoning agrees with the perspective expressed earlier by Amlan Datta that "food is needed to support industrial workers and raw "” as the Soviet Union later materials to feed the machines, found after its initial revolution. This argument implied ‘that the contributory sectors would certainly be in step with (development as the effort evolved. The opposing side, the balanced school approach to economic development, disagreed with the leading sector view on grounds that large imbalances would be created which would, in turn, destroy whatever successes may be achieved. The 35Datta, Perspegrives of Economic Development, p. 100. 46 balanced growth group countered with a suggestion that conferred assumed uniformity of investment in all sectors or many mmtually interdependent consumer good industries following along lines imposed by demand elasticities. In other words, they strongly advocated a "balanced diet" approach to ensure that disharmonies were not intentionally created and that every sector was mutually in step with a focused, predictable development process. The issue now was both to ascertain the validity of these two opposing theories by evaluating them in the history of economic development of Nigeria from 1971 to 1990 and to learn from such a review. The period chosen for the purpose of this study took into consideration the general conviction that new policies aimed at enhancing economic development must produce appreciable results within five years“. The 1971-90 period of study is considered to be long enough to allow for a suitable evaluation. The approach used for the evaluation was a comparative analysis of Nigeria's and Venezuelan economic development historyu The choice of‘Venezuela.was based Simply on the fact that it shared similar economic conditions and humble Ibeginnings with Nigeria. The make-up of venezuela's early economy was also agricultural, and the components of its ”D. Seers, "The Role of Industry in Development; Some Fallacies, MW (December 1963): 341. 47 export trade were mostly coffee, cocoa, cattle, and hides. Also, a large majority of its people were poor. Finally, Venezuela, along with Nigeria, was a founding member of OPEC and like Nigeria, it was a major beneficiary of the sudden wealth from oil revenues in the 1970s. What.wa5 different and of remarkable interest to this study was that in addition to a considerable difference in population, Venezuela arguably continued on the original path of a "balanced growth approach" it had originally adopted, even when the importance of the hydrocarbon sector became manifest. This does not assume that it did not also have, as Nigeria did, its problems with the dominance of oil as its main export. What was of interest to us was to examine the results from Venezuela's balanced investments in other sectors of the economy and their resulting relative contribution to the national output. Also of importance was the fact that Venezuela had .been producing oil since 1912 and actually became the world's largest exporter of oil in 1929 as illustrated in Table 5, with oil exports accounting for about 62 percent of its exports. This interesting point Should not be taken to imply 'that venezuela had no advantages over Nigeria prior to the decade of the 19705, when the production and supply of oil to 48 TABLE 5 Exports of Crude Petroleum by Country -1929 Country of Crude Oil Total Origin Exports Percentage long tons* of Exports Venezuela 18,916,256 61.888 United States 3,566,804 11.670 Colombia 2,536,500 8.299 Mexico 2,344,039 7.669 Persia 1,509,026 5.202 Peru 1,004,006 3.285 Russia 305,364 0.999 Trinidad 124,459 0.407 Canada 101,908 0.333 United Kingdom 48,094 0.157 N.E.Indies 22,258 0.073 Formosa 2,612 0.009 Romania 2,502 0.008 Italy 298 0.001 France 25 0.000 SQQIQg: Jose Amado Gil Ravelo, Oil Revenuasl Di§§2jbntiona1 1' 'ons n Economic Develo ment: An Ana S's of he W. 1990. P- 36. *A long ton is the equivalent of 2,240 pounds. 49 the world market became very important following the Middle East conflict between Israel and the Arab States.” While Nigeria was relatively debt free from 1965 to 1970, Venezuela's early economy in 1902 was saddled with a national debt of more than $50 million that was owed to Europe and the United States, a sum equal to ten times the annual income of the national government.” Venezuela, therefore, was a suitable choice to use for comparisons with Nigeria, especially noting that both share certain commonalities in terms of economic development and access to capital. Venezuela, then, could help provide a useful comparable basis for achieving the objective of this study: an analysis of two development.models, the leading sector and the balanced growth methods to economic development. It must be stated that this study was not intended to serve as a general or definitive test of the Nigerian economy. It was instead intended to be retrospective and to provide a perspective for a cautious understanding of economic development drawn from two separate methods. A.definitive study would require a much 37The Yom Kippur war that was fought between Israel and the Arab States gave rise to the use of the "Oil Weapon," by the Arab States in the form of an imposition of embargo on all of the industrialized nations of the world. 3'Fundacion John Boulton, Poliriga X Ecgnonia an yaneanala; l8lQ-l97§ (Caracas, Venezuela: Editorial Monte Avila, 1976). 50 greater number of experts, evidence, data, as well as more money and time. Rather, it was to examine whether the Nigerian model, based on the leading sector approach, had brought about the useful changes that the planners and theorists had intended. The objective was to measure the consequences, or the relative success of the new economic development policy, as implemented by the proponents of the leading sector approach, testing for the positive changes the approach brought to the economy. To achieve the above objective, it became necessary to identify'a method to verify success and define the main.points of agreement or otherwise, as discussed and identified in the previous chapter reviewing the theoretical concepts. Six important economic indicators, example; employment, income distribution, foreign trade,linkage effects, foreign debt, and economic growth that generally defined the level of performance of any economy were selected.as.a good measure for evaluating the two conflicting economic models. These criteria represented the measurable critical variables that constituted. the basis of the comparative analysis. To facilitate the process, each of these variables was used to develop a hypothesis that showed the contrasting nature of the positions taken.by the respective groups to this controversy. The hypothesis for each variable was used to generate an objective function that served as a measure of 51 economic development. Each was evaluated for performance and conformity with the contending group position. The criteria was further used in the discussion and analysis of the data, as a determinant of success or failure, in the economic role it was supposed to play in order to foster economic development. To aid understanding, the leading sector group was represented in the hypotheses by LS, while the balanced growth group was noted as BG. Hypotheses EEElQYEQDL LS: Employment opportunities become greater as. the reliance on the leading sector approach to development increases. BG: Reliance on the leading sector will increase unemployment and may well reduce opportunities. The leading sector approach to economic development suggested that the growth of the industrial sector created more responsive employment opportunities upstream and downstream of its source, through some form of inducement mechanisms. That inducement would spur investments in subsidiary service industries that would address both industry needs and the needs of the workers, thereby energizing the course of development. The result would be the development and growth of several ancillary employment opportunities 52 reminiscent of those found in dynamic urban areas. The economic significance of labor as a factor of production consisted in its dual aspect--its role as a consumer as well as a producer. In combination with other factors, labor contributed to total product. But unlike the other factors, labor was also the consumer of the product. The leading sector group further argued that one of the consequences of simultaneous investment in all sectors was the slow response to the provision of employment. In several underdeveloped countries, the proportion of the labor force in industry in the decade of the 19605 increased very slowly, obviously in.response to the slow growth of the industrial sector. Between 1955 and 1964, the 4 percent growth rate of manufacturing and industrial employment in all developing countries was barely able to absorb even a small proportion of the increase in the available labor force."’9 That argument was countered by the balanced growth group with the fact that industrialization, as it is known today, has failed to provide employment as needed. The migration of rural labor to urban areas in search of employment and better living conditions tends to exacerbate the problems of unbalanced growth. AS an illustration, the 3”Recent Overall Progress in industrialization Achieved by Developing Countries," Qnireg Narions Bullarin gr Ingnsrrializarign and Erogngriviry. fill. 53 increasing divergence between urban and rural incomes had arisen both as a result of the relative stagnation of agricultural earnings (partly as a direct outgrowth of post- war bias towards industrialization at the expense of agricultural expansion) and the concomitant phenomenon of rapidly rising urban wage rates for unskilled workers.‘0 For example, as observed by Arthur Lewis“, Urban wages are typically at levels twice as high as average farm incomes. Between 1950 and 1963, prices received by farmers through marketing boards in southern Nigeria fell by 25 percent while at the same time the minimum wage scales of the Federal Government increased by 200 percent. The balanced growth group further contended that unbalanced investments in development, practiced by some developing economies, does at its initial stages, reduce employment by displacing existing industries, through cessation of subsidies by governments and by loss of financial credit offered by commercial institutions.‘2 That backlash was shown by the growing levels of urban unemployment in developing countries, which implied that the employment creation aspect of the leading sector approach to development was unpredictable. The balanced growth group also pointed out “Todaro, "Income Expectations, Rural-Urban Migration and Employment in Africa," pp. 391-5, 411-13. “Lewis, Reilectigns gn Nigeria's Economic Grgwth, p.42. "Seers, The Bola of Indnstry in Qevelopnenr, pp. 461-463, and Singh, Egononics of Development, pp. 78-80. 54 that displaced workers from industries, such as above, tended to remain unemployed indefinitely because of the very low absorbing capacity of the new, often high technology industrial sector. To test the hypothesis on employment, historical employment data (in numbers) by sector was evaluated by the author in both.Nigeria and Venezuela for the period.covered.by this study. The purpose was to determine whether any of the anticipated changes desired and proposed by the proponents of the leading sector approach was achieved. To accomplish this, an analysis in the following steps was presented: --Analyzed employment figures as related to the primary (agricultural), secondary (industrial), and the tertiary (service) sectors, at the inception of the study period. --Analyzed employment figures for the same sectors for the end of the study period. --Compared the above analysis with Venezuela in order to identify trends in employment variations and provide possible explanations. --Compared Nigeria's performance to that of Venezuela and draw conclusions relative to the effectiveness of the employment policies of both countries with respect to creation of jobs. 55 WWII LS: The leading sector approach fOsters equality in income distribution. BG: Reliance on the leading sector approach perpetuates inequality in income distribution. The existence of huge differences in the distribution of wealth in some underdeveloped countries of the world gave rise to renewed thinking on the methods of achieving some form of equity. The recognition that large-scale transfers of income are politically unlikely in developing or developed countries made it necessary to evaluate the results of any development policy in terms of the benefits it produced for different socioeconomic groups. In this respect that benefit referred to the aggregate share of income received by each of the major groups that collectively make up the country's economic sector. The perspective held.by the leading sector approach.was that the level of industrialization provided a strong connection in any political system between the growth of wealth and an improved living standard. The leading sector also argued that as the transition from very low levels of development to higher ones are realized, income distribution undergoes useful changes and redresses inequalities. Those changes are forced. by the jprocess of transformation of production functions from agricultural and primary products to 56 intermediate and final products. That change tended initially to aggravate the difference in income distribution, but then redressed it as the income levels increase. This point about the leading sector approach was a source of contention with the balanced growth group. They argued that such increased differences only aggravated existing poverty levels with no guarantee of a remedy to redress losses suffered later in the cycle by others in the lowest economic leveLs. The balanced growth group further contended that the mere nature of investment in industrial development required large-scale capital investment, which, in turn, tended to concentrate income within a small group of people within a small geographical area, thereby aggravating the already existing inequities. This argument underlined the difference in development approach between the two groups. Capital intensive investments in only one sector, in the opinion of the balanced growth group, also tended to deplete the much needed capital reserves of underdeveloped countries. It was also argued that the leading sector approach unfortunately ensured that several important sectors, for example agriculture or service industries that augment the process of development, such as health services, were left out or were relatively neglected. The approach was also said to perpetrate the element of income inequality between the rural poor and their urban counterparts. 57 From the perspective of Dharam P. Ghai“: In Kenya average earnings of African employees in the non-agricultural sector rose from approximately $194- in 1960 to approximately $360— in 1966, a growth rate of nearly 11 percent per annum. During the same period the small farm sector of Kenya experienced a growth of estimated family income of only 5 percent per annum, rising from $114- in 1960 to $154- in 1966. Consequently, urban wages rose more than twice as fast as agricultural incomes, so that in 1966 average wages in the urban sector were approximately two-and-a-half times as high as average farm family incomes. This situation was explained by the leading sector approach as a perhaps unfortunate necessity of development. According to Hirschman, in his attempt to alleviate the fears associated with income distribution problems, "It is the experience of unbalanced growth in the past that produces, at an advanced stage of economic development, the possibility of balanced growth."“ The most critical concern lay in the negative effects of the industrialization policy of the leading sector approach on agriculture. The desire was to increase investment in agricultural development so as to reduce considerably the problem of income inequalities, and to stem migration of manpower into the already depressed existing urban areas. The approach used to determine income distribution was also used first to analyze sectoral distribution of income and “Dharam P. Ghai, "Incomes Policy in Kenya: Need, Criteria and Machinery," East Africa Economic Review (June 1968): 20. '“Hirschman, The §trategy of Econonic Eevelopment, July 1964. 58 the growth of earned income in the various sectors of the economy. It was necessary to note, in caution, that in underdeveloped countries and most Third World Countries, unreliability of acquired data and possible poor quality of information were persistent issues. However, it is believed that the approach described above, yielded an acceptable means to test an income distribution profile of the two countries for the period.under consideration. Egreign Trade LS: The leading sector approach ensures diversification of trade and the economic base. BG: Reliance on the leading sector approach will increase the risk of failure and uncertainties and may permanently hamper diversification. One of the major limitations of underdevelopment was the severe hinderance it imposed on trade. Further restriction came from the extreme low levels of income at the local level and the inability to purchase imports with the result that even trade at the national level was depressed. These problems conferred importance on the topic of trade and attracted the interest of economists. Adam Smith, presenting his arguments on the importance of international trade, noted that: 59 By means of it, the narrowness of the home market does not hinder the division of labor in any particular branch of art or manufacture from being carried to the highest perfection. By opening a more extensive market for whatever part of the produce of their labor may exceed the home consumption, it encourages them to improve its production powers, and to augment its annual produce to the utmost, and thereby to increase the real revenue and wealth of the society. In fact, John Stuart Mill“, went further to say, . . . the opening of a foreign trade, by making them acquainted with new objects, or tempting them by the easier acquisition of things which they had not previously thought attainable, sometimes works a sort of industrial revolution in a country whose resources were previously underdeveloped for want of energy and ambition in the people. The proponents of the leading sector approach to economic development further contended that underdeveloped countries may well suffer from problems of export dependence, concentration and the ever-changing pricing structure of international commerce that established poor terms of trade. Thus fluctuation in prices of export commodities, which was often unfavorable, created balance of payment problems and perpetuated unfavorable trading terms. This followed the increase of imports, higher income levels, and the increased demand for basic industrial goods. The leading sector group suggested that a diversification of the export base and the increase of manufacturing capacity at home better served to ”Adam Smith, An Ingnig into the Nature and Causes of The flaalrh_g£_narign§, Edwin Cannan (ed.), 1937, p. 415. ‘wJOhn Stuart.Mill, Principles of Political Econony, Vol. II, Book III, Sec. 5, Chap. 17 (London 1848). 60 satisfy local demand and also reduced the quantity of products imported. The leading sector group maintained that their approach should also mitigate the unfavorable effects of balance of payments and help move the country toward achieving stability in international commerce. The counter argument from the balanced growth group was presented in the form of historical facts. The balanced growth group contended that events have proven that despite huge revenues earned by Third World Countries that benefitted from the high oil prices of mid- to late 19705, their economies have simply in the long run become more dependent on their exports of crude oil with little or no diversification. Arguably, they failed to diversify successfully their economic home base because most of their trading partners introduced restrictive import policies or competition that negated all efforts to make a profit. Secondly, the balanced growth group agreed that the development efforts of these Third World Countries were also hindered by the difficulties presented by the increasing subsidies needed from the government to reduce production costs required by the base industries. Finally, the rapid population growth presented human problems that demanded urgent attention. Thus, most developing countries resorted to importing basic commodities as well as food because the agricultural sector and other 61 basic local food processing industries were neglected or forced into decline due to the fact that they were not on the priority list of the leading sector approach. That action, the balanced growth group explained, was to some extent responsible for the huge balance of payment.problems found in, and the high levels of, foreign debt owed by underdeveloped countries. This was the dismal picture of development, economic stagnation and agricultural backwardness in :most of’ the underdeveloped. countries ‘that. adapted. the leading' sector policy. It also represented the most important component of the leading sector economic development approach about which the balanced growth group is most critical. In response to the above predicaments, the balanced growth group suggested a change in the export oriented strategy of the leading sector approach. According to H. Myint", presenting his arguments for the balanced growth group, "agricultural import substitutes will be easier for developing countries to produce than industrial import substitutes." The intent, at least, was to meet the increasing need for food at home and thereby reduce the substantial food import bills incurred by the respective countries. It was assumed also that it would simultaneously "Myint, The Ecgngnics a: the Eeveloping Cguntrias, p. 130. 62 reinvigorate the agricultural sector. In fact, according to M. P. Todard“, in evaluating the effects of world trade on the Third World, We can state almost without reservation that the principle benefits of world trade have accrued disproportionately to rich nations. Trade has been clearly harmful to the majority of the people in the Third World. The above underlines the handicapped position of ‘underdeveloped. countries ‘that. adopted ‘the leading’ sector approach of economic development. The quote also supports the case of the balanced growth group in urging a development approach that did not concentrate solely on one leading industry. In order to evaluate the role of foreign trade on the development process, the author conducted a historical analysis of the following trade indicators for the period covered by the study: --Imports by sectors, indicating values in dollars --Composition of Imports in dollars --Exports by sectors, indicating values in dollars --Composition of Exports in dollars --Hydrocarbon Exports, indicating values in dollars --Food items imports, indicating values in dollars Analysis and comparison of the above indicators assisted in observing trends in trade composition and facilitated the “Todaro, Egononig Qevelopment in the Third World, p. 393. 63 identification of changes that showed evidence of satisfactory diversification. The expectation was that satisfactory changes, based on the ideas of the leading sector approach, would meet the original requirements set by Nigerian planners. Those changes should have led to a higher proportion of manufactured export goods and a corresponding reduction in the volume and monetary value of traditional export raw materials. It should also be manifested in the form of higher foreign exchange earnings well above the level achieved by the export of raw materials. The objective effect should be a move towards a relatively more favorable balance of trade and the achievement of a positive balance of payments. For the purpose of this study, any change that failed to satisfy the above terms or showed only marginal or temporary signs of affecting the volume of export, was conditionally judged unsuccessful. Linkages LS: Linkage effects will result from pressures created by lack of balance. BG: Lack of balance in investments will depress uniform growth and will hinder any useful linkage effects. From the perspective of Meier,‘9 “Meier, Lpaging lssuas in Econonig Devalopment, p. 368. 64 . . . two inducement mechanisms may be considered to be at ‘work ‘within the directly productive activities sector. These are first, the input provision, derived demand, or backward linkage effects, i.e., every non- primary economic activity, will induce attempts to supply through domestic production the inputs needed in that activity. Second, the output-utilization or forward linkage effects, i.e., every activity that does not by its nature cater exclusively to final demands, will induce attempts to utilize its outputs as inputs in some new activities. The lack of interdependence and linkage was, of course, one of the most typical characteristics of underdeveloped economies. To address this issue, the leading sector approach suggested that the pressure from unbalanced investment serve as an incentive for induced investments in other sectors. 'The leading sector approach further argued that the creation of strategic imbalances would set up stimuli and pressures which were needed to induce investment decisions. As expressed by H irschman‘r'o : . . . our aim must be to keep alive rather than eliminate the disequilibria of which.profits and losses are symptoms in a competitive economy. If the economy is to be kept moving ahead, the task of development policy is to maintain tensions, disproportions, and disequilibria. The leading sector group further maintained that the establishment of a "master industry," would almost certainly ”Hirschman, Tha Strategy or Economic Developmenr, p. 66. According to his view, the central task of a development strategy is to overcome the lack of decision-taking actions in the economy: unbalanced growth approach is therefore necessary to induce investment decisions and thereby economize on the less developed economy's principal scarce resource, namely, genuine choices by decision. 65 lead to the establishment of associated "satellite" industries. 'That, in turn, would serve as the stimulus toward the setting up of induced nonsatellite industries. Satellite industries could, therefore, be established through backward or forward linkage. A satellite industry usually had the following characteristics: 1. Its minimum economic size was smaller than that of a master industry. 2. It enjoyed a strong location advantage from proximity to the master industry. 3. It used as principal input an output or by-product of the master industry or its principal output is a minor input of the master industry. The leading sector theorists concluded their argument by suggesting that.to»encourage effective linkage effects, the choice had to be in favor of industries that produced at the intermediate stages of production. They excluded investments in agriculture which were considered primary, generally characterized by the scarcity of linkage effects because a large proportion of agricultural output was destined directly for consumption or export. The balanced growth group, disagreeing, argued that it was not realistic to expect agricultural stagnation to be broken simply by the impact of rapid.growth.of heavy and large 66 scale industry.51 What happens if it is not broken? They argued further that the rapidly growing industrial sector would require food for the growing urban population and raw materials for expanding manufactures. They suggested that disregard for increasing agricultural output would create food shortages, high food import bills, high foreign debt levels, and inflation which might ultimately negate the expected benefits of economic development. In conclusion, the balanced growth group insisted that a model of development in which industry had to depend on domestic agriculture for supply of food and raw materials embodied more accurately the constraints under which some of the underdeveloped countries had to operate than one in which free and unlimited imports of these commodities were allowed. The argument, therefore, was how to investigate the input-output relationships of the economy which would enable one to determine the relative magnitude of linkages generated by the industrial sector in order to understand the consequences of each economic development model. The petroleum sector generated only marginal backwards and forwards linkage effects from.exploration to export of the crude oil. The Nigerian economy was no exception, since it was also dominated by the export of crude oil. Given these conditions, the author used any available sectoral growth data 51Datta, Earspactiyaa gr Egonomic Eevelopmenr, p. 101. 67 for the period under study to estimate intersectoral relationships that may be used as a framework for measuring linkage effects. Any reasonable increase over the time under evaluation manifested in the form.of either a reduction in.the import of an industrial or sectoral intermediate input, because of the production or development of a domestic substitute, was considered a positive linkage effect and, therefore, consistent with the theory of the leading sector approach. The reverse was viewed as in support of the position of the balanced growth group. Egraign Eebt LS: Foreign debt level will be manageable under the leading sector development approach. BG: Foreign debt level will be overwhelming and may derail the development program. The.difficulties imposed.by the limited availability of capital in most underdeveloped countries was one of the major reasons for very low levels of investment and.development. In fact, according to Meier,52 "the general rate of development was always limited by the shortage of productive factors. If any one scarce factor associated with underdevelopment should be singled out, it would be capital." 52Meier, Laading lssues In Economic Development, p. 219. 68 The leading sector approach, pointing to the need for adequate capital and the fact that development programs need to be sustained, suggested that underdeveloped countries augment their meager domestic savings with borrowed capital from abroad. They argued that capital increases from investment necessitated more savings or foreign assistance. They recognized that foreign assistance, if not in.the form.of grants, meant some burden in the future, but concluded that foreign loans were necessary and that their rate of repayment would determine how much was saved at home in the future. Meier went on to explain that "capital accumulation brings along, strong entrepreneurship and training of workers and public administrators, all of which are critical components to development." The advantages of foreign capital, therefore, was to overcome the inertia imposed by lack of capital at home, and by so doing, stimulated domestic entrepreneurial skills which would, in turn, help reduce the debt payment burden while spurring development. The balanced growth group disagreed, arguing that the consequences of excessive external debt on the fragile economies of the underdeveloped countries could literally destroy any hopes of improving those economies. They theorized that the ease by which an outside loan could be acquired may diminish the effort level at home and lead to the slowing down on investments and increase of domestic savings. 69 They further expressed concern over the risk of misapplication of loans or outright abuse, and dwelt at length at its consequences to these countries. In fact, according to Singh, 53 the efficacy of external financing as a means of fostering economic growth in an underdeveloped country depended on the following factors: 1. the volume of savings mobilized is large in relation to the strain involved in implementing and operating this technique: 2. the resources collected in this manner are productively employed so as to secure the maximum advantage; 3. that while a moderate rate of inflation arising on the wake of external financing is permissible, the practice should not lead to runaway inflation. These conditions were applicable to all underdeveloped countries and were terms necessary for the successful use of scarce capital. They also helped to minimize the risk of :misapplication and abuse 'which. was of considerable significance in some economically dis-advantaged countries. Nigeria and Venezuela obviously did not have to depend on external financing by virtue of their advantaged positions of wealth.brought forth.by the international crude oil market. Nigeria's adoption of the leading sector approach to economic development implied the pursuit of an expensive and aggressive 53Singh, Ecgngnigs of Eeyelopment, p. 337. 70 development program. That approach, as dictated by the policies of the leading sector approach, led to the use of its crude oil resources as a guarantee of payment of external debt and.also led.to a substantial level of foreign debt.which rose to slightly more than $36 billion for Nigeria and $26 billion for Venezuela in 1990.“ The objective of the Nigerian external financing program was to acquire the use of foreign capital at suitable terms and to use the financial capital to attract high level expatriate manpower. They further intended to hold external debt at a maximum level of 25 percent of exports, for debt service and amortization. The author tested the impact of foreign debt on the dynamics of economic development of these two countries under comparison, along the lines of a historical analysis of the following indicators: --Total External Debt for the period under consideration --Total External Debt as a percentage of G.N.P for the same period --Total Debt Service charges --Debt Service Ratio as a percentage of Total Exports. 5‘Intermitielrw‘l Monetary Fund W Shatistics Yearbook, XLIII,1990. World Tablas, 1989- 90 ed. 123W); (Baltimore and London: The John Hopkins University Press, March 1990). 71 The result of the analysis helped in evaluating the effectiveness of the external debt management policies of the two countries and the degree of success or failure in their utilization of loans that were acquired. Egononic Growth LS: Adoption of the leading sector approach to economic development will ensure a relatively faster aggregate growth of the economy. BG: The leading sector approach will ensure a relatively much slower rate of aggregate economic growth. The issue of economic growth in underdeveloped countries of the world, as stated earlier, must be capable to address a variety of important components. The argument was that economic development should be viewed in its global form to ensure that goals achieved were sustainable as efforts toward conquering emerging new priorities continued. Economic growth must be tied to overall improvement and should go beyond.the enhancement of mere economic factors. It should also address the issue of equity in the distribution of assets, especially to the poor. According to Meier,55 "a ”Meier, Eaading issues in Economic Eevelopmenr, p. 18. He went further to distinguish between four basic approaches to the problem of raising the welfare of the low income growth .as: (a) Maximizing GNP growth through raising savings and allocating resources more efficiently and equitably; (b) redirecting investment to poverty groups in the form of 72 more general statement will recognize that the income of any household is derived from a variety of assets: land, privately owned capital, access to public capital goods, and human capital embodying varying degrees of skills." The leading sector approach to economic development, convinced of the need for industrial investments, concluded that such investments would spur the growth of other ancillary (satellite and nonsatellite) industries, thereby providing rapid growth as the linkage effects evolve. That suggested investments in industrial capacity without the benefit of a fully matured local demand, depressed by the lack of employment and necessary training. The balanced growth group, sensing danger, disagreed. They argued that the most prudent approach would be to eliminate demand difficulties, thereby opening the way for a much higher level of involvement at the local level through increased employment, savings, and higher product demand. In fact, Ragnar Nurkse“) presenting his arguments on the imposition of deficiencies, suggested that: education, access to credit, public facilities etc.: (c) redistributing income or consumption to poverty groups through the fiscal system or through direct allocation of consumer goods; and (d) transfer of existing assets to poverty groups, as in land reform. He concluded by arguing that in some countries, most of the above was applicable, depending on their initial economic and social structure. s"5Nurkse, Egnilibrinm ana Growth in the World Econgny, p. 279. 73 The elimination of demand deficiencies would do much to mitigate the more potential supply deficiencies by encouraging a higher level of gross savings and encouraging more induced investments at a later stage. The case, therefore, was for the expansion of income on a broad basis and the elimination of poverty by increasing investments in agriculture. An example was given by Sen” in the case of South Korea and Taiwan, Where the method of removing poverty was one of guaranteeing employment at a tolerable wage, and this has been possible by a very fast expansion of these economies using labor-absorbing production processes. The agricultural approach was chosen for the underdeveloped countries because of the existence of widespread nutritional deficiencies, the issue of undeveloped agricultural sector, the absence of an industrial sector capable of (generating sufficient. capital, and so forth. Investment in agriculture would also, in addition to addressing other inadequacies, provide the market for manufactured goods of the industrial sector, as the standard of living improved and employment in the industry became more available. The agricultural sector must, therefore, be considered as an important contributor to the development process and may 5TSen, "Levels of Poverty: Policy and Change," EQIIQ_BQDK W (July 1980): 53-65- 74 also be a precondition for industrial growth. According to T.W. Schultz”, . . . in a high food drain economy where most of the income of the community is represented by food, there is little room except in agriculture for new and better production possibilities, because the productive efforts required to produce food are so large a part of the whole. He went further to conclude that: . . . if increase in agricultural production takes place without corresponding expansion of other sectors of the economy, the demand for agricultural products will fall short of supply, and this would lead to (assuming that export markets remain unchanged) depression in agricultural prices and fall in incomes and would thus hamper growth. The above arguments addressed economic development from the perspective of scarcity of capital as prevalent in most underdeveloped countries. The situation of Nigeria and Venezuela was notably different. They are members of the Organization of Petroleum Exporting Countries (OPEC) and had benefitted from the Sharp increase in the international price of crude oil, the availability of capital and the ability to acquire it in the form of loans with relative ease. Their problem was rather more of the exercise of ;prudence and effectiveness of capital utilization in the face of their desire to implement several ambitious economic development programs. The approach used to evaluate the growth of their economies was through sectoral comparison of 5'T. W. Schultz, The Egonomic Organization or Agriculrura (New York: McGraw-Hill, 1953), p. 273. 75 their two economies to enable us determine the impact of any changes during the period under study. To accomplish this, the comparisonwwas conducted in the following steps: 1. Conducted a detailed analysis of the various economic sectors from 1975 to 1990, to ascertain their'impacts on the overall economic performance. This analysis was designed to account for the weighted, (in percentage), yearly contribution of each of the economic sectors to the national account. 2. Compared Nigeria's economic performance with that of Venezuela. It was expected that such a comparison would lead to some useful conclusions because, as noted earlier, Venezuela pursued a different economic development approach. The two countries are similar in level of development, social characteristics, and economic base. Also, both are active members of OPEC and were beneficiaries of the huge revenue returns from the oil sector in the 19705. Indication of reasonable achievement in any sector was accepted as a mark of growth in investment and productivity and an increased contribution.to the national economy. If, on the other hand, the growth rate was marginal or insignificant as observed by comparison with available data for the period ‘under study, or had not shown a distinguishable difference, 76 the economic sector'was judged as having failed to produce the anticipated rapid growth rate. CHAPTER IV STRUCTURE OF THE NIGERIAN ECONOMY (1900-1960) Brief History of Nigeria The name "Nigeria" came from the River Niger which entered the country from former French West Africa. The original colony of the British was referred to Lagos Island with an area of about 1,300 square miles on the mainland: the island was occupied by the Royal Navy in 1861 in an effort to stop the slave trade and was Nigeria's capital and principal port for several decades. The northern and southern protectorates intO‘which.Nigeria was formerly divided were not established until 1914. For administrative purposes, the country was further divided into regions and provinces. The northern region with the most population (17 million in 1953) represented more than half the total population of Nigeria. It covered an area of 282,000 square miles or three quarters of the country's total surface land area. The eastern and western regions, together often referred to as the "South" were about equal in size. The east covered 46,000 square miles in area, with a jpopulation of 7.9 million, including the 16,581 square miles 77 78 and 760,000 inhabitants of the southern portion of the Cameroons Trust Territory, known as the Southern Cameroons. The west covered 45,000 square miles with a population of 6.5 million people. With a population of 32 million in 1953, Nigeria's average population density was 85 people per square mile. As in any predominant agricultural economy, most of the population lived in villages and small towns. Approximately four-fifths of the population earned their livelihood as farmers, fishermen, hunters, herdsmen, or lumbermen. About seven out of every 100 men were skilled craftsmen or industrial workers, while six were engaged in commerce, either as traders or employees of commercial firms. Non-agricultural employment was a significant source of income only in the port cities, inland commercial centers, the mining districts of the north and the eastern region because of the absence of sufficient arable land and migration into urban centers. The country was granted full independence from the British in 1960: the contemporary and unified Nigeria is young as are most of the countries on the West Coast of Africa. Many African tribes, religions, and languages are represented in Nigeria. Among the main tribes are the Ibos and the Ibibios in the east; the Yorubas in the west: and the Kansas and Fulanis in the north. The north is predominantly Moslem in both religion and its customs: the south is mostly 79 Christian. Hausa is the linqua franca of the north, and the most widely spoken languages in the south are Ibo and Yoruba. Exports from Nigeria at the beginning of the century were essentially naturally occurring products extracted from the southern rain forest belt--wild palm oil kernels and wild rubber which accounted for nearly 90 percent of the value of all exports.” The economy was rural, and a great majority of Nigerians engaged in small-scale farming, producing yams, cassava, and palm fruits in the south, but guinea corn, millet, and other grains in the north. The expansion of trade was the primary instrument used by the British, to carry out its "Dual Mandate" doctrine in Nigeria. This doctrine required that the resources of a colony were to be developed to help the native population as well as the other nations of the world.60 To achieve this objective, emphasis was placed on the development of transportation, communication, and the maintenance of law and order. The British relied largely on the railroad to open up the country and its construction proceeded well ahead of demand. s’Carl K. Eicher and Carl Liedholm,eds., Grgflh and analgpnanr gf rha Nigerian Ecgnomy (East Lansing, MI: Michigan State University Press, 1970), p. 9. 60 H. A. Oluwasanmi, Agrignlture and nigeri an Ecgngnig Dayalgpnanr (Ibadan: Oxford University Press, 1966). 80 Between 1920-1940, the increase in Nigerian agricultural output came from small farmers who expanded export crops primarily through additional labor and land inputs. However, that was aided by a policy put in place by the colonial government that exclusively preserved the land for'Nigerian.farmers. 'That approach.played.a dominant role in the organization of agricultural production to date. As illustrated in Table 6, the predominant produce were export crops, food crops for consumption and local trade, and products for interregional trade such as cattle, kola nuts, and palm oil. The annual rate of population growth increased from about 0.6 percent in 1940 to approximately 2.3 percent (32 million) by 1960. Food crop output appeared to expand about as rapidly as population growth, while food imports remained at a low level. Exports of palm products, cocoa, and groundnuts roughly doubled from 1940 to 1960, while cotton exports increased 300 percent and rubber increased twentyfold. Although the primary expansion of export crops came about during this period from bringing more land under cultivation, important productivity gains in cocoa and.groundnuts can.be attributed.to the opening of the biological research process which was started in the late 19405. Nigeria emerged as the world's largest groundnut exporter, with exports increasing from 169,480 tons in 1940 to 332,916 tons in 1960. .HH .m .osma .mmmmm .mummum>Hco mumum sameness .Nadqdmm .fiomoms sumo can .8203 .x T30 “add mmm.- mam.mnm ~mm.ma omn.mma mmo.m~ msa.mae msm.mn mmarema omma ena.m~ eom.mmm Hma.na mva.mma mmH.mH 4mm.nmv mma.m~ mae.mm mmma mm~.ma Hmm.aam mso.~a oHo.mSH emm.ma mom.mam mmm.mH mem.mm ommH mmm.~ www.mma emm.a mma.vaa mme.m mmm.~mm oma.~ voo.sm meme mse.a omv.mma mmo.H mmm.mmH oom.a Hmm.mm~ mmm.a mms.mm oema nmo.~ mmm.mma mmm.a mmm.~ea m¢~.~ mes.~am mmm.H mea.mm mama mma.m Hmm.mea om~.m Hom.mma msm.m mmo.om~ mmm.H Hmn.~m omma emn.~ m-.m~H mma.e mHH.m~H Smm.e mmm.~sm eme.a mos.¢e mama omaa.fl mo¢.me smm.e mmm.em mam.m oao.mom mm~.H mmH.mH omma ms oam.m mme.a emm.ms mmm.H mam.mma «an moa.m mama m mmm mem.a Hmm.mm ame.~ mom.~>a Hod ~nm.~ onH m oms mmm ~mm.om omoa www.moa RH one momH e mmm Hmm mom.me «mm emm.mm m mom coma coo u Amcouxqe ooo m Amcoumwe ooo m Amcou\qe ooo m Amcou\qe muscoom HHo Baum madcumx Baum ooooo How» sandmaz Bonn munocxm Hodflocaum w mdmda 82 This success in export crop production led to major reforms in the administrative approach of the colonial government in the 19405, and gave birth to the establishment of the marketing boards between 1939-40 to control the foreign sale of all major export crops except rubber. It also gave rise to a sustained effort by the government to introduce and maintain research centers for all of the major export crops and a few of the food crops, such as maize. The Colonial Development and Welfare Act of 1940 provided for sustained British personnel and financing to expand the Cocoa Research Institute in Ghana, which was started in 1938, and the Oil Palm Research Station, which was opened in Nigeria in 1939. Later in 1951, these institutions were expanded to serve the entire West African coast, and gave rise to several other institutes for various forms of export crops. Introduction of colonial land policy also played a major role in the organization of agricultural production. The Land and Native Ordinances of 1910 and 1917 confined investment in agricultural production in the hands of Nigerians.“1 Foreign firms were initially allowed to invest only in trading activities since very little manufacturing was in process. The passage of the 1945 Colonial Development and Welfare Act, cleared the way for the colonial government to “Oluwasanmi, Agriculrure and Nigerian Econonic Went. P- 146- 83 allow some form of development planning in the colonies. In 1954 a World Bank Mission, which had visited Nigeria earlier, proposed an "integrated development program" for long—run economic expansion in Nigeria. It failed.to recommend a major structural change during the decade of the 19505, even though it recommended a doubling of public expenditure between 1952- 53 and 1959-60. Instead, it stressed the need for development, through the expansion of educational facilities, as well as a pool of Nigerian manpower which would become the basis for Nigeria's future economic growth. Development of Education in Nigeria Following the increase of administrative powers granted to the regional governments of Nigeria by the 1954 colonial constitution, the Eastern and western regional governments moved forward strongly to commit to the development.of primary education. Their aim was to achieve universal free primary education for their respective region. As shown in Table 7, government expenditure for education grew fourfold between 1952 and 1962 in eastern Nigeria with enrollment in primary education doubling in the same period. In the western region, government expenditure in education for the same level increased.more than 600 percent.with enrollment increasing 300 percent. 84 TABLE 7 Expenditures* on Primary Education and Primary School Enrollment in Eastern and Western Nigeria, 1952-1962 Eastern Nigeria Western Nigeria Year Expenditure Enrollment Expenditure Enrollment (£000) (£000) 1952 1,059 519 1,034 400 1953 1,225 573 1,201 429 1954 1,283 665 3,668 457 1955 1,304 743 4,096 811 1956 3,893 904 4,082 908 1957 4,251 1,209 4,630 983 1958 3,201 1,221 4,612 1,037 1959 4,177 1,378 5,676 1,080 1960 4,912 1,430 7,281 1,125 1961 4,684 1,274 6,506 1,131 1962 4,168 1,267 6,200 1,109 Source: A.Callaway and A. Musone, Financing of Education in nigaria, (Paris: ‘UNESCO, International Institute for Educational Planning, 1968) pp. 15, 133. Note:- *Expenditures include both recurrent and capital outlays. 85 Between 1955 and 1962, the eastern region devoted between 37 and 49 percent of its annual recurrent budget to education: in the west the range was from 36 to about 47 percent for the same period. In the north recurrent expenditure on education stayed below 25 percent and enrollment in schools showed the same remarkable trend, not following closely to the levels of enrollment in the south. The lack of interest in education in the north is probably because the policymakers of the region saw no need for increased investment in education at that period or else because of the scarcity of trained teachers which.also greatly reduced the developmental benefits from education in the south. The quality of education.was very low, even though.the improved education sector provided considerable employment for teachers and ancillary staff. Eevelopment of Industrialeanufacturing Sector The industrial sector, prior to 1950, fared no better. Industrial development was not among the priorities nor the interests of the colonial government. Although the official policy of the colonial government with respect to the manufacturing sector was not explicit, there is evidence to indicate that certain types of manufacturing activities were actively discouraged. One might speculate that the colonial government's actions with respect to manufacturing were traceable to an important keystone of British colonial policy, 86 the desire to secure and preserve markets for British-made goods . ‘2 As Joseph Chamberlain, a former British Colonial Minister in the early part of the twentieth century noted "the Foreign Office and the Colonial Office are chiefly engaged in finding new markets and defending old ones."'53 It should be noted also that it was a widely held opinion in the Colonial Office that the establishment of manufacturing firms in the colonies should be retarded, because these competing firms would reduce the market for British made goods. Lord Lugard, then the Colonial Governor General of Nigeria, also felt that "a Government would not be wise to hasten the advent of the factory in Africa."“ Lugard's position was derived from his concern about disruptivezsocial effects that would likely accompany attempts to industrialize populations based on agricultural economies. He further stated, for example, that "when trade is slack, with consequent unemployment, discontent will be rife, and “Carl K. Eicher and Carl Liedholm, Growth and Development or the Nigerian Economy, pp 57. “Walter Rodney, How Europe Under-Developeg Africa (Dares Salaam: Tanzania Publishing House),p. ; Carl Liedholm, "The Influence of Colonial Policy on the Growth and Development of Nigeria's Industrial Sector," in "Growth and Development of the Nigerian Economy," ed.: Carl K. Eicher and Carl Liedholm (East Lansing: Michigan State University Press, 1970), pp. 57-58. “Eicher and Liedholm, Grpwth and Development 0: the Eigerian Economy, p. 58. 87 there will be no lack of labor leaders eager to organize agitation on the worst models of the West."“5 The instability accompanying industrial development was thus felt to interfere with the colonial government's aim of maintaining law and order, and served as one of the many reasons for discouraging need for or retarding development. One of the domestic manufacturing industries that appeared to have been actively discouraged by the British Colonial Government was cotton textiles. In the 1930's, for example, the United African Company was dissuaded by the British Colonial Government from establishing a spinning and weaving mill near the cotton growing belt in Nigeria and a garment factory in Lagos. In fact, the desire of the colonial government to discourage industrial growth might partially explain why there was so little manufacturing industry in Nigeria . “ "Ibid., p. 58. “It is important to note that there were other important reasons for the lack of manufacturing activity in Nigeria prior to World War II. The lack of profitable investment opportunities in the manufacturing sector was undoubtedly an important contributing factor. Another was the lack of a skilled and disciplined labor force that necessitated the importation of skilled and expensive expatriate labor force. Moreover, the small size of the Nigerian markets in relation to the minimum size of plant required for economic viability and the technical constraints on production imposed by the tropical climate could also have limited investment opportunities. 88 The largest forms of industrial activity that enjoyed colonial office support were the tin and mineral mines of the northern region and the Sapele timber and Plywood Sawmill in the south that employed about 3,000 people in 19533" These industries were relatively small in capacity and significantly below economics of scale in size. Other forms of industrial activity that existed included large-scale mechanized production of cigarettes, beer, soap, metal drums, mills for processing groundnuts and palm oil, small textile mills, bottling plants, and soap factories. There is no doubt that the development and growth of industries in Nigeria was conducted and strictly controlled by British colonial policy from 1900-1960. During this period, the colonial government owned all the mineral rights in Nigeria and possessed the authority to regulate and administer almost all of Nigeria's land. Most of these rights were obtained from the Royal Niger Company in 1899 when its charter was revoked.“ The colonial government thus gained at an ”Report of a Mission to Nigeria, Economig Developmenr of Eigaria, Organized by the International Bank for Reconstruction and Development at the request of the governments of Nigeria and the United Kingdom (1953), p. 5. '“To obtain the rights, the Colonial Government paid the Royal Niger Co. £150,000 as well as half the royalties from its former operating area. The duration of the agreement to retain the rights was to be 99 years. That arrangement was abolished in 1950 when the rights were redeemed by the Nigerian Government by a payment to the United African Co. (U.A.C), that bought over the assets of the Royal Niger Company. 89 early stage the rights to collect rents and royalties and the legal power to control the development of the Nigerian mineral industry. Their authority was formalized through a series of Land Ordinances and Proclamations in both the Northern and Southern regions of Nigeria. Moreover, in a series of Mineral Ordinances, the first of which was introduced in 1902, the Colonial Government laid. down. regulations. concerning’ the disposal of prospecting and mining concessions in Nigeria. By manipulating these laws and regulations, the British Colonial Government was able to implement its policies with respect to the development of Nigeria's mineral resources. But the Nigerian economy, unlike the economies of many of its African neighbors within that period, was not built on a mineral base. Although it was the fourth largest mineral exporter among Britain's African colonies prior to World War II, Nigeria's economy was sufficiently diversified that.it was not.dependent on its mineral sector; Indeed, minerals accounted for only 16 percent of Nigeria's export earnings in 1935.69 As illustrated in Table 8, the Nigerian minerals of commercial significance prior to World War II were tin, coal, gold, columbite, silver, and wolfram. Tin was by far the most important mineral, followed by coal and gold. "s. H. Frankel. W (London: Oxford University Press, 1938), pp. 231-321. 90 The mining of tin in Nigeria dated back to ancient times. In 1884 the Niger Company discovered that.the tin used by the Hausas of the north for tinning their brassware was not brought from across the Sahara, but was being mined by Nigerians on the Bauchi Plateau of northern Nigeria. The development of the Bauchi tin fields was conducted largely by non-Nigerian mining firms on an extensive scale from 1910 because of the promotional efforts of both the colonial government and the Champion Tin Fields Company. Indeed, in 1923 the indigenous Nigerian tin industry that managed to be involved in the mining operation disappeared. The boom that followed was assisted by the extension of the railway system.to the Bauchi area in 1914, as the Nigerian tin mining industry reached its pre-World War II peak in 1929. At that time, Nigeria, with an output of 15,335 tons, was the fourth largest tin producing nation in the world." Another important mineral of Nigeria during the period of 1900 to 1940 was coal. It was discovered at Enugu, capital of the eastern region in 1909 and West Africa's only colliery that was owned by the government, was opened in that city in 1915. About 400,000 tons of coal were produced per year by the mines under very strict government control, and most of it '"Lord Hailey, hn arrigan Snryey (London: Oxford University Press, 1938), p. 1501. 91 TABLE 8 Value of Mineral Production in Nigeria, 1936 Value (f) Eercent Tin 1,880,465 76.5 Coal 269,880 11.0 Gold 233,825 9.5 Columbite 49,531 2.0 Silver 25,499 1.0 Wolfram 636 - Total E24459.786 100.0 fignrga: Carl K. Eicher and Carl Liedholm, Growth and Eavelopment of tha,lNigarian Econony (East Lansing, MI. Michigan State University Press, 1970), p.53. 92 was sold to the Nigerian railways or to other government departments. Gold also was another important Nigerian mineral of commercial significance and contributed about 9.5 percent of the total mineral value in 1936. Its role was limited.because the deposits were sparse and often uneconomical to mine. That was responsible for the limited investment capital that was attracted to the industry, and development was confined to a few small foreign owned enterprises. The colonial policy toward the development of mineral deposits in Nigeria was substantially different from their policy toward agriculture. The desire of the colonial office to preserve the land for Nigerian farmers saw the active use of their control mechanism to prevent foreign involvement in the development of agriculture. In ‘the 'mining sector, however, they were willing to permit foreign investors to develop Nigeria's mineral resources. That willingness to admit foreign investors is underlined by the fact that in 1929, for example, there 'were 144 foreign. mining firms prospecting for tin and other important minerals in Nigeria. The colonial government was thus evidently implementing its doctrine of "Dual Mandate." In fact, Lord Lugard, the first Colonial Governor General of Nigeria, in an attempt to explain the ambivalence of the Colonial Mineral Policy in Nigeria stated, "such a mineral policy, would not deprive the 93 natives of any customary rights or profits".n' He went on to add that "their discovery is generally due to the technical knowledge of alien prospectors, and the possibility of their exploitation usually depended on the scientific methods, and the use of machinery imported by Europeans."72 This statement was meant to give credence to the implementation of a discriminatory mineral policy that literally excluded the participation of Nigerians. That exclusionary approach was further made more apparent by explicit use of legislation. For example, the mining legislation stipulated that an applicant for a mining lease should have sufficient working capital "to ensure the proper development and working of the mines" and might be required to supply the Governor with "73 The "reports on the matter made by competent engineers. regulations went further to require that "if the owner of the mining lease were to be absent from Nigeria, the agent, representative, or engineer left in charge should be European." "Cark K. Eicher and Carl Liedholm, "The Influence of Colonial Policy on the Growth and Development of Nigeria's industrial Sector," in Growth and Development of the Nigerian Eggngny, pp. 52-58 (East Lansing, MI: Michigan State University Press, 1970). '"Ibid., Pp. 52-58. 73Ibid., Pp. 56. 94 These statements point to the fact that the intention of the many legislative ordinances on the exploitation of Nigerian Mineral resources were designed to exclude indigenous participation. Exclusion was achieved either through the imposition of capital requirements, capital not being readily available to local entrepreneurs, or through blatant limitations based on skin color. The ambivalent "Dual Mandate" Mineral Policy of the Colonial Government did not, however, extend to all the mineral resources of Nigeria. An exception was the energy mineral coal industry, which was considered a monopoly of the government in Nigeria for a variety of reasons. First, the timing of the discovery and development of the coal industry in Nigeria coincided with the prosecution of World War I. Coal being a source of energy and power was, therefore, considered a strategic industry. Secondly, since coal was to be used only within Nigeria and the government was the chief consumer, the participation of foreign capital and expertise were not essential. Thirdly, the bulky nature of coal presented transportation problems to the available international methods of transportation. Added to that was the fact that the industrial machinery in Europe and the rest of the industrialized world did not need an external source of fuel, partly because of local abundance but also because of the uncertainty of international supplies especially during a war. 95 These factors, collectively, contributed to the virtual exclusion of foreigners from the development of the coal reserves of Nigeria. However, the mineral policies of the Colonial Government in Nigeria ensured that the Nigerian mining industry was developed, not by Nigerians as was the case with agriculture, but by foreign capital, expertise, or the government. Global Characteristics of the Nigerian Economy After Independence (1960-19741 Post-independent Nigeria, from 1960 to 1974, was marked by the central government's efforts to achieve a successful political transition from British rule. One important issue was that of charting a suitable economic path, based on a fairly considered approach to all the sectors of the economy. That effort was marked by the introduction of the First National Development Plan for the period 1962 to 1968. The plan aimed at achieving, among other things, a savings of 15 percent of the GDP by 1975; an annual increase in government expenditure of 15 percent of the Gross Domestic Product for the plan period; a GDP minimum growth rate of 4 percent for the economy; greater development in agriculture, industry and manpower: and a fixed investment of over 2.5 billion naira (approximately $4.03 billion). The rate of 96 exchange was of the naira to the dollar was 0.62 naira to the dollar in 1975." It is against this backdrop that Nigeria marched into the fight for economic prosperity, saddled with development difficulties and.bottlenecks stemming from the implementation of the colonial Dual Mandate policy. The transition period and necessary adjustments resulted in the temporary decline of the existing economic activity levels, partly because of the flight of foreign capital, purchasing power and expertise, in anticipation of a crisis or civil war. Nigeria's dawn of independence began with an economic structure primarily defined around.a minerals mining industry that was starting to experience some curtailment due to international price fluctuations. Nigeria's manufacturing industry was restrained from growth and expansion by former colonialists who used Nigeria's raw materials for their home industries while maintaining Nigeria as an outlet for export goods produced in the home country. The agricultural industry had been left to the natives as a gesture to participation, but without the benefit of foreign capital and know-how. The mineral industry was confined to the northern region of the country, while the agricultural and manufacturing industries were distributed '"International Monetary Fund, Governmenr Financa Statistiss_x§ar_§995. V. 1981- 97 around the country. Nigeria, therefore, effectively inherited two sectors--the poorly developed modern sector and the unevolved traditional sector. The dual nature of the economy and society became important to Nigeria since the modern sector employed less than 5 percent of the population at the time of independence but made a substantial contribution to the economy. The traditional or agricultural sector, which employed about 90 percent of the available labor force was not encouraged to diversify its production and balance out its export crop production with staple food items, such as cassava, millet, and yams and other essential home consumption necessities. The result was that these other valuable food items were imported following the trend initiated during the colonial regime. As illustrated in Table 9, which points to the start of the decline of agriculture in Nigeria, the value of food items imported doubled in 1960 from the 1954 level. This represented an average annual growth rate of more than 12 percent, a rate far in excess of the growth rates of the gross domestic product (GDP) and the value of domestic agricultural 5 production in both real and money terms.7 The rate of growth of food imports continued to show increases from the ”Godwin E. Okurume, Foreign Trade and the Subsistance ct n N' e ia The Impact of Agricultural Exports on anaarig Food Supplies in a Peasant Economy) (New York: Praeger Publishers, 1973), pp. 94-95. 98 late 50's. The same trend continued till 1966 with a minor downwards adjustment of about 7% from 1954-66. The decline of food imports in 1962-64 is explained to a large extent by the fall in wheat flour imports following the establishment of some flour mills in Nigeria during 1962. The most important foodstuffs imported were fish, wheat, and wheat flour, sugar, and milk. These items accounted for about 75 percent of the value of total food imports over the period 1954-1967 as shown by Table 10. It is evident that most of the imported food items were processed foodstuffs that are not, except for’ perhaps wheat and ‘wheat flour, perfect substitutes for the major domestic staple food items like cassava, millet, and yams. It can be argued that these imports were made to augment domestic shortfalls. The likelihood of that becomes more pronounced when attention is focused on imports of wheat and wheat flour. It is quite clear from the table that wheat and wheat flour imports increased much faster than.other'major food import category during the period. Their combined share in the value of total food imports rose from 14.5 percent in 1954 to 22.0 percent in 1966. It seems reasonable to expect that, if food imports are induced as a result of short-falls in domestic production, the greatest impact would be felt in those commodities that are the closest substitutes for the domestic product. 99 TABLE 9 Value of Food Imports (value c.i.f. in millions of pounds, (£)): (ratios in percentages) Food Imports Year Food Total Total Agricultural GDPb Imports Imports Imports GDP' 1954 12.0 114.1 10.5 - - 1955 13.0 136.1 9.5 - - 1956 16.0 152.8 10.5 - - 1957 18.3 152.5 12.0 - - 1958 18.2 166.3 10.9 3.7 . 1959 20.8 178.4 11.7 . . 1960 23.9 215.9 11.1 . . 1961 22.7 222.5 10.2 1962 23.5 203.2 11.6 . . 1963 21.9 207.6 10.5 . . 1964 20.6 253.9 8.1 . . 1965 23.0 275.1 8.4 . . 1966 25.8 256.4 10.1 . . §ource: Godwin E. Okurume, Foraiqn Traga and tha Subsistence §actor in Eigeria. The Impact of Agricultural exports on Domestic Food Supplies in a Peasant Economy. Praeger Publishers, 1973. Pp. 95. ' Agriculture includes land development but excludes livestock, fishing, and forest products. b These ratios are only indicative and should be used with care since import figures are for calendar years while GDP figures are for fiscal years (April - March). - = not available. 100 Nonetheless, its effect should also show in total expenditures on food imports. Although that breakdown is not provided in the context of this study, the impact on total expenditures is evident in Table 9. Food imports doubled from 1954 to 1966, while the value for total imports showed a 125 percent increase for the same period. This increase in the value of imports was of critical consequence for a country such as Nigeria where agriculture was the most important sector during that period and employed.more than.70 percent of the population while contributing with livestock, forestry, and fisheries, more than 60 percent of the national income." The overall decline in the production of foOd crops resulted in a food shortage. 'That, in turn,was exacerbated by the continuous stream of rural labor to the urban areas in search of paid employment. Available data indicates that in the early 19605 and 19705 the growth in food demand estimated at 3.4 percent annually far exceeded that of supply estimated at 2.2 percent per year. The reason for that is related to the steady increase in.the growth rate of the population from 2.5 percent.per year in 1960 to an estimated 3.5 percent in 1970.77 The above 76 H. A. Oluwasanmi, Agriculture and Nigerian Econonic Qayalopnent (Ibadan: Oxford University Press, 1966, pp. 3-5. 'n'Tayg Lanho, fligarian Econony: A Taxtbooh o: Applied Eggngniga (Ibadan, Nigeria: Evans Brothers Nigeria Publishers Limited, 1987), pp. 24-27. 101 TABLE 10 Principal Food Imports (Values c.i.f. in millions of pounds) Year Sugar Wheat Fish Milk Value Total and Percent Wheat of Total Flour* Imports 1954 2.11 1.74 5.66 - 9.51 79.3 1955 2.44 1.77 4.84 - 9.05 69.6 1956 3.05 2.00 6.76 - 11.81 73.8 1957 2.58 2.33 8.48 0.96 14.35 78.4 1958 3.35 2.11 7.48 1.09 14.03 77.1 1959 3.22 2.64 8.72 1.34 15.92 76.5 1960 3.82 3.16 8.83 1.93 17.74 74.2 1961 3.11 3.23 8.52 1.88 16.74 73.7 1962 3.39 4.51 7.99 2.28 18.17 77.3 1963 3.48 3.57 7.25 2.38 16.68 76.2 1964 3.05 2.41 6.88 2.99 15.33 74.4 1965 2.62 3.51 7.32 3.64 17.09 74.3 1966 2.68 5.87 7.46 4.02 20.03 77.6 1967 3.03 4.64 4.90 3.61 16.18 76.0 Egnrce; Godwin E. Okurume, Foreign Trade and the Suhsistenge §ectgr in Eigaria; The impact of Agricultural Exports on the a Peasant Economy. Domestic Food Supplies Publishers, New York 1973. Pp.97 Praeger * ‘Wheat flour is included only up to 1962; figures thereafter' refer to nearly all wheat. - = not available 102 also pointed to the fact that population growth rate was greater than the growth rate of food supply in the same period. That position is further supported by Table 11 below, which indicates that the demand for food had consistently outstripped supply for a very long time, in most of the major food types. In 1972, a Food Balance Sheet for Nigeria" estimated that in 1968 to 69 about 61.2 grams of crude protein and 2203 kilo calories of energy per’ day 'were available to the population. Minimum requirements, according to the Food and Agricultural Organization of the United Nations (FAQ) for meeting the food and nutritional needs of the population, were 2420 kilo calories and 65 grams of crude protein per day for every individual. Thus, the nutrients from available food supply in Nigeria in 1968 to 1969 were on average below the minimum needed. In 1974 to 1975, the position had deteriorated further as only 56 grams of protein and 2023 kilo-calories of energy were being derived from available food supply. This was the condition in spitezof‘a sustained annual increase of nearly 25 percent of food imports between 1970 and 1977. Another, and perhaps the most appropriate indicator of the poor food situation in Nigeria during the period, was the price of 78 S. O. Olayide, A Quantitarive Analysis or Egod Eagniranent §upplies and Demand in NigeriaI 1968-1985. 103 domestic food prices. Generally, a rise in domestic food price implies an increase in demand although prices can also be influenced by supply bottlenecks and speculation. On balance, however, the continuous rise in domestic food prices in this respect appeared to be another indicator of the inadequate supply. Increased food prices had been the result of a decline in growth rate of domestic food supply in the face of increasing population, a declining agricultural sector, and increasing urban income. A look at the consumer price index from 1960 to 1977, as contained in Table 12 below, shows the extent of the shortage and the resultant price increases. In the period 1960 to 1965, the general price level, based on available urban consumers price index, showed only a small increase of about 3 percent per year. The food component of the index rose by only about 10 percent during the entire period, underlining an effort by the agricultural sector to provide the bulk of the domestic food requirements. However, on closer examination, it is observed that between 1960 and 1977, the food price index increased at a yearly rate of about 12 percentage points. However, the above does not fully provide an accurate picture of the food situation in Nigeria, since a 12 percent annual increase for most Third World Countries is considered normal. This view takes into consideration the poor state of 104 TABLE 11 Annual Rate of Growth in Food Supply and Demand in Nigeria j w — Eggg ltans Percentage rate Percentage rate of growth in Food of growth in Food Supply per year. Demand per year. Eggg_grgp§ 1.8 2.7 Cassava 1.0 1.8 Yams . 1.0 1.8 Potatoes 2.5 1.8 Plantains 1.5 1.8 Maize 2.5 3.7 Millet 2.5 3.7 Sorghum 2.5 3.7 Rice 10.0 5.5 Cowpeas 6.0 2.8 Palm Oil 1.0 4.6 Groundnut Oil 1.0 4.6 Vegetables 3.5 5.5 Oil seeds and Nuts 2.5 2.8 Local Wine 2.5 3.7 Others 6.5 8.5 Livesrock products 3.5 7.5 ELSE 6.5 9.2 aggragate 2.2 3.4 gunnrgn, Tayo Lambo, Nigerian Economy: A Textbook gf Appliag ;Econgmics, Evans Brothers Nigeria Publishers Limited, 1987. Pp. 26. (Adapted from data published by the Federal Department (of'Agriculture and the Third National Development Plan, FMED, ‘Lagos, Nigeria). 105 agriculture in these countries and the unresolved efforts of their respective governments towards the allocation of revenue for the development of agriculture. To understand the food situation in Nigeria for the period of 1960 to 1977, it is necessary to make a useful modification and avoid analyzing the data together. If the entire period of 1960 to 1977 is broken into two periods of 1960 to 1968 and 1969 to 1977, respectively, it will be observed that.the food price index showed.a modest increase of only 1.9 percent per year for the period 1960 to 1968. The 1969 to 1977 period, on the other hand, showed a different picture. It actually recorded an increase of about 19.2 percent and accounted for most of the jump in the price index for food items. In 1975 alone, the food price index recorded an unprecedented increase of more than 40 percent, the same year that the Federal Government of Nigeria implemented the Udoji salary adjustment awards for federal and state workers. It should also be noted that 1975 was the first year the government received huge foreign exchange revenue from the petroleum industry following the Arab-Israeli war. There are other important reasons, in addition to the state of the agricultural sector and the inflationary market response to the issue of new'wealth from the petroleum industry, that can 106 TABLE 12 Consumer's Price Index 1960-1977 (1960 = 100) ear All_Items Feed 1960 100.0 100.0 1961 106.4 109.8 1962 112.0 118.0 1963 108.9 106.7 1964 110.1 105.7 1965 114.4 110.5 1966 125.5 133.1 1967 120.8 119.3 1968 120.3 112.6 1969 132.3 133.9 1970 150.6 164.4 1971 174.1 211.4 1972 179.6 216.6 1973 189.3 223.6 1974 214.7 258.7 1975 287.4 367.2 1976 348.2 465.7 1977 423.1 592.2 apnrga: Tayo Lambo, Nigerian Economy, A Textbook of Applied W, Evans Brothers (Nigeria Publishers), Limited, 1987. Pp. 30-31, and Qantral BankLOf'NiqeriaL Economic and Financial Bayiay, several copies. 107 provide a plausible explanation for the continued spiral of food prices in Nigeria, during the decade of the 19705. The political and military crisis of 1966 to 1970 had a devastating effect on the economic performance of thecountry that had just won independence in 1960. Apart from the fact that a large amount of labor was lost to the war effort on both sides, considerable resources and time were put into its prosecution, reconciliation, rehabilitation and reconstruction. These events had some adverse effects on food production on the country as a whole, and especially on the eastern region of the country, that was responsible for producing more than 40 percent of the nations root crops, mostly used for food, as well as 70 percent of its palm oil supply. These production levels dropped to 29 and 33 percent, respectively, by the end of the first post-war year. Other factors also contributed to the production loss, such as prolonged periods of unfavorable weather, poor transportation, shortage of adequate storage facilities, and declining prices. The most significant of the above adverse factors was the effect of the Sahelian drought in 1972-73 that resulted from low rainfall, the encroachment.of the Sahara desert, and.other changes in the weather. It was estimated that in 1973, the worst year of the drought, production levels of such crops as :millet, guinea corn, groundnuts, cowpeas, maize and rice were :reduced by between 25 to 40 percent. It was also estimated 108 that about 300,000 head of cattle died because of starvation and many thousands more were slaughtered prematurely. Another difficulty encountered by the agricultural sector during this period was the lack of improved agricultural inputs. Procurement and distribution of seeds, fertilizers, chemicals and other agricultural necessities were handled by government agencies. Inefficiencies were thereby imposed on an agricultural system already suffering from production setbacks. Quantities of available chemical inputs were also limited, with the result that most of the farmers received none, or when they did, it was late for timely application. Affordable labor supply for farmers was also limited. The young men and women who were vital to the supply of cheap farm labor were more attracted to urban centers where they searched for viable employment, leaving the old and feeble to toil on the farms often resulting in decreased productivity. The inadequacy of capital capable of providing sufficient loans to farmers was also one of the most severe difficulties encountered by the Nigerian farmer during 1960-1977. The establishment of the Nigerian Agricultural Bank during the Second Development Plan period in 1973 was a welcome relief for farmers. The bank was charged with making loans to farmers on terms that otherwise would be considered soft by (commercial banks and other financial institutions. Although it.did not solve all the farm related financial problems in 109 Nigeria, the Bank's impact. was largely felt. by farming cooperatives who had access to loans for purchase of machinery and labor. The marketing system, especially for staple food crops, for some reason, was largely unorganized, inefficient, and served to discourage large-scale producers. In the decade of the sixties, Regional Marketing Boards constituted exclusive purchasers of cocoa, groundnuts, palm produce, and a number of minor commercial crops. They were not successful in putting together an effective market network to serve the production system. Commodity Boards and Grains Boards that were later formed to replace the Regional Marketing Boards had the responsibility to provide adequate storage for products, such as maize and guinea corn, but were also unable to address these assigned problems. In addition, the farmers were unwilling to participate in any form of controlled purchase program for domestic foodstuff, either because of fear of regulation or more likely because the farmgate prices paid by government agencies for grains and commodities were uncompetitive and lower than market prices. Other support services, for example storage facilities, that were necessary for the proper evolution of agriculture *were also noticeably absent. The result of scarce storage facilities was that Nigeria's entire farm output was brought to market at harvest, resulting in low prices that did not In 110 give the farmers sufficient incentive to increase output." The distribution and marketing of staple foodstuffs were also hampered by the absence of a planned network of rural transportation, a problem that plagued Nigeria since the days of colonialism, and the generally poor state of infrastructure in rural areas.” The deficient transportation network also meant that foodstuff produced in remote farm areas did not get to market, with the resulting loss of farm produce. Land use, and access to it, was also a factor of importance. The land ownership system and the native laws governing its use varied from one ethnic group to another. However, there was one uniform characteristic--the absence of individual land ownership. Before the promulgation of the Land Use Decree of 1978, land was owned collectively by the community, and consequently, individual holdings were often very small. Such a system unfortunately discouraged individual investment in conservation and improvement of land, and made it difficult, if not impossible, for a farmer to obtain loans using land for security. The Land Use Decree of 1978 was therefore an effort to reform the agricultural sector. tu a evel t in Ni e ° 19 - 0 (Rome: Food and Agriculture Organization of the United Nations, 1966) . "W. 0. Jones, "The Food and Agricultural Economics of Tropical Africa," Eggd Besaarch lnstirute Studies 2 (February 1961). 111 The essence of ‘the «decree in the rural areas ‘was basically to facilitate large-scale farming by making land available to the farmers who needed it. However, the beneficial effect of the decree 'was lacking' because of inefficient enforcement. This made the new laws ineffective and also meant that land was still administered as it was before, with right of ownership still in the hands of communities and a few privileged people, despite the decree itself which vested ownership of all undeveloped land in the government. Industrial Development Industrial development in Nigeria from 1960 to 1965, for example, grew at an annual rate of 15 percent. That level of growth was not sustained due to the civil war with the result that the annual growth rate was only 6 percent from 1966 to 1969, the period of the war. The pace picked up again to an annual rate of 14.5 percent after the war in 1970. The contribution of the industrial sector to national output, which was at 4.8 percent in 1960, showed an increase to 7 percent in 1965. By 1970 its contribution was marginal at only 7.6 percent due to the effects of the war but it improved by 1975 to 10.2 percent. The manufacturing sector in Nigeria, during the period of 1960 to 1974, was despite the First National Development IPlan, (1962-68), substantially similar to that of any 112 developing country that had pursued import substitution industrialization models behind high protective barriers. A sectoral breakdown of manufacturing output into consumer, intermediate, and capital goods industries would help understanding of the pattern of development in this sector. Consumer goods made up mostly of food, beverages, tobacco and textile industries dominated this category, although its share showed some decline from 59 percent in 1963 to 49 percent in 1976. The intermediate goods category showed impressive growth from 30 percent in 1963 to 45 percent in 1976, following the increase of manufacturing activities in the country, while the Share of capital goods declined. This performance had some understandable impact on imports as the years progressed. As an illustration, the share of consumer goods in total imports fell from 50 percent in 1963 to 32 percent in 1976: that of intermediate goods remained unchanged: while the share of imported capital goods increased significantly from 26 percent to 44 percent as the country sought to develop and build more industrial capacity. The manufacturing sector in Nigeria during the period 1960 to 1974 was characterized by industries with low value added.”’Their input structure was highly import intensive as illustrated by Table 13 for the period up to 1968, which also implied very low or minimal linkage effects with the rest of ”Lewis, Rerlections on Nigeria's Economic Growth, 1967. 113 the economy. These industries were principally assembly operations that put finishing touches to imported components. As Table 13 illustrates, imports of agricultural inputs, for example fertilizers, produced grains with higher yield ratios, while imports of tractors and ancillary machinery grew to 67.4 percent, pointing to the very high level of import dependence. Other industries concentrated on low, light consumer technologies that processed agricultural produce or imported consumer machinery components. This situation of high dependence on imports, as Nigeria struggled to implement its balanced growth approach, prevailed through to the end of the First Development Plan in 1968. The Second National Development Plan for the period 1970 to 1974, which was designed to continue the process of equal allocation of resources to all the sectors of the economy, was introduced in 1970 with the intent of addressing some of the deficiencies of the 1962 to '68 plan. More specifically, some key objectives of the new industrial policies in the 1970-74 Plan were to ensure a rapid expansion and diversification of the industrial sector; to promote the establishment of industries which cater to overseas markets; to continue the program of import substitution, as well as raise the level of intermediate and capital goods production: and to initiate schemes designed to promote indigenous manpower 114 TABLE 13 Import Content of the Intermediate Inputs of Nigerian Industries (1962-73) (Thousands of Naira) Import Total Industry Total Imported Inputs (%) Agriculture 6,141.6 4,141.2 67.4 Livestock, Fishing & Forestry 12,197.6 9,687.0 79.4 Agricultural Processing 89,230.8 4,270.6 4.8 Textiles 6,782.6 1,239.4 18.3 Clothing 31,147.6 9,135.8 29.3 Drink & Tobacco 9,990.0 7,560.4 75.7 Food 31,078.6 6,954.6 22.4 Metal mining 2,037.6 795.6 39.0 Non-metal mining 7,758.8 6,228.4 80.3 Chemicals 4,200.6 1,653.4 39.4 Transport 48,435.6 23,735.6 49.0 Utilities 4,552.4 1,476.8 32.4 Trade 11,852.2 1,640.0 13.8 Construction 104,692.0 41,346.0 39.5 SerVice 24,652.0 6,423.2 26.1 Transport equipment 7,520.8 5,119.0 68.1 Non-metallic mineral 2,911.8 1,250.8 43.0 Metal manufacturing 12,544.2 9,014.0 71.9 Wood, leather, etc. 21,760.6 6,954.2 32.0 Miscellaneous Manuf. 2,248.2 1J473.8 65.6 Total 441,735.6 150,009.8 34.0 M W.F. Stolper, glanning Wirhout Fagts; Lessona in Basourga Allogation from Nigeria's Development (Cambridge: Harvard University Press, 1966); O.Teriba, and M.O. Kayode, us velo ment in Ni eria: Patterns Problems and Ergapagra (Ibadan University Press, 1977), p. 26. 115 development in the industrial sector and to raise the proportion of indigenous ownership of industrial investments. Overall, the focal point and priority of industrial policy for the 1970 to 1974 Plan was to maximize value added to the gross domestic product rather than the'mere increase in the range of products manufactured locallyu The Plan also put some key industries, such as, iron and steel, petro-chemical industries, fertilizer production, and petroleum products (especially for local distribution), under' public sector control. More specifically, the government assumed 55 percent equity and for other large and. medium sized industries ownership were to be on a joint venture basis with the government and private indigenous participation at a minimum level of 35 percent of their equities. Examples of such ventures are plantation production of traditional crops and of basic raw materials for processing industry, such as wheat and sugar, food industries, forest product industries, building materials and construction industries. It is important to mention that during this plan period, especially its later years, the oil boom brought about budgetary and foreign exchange resources that were greater than expected and this helped to remove the financial constraints towards achieving development objectives. The absorptive capacity of the economy did not, however, expand simultaneously, and hence, there were delays 116 in project completions because of shortages in construction materials. There were also severe weaknesses in manpower planning and development. After fourteen years of independence, marked by two planned periods of steady progress on the economic front, Nigeria witnessed a sudden and welcomed change of its financial strength from the sale of crude oil. This situation made the government of Nigeria to decide to change its development policy from the equitable allocation of resources to all sectors of the economy to concentration.on the petroleum sector as the leading sector of the economy. This approach gave the Nigerian decision makers an opportunity to put the country on a fast pace of economic development firmly defined around the performance of the petroleum sector that had the highest propensity to earn foreign exchange at the required level to satisfy national development plans. CHAPTER V STRUCTURAL DEVELOPMENT OF VENEZUELA'S ECONOMY (1498 - 1974) General Background Venezuela is located at the northern end of South America on the Caribbean Sea between approximate latitudes 1 to 12 degrees north of the equator and longitudes 60 to 73 degrees west of Greenwich meridian."2 Until the 19305 when the development of the petroleum industry started to exert influence, the economy of Venezuela was based on agriculture. During the colonial period, which began in Venezuela in the sixteenth century, production for local consumption and export was based solely on agriculture and livestock products, unlike Nigeria which.had substantial input from minerals such.as tin, gold, columbite, silver, wolfram, and so forth. Cocoa and tobacco were the mainstay of the Venezuelan export trade to the Caribbean islands and Spain, in the seventeenth century. Live cattle and hides were also important export items from Venezeula to several other parts of the world within the same period. "Louis E. Heaton, The Agricultural Development of Tanganala (New York: Praeger Publishers, 1969), p. 5. 117 118 Coffee production began in the eighteenth century and during the nineteenth century, it became the most important export commodity. Indigo for dye material also was an important export component beginning with the latter part of the eighteenth century. For the first two decades of this century, the principal Venezuelan exports, in an order of importance or level of contribution to foreign exchange receipts, were coffee, cocoa, live cattle, and hides. The level of the Venezuelan economy at this point was comparable to that economy of Nigeria in that both were primarily agrarian and essentially self-sufficient in food production. Both economies were characterized by low per capita income levels, resulting in poverty, and the absence of a strong capital formation base from which any form of development could have begun. Both countries were also dominated by the interest of colonial masters, with the result that economic development was either impaired or strictly controlled and channelled only to areas were foreign interests were best served. Crude oil was discovered in Venezuela in 1912. By the late 19205, oil had become an important sector of the economy in terms of foreign exchange receipts. In the 19305, its contribution to the Venezuelan economy had grown extensively so that by the 19405, it had outpaced the combination of all other sectors. As shown in Table 14 foreign exchange receipts 119 from the petroleum sector in 1945 had risen to 92.6 percent of total exports of Venezuela,’3 and earned 93.9 percent of the total foreign exchange receipts. In 1965, the rate of contribution from the petroleum sector still remained at 92.8 percent, showing a slight increase from the 1945 level, while in Nigeria, the petroleum sector was contributing less than 5 percent of the nation's foreign exchange earnings from 1962 to 1965, when oil was first discovered in a commercial quantity. The petroleum sector continued to play a very important role in the economic picture of ‘Venezuela even ‘when. Nigeria was still under colonial domination and dependent on agricultural exports and the mineral ore mining industry. When income from the petroleum industry is compared against the total fiscal income of the Venezuelan government for the period 1945-65 the influence of the oil industry as a generator of government income, becomes more apparent. As illustrated by Table 15 as early as 1945 the oil industry was already contributing as much as 69.6 percent of the total annual income. That continued above 58 percent through to 1965 and conferred. on ‘Venezuela. a guaranteed access to enormous wealth and capital with which to embark on extensive economic development programs. ”Annual Reports, ent al n of V te1a fo 1 4 to lag . 120 TABLE 14 Oil Exports and Inflow of Foreign Exchange Attributable to the Petroleum Industry in Venezuela, 1945-65. Oil Exports as Percent of Total percent of Total Foreign Exchange Exports. Income from the Year Petroleum Industry. 1945 92.6 93.9 1950 96.6 97.7 1955 96.1 96.3 1960 87.7 93.4 1965 92.8 90.7 Source: hnnnal reports of the central bank of Venezuela for M: Louis E. Heaton, 'c u d v 1 e t o V e l , Praeger Publishers, New York, 1969, Pp. 7. Meanwhile, the situation in Nigeria, as stated earlier, was remarkably different. Capital formation was deterred by the presence and objectives of foreign rule, and the economic development of any industry was restricted to the choice of the British Foreign Office. That predicament imposed limited choices on Nigerians, since most of the available labor was applied to the agricultural sector that was characterized by ‘very low wages. However, in Venezuela the growth of the oil industry soon became the stimulus for the nation's economic growth. Principally it provided relatively high wage labor, was a 121 TABLE 15 Income of the Venezuelan Petroleum Industry in Relation to the Total Fiscal Income of the Venezuelan Government, 1945-65. Total Fiscal Income from Percent of Income the Industry. total Income. Year (Million Bs.*) (Million B5.) 1945 660 458 69.6 1950 1,917 1,124 58.6 1955 2,992 1,973 65.9 1960 4,968 3,002 61.2 1965 7,264 4,830 66.5 figurca: Annual reportg of thaygantral bank of Venezuela for 1255-6? Louis E. Heaton, The Agricultural Development of Tanganal_. Praeger Publishers, New York, 1969, Pp.7. * - Venezuelan unit of currency is the Bolivares. - Rate of exchange between 1961-65 was 4.50 bolivares to U.S. $. generating force for government fiscal income, and was the preponderant source of very significant foreign exchange that gave Venezuela an extraordinary capacity for imports and foreign payments. It must be noted that this occurred before the formation of OPEC at which time the price of crude oil in the this was not distributed to a large proportion of the total population. The increased purchasing power available to some of the populace could not.be supplied immediately by the other 122 sectors of the economy; so, as would be expected, there was a large increase in imports of consumer goods to meet the increased demand. In addition, the large fiscal income of the government brought a drastic reorientation of traditional government services that formerly had been limited to minor road building and repairs, together with the erection of certain other transportation systems. Government services were increased in areas of economic development, public health and education, and national public works.“ As shown in Table 16, several observations can be made from the gross territorial product (GTP), sometimes referred to as the gross domestic product, shown for the three main sectors and nine subsectors of the economy, for the period 1961-65. First is the across-the-table increase in production of all the major sectors of the economy with some minor adjustments with respect to contribution to the GTP during the period. The primary sector tended to diminish in its influence on the total contribution, principally because of a minor adjustment of less than 1 percent in the relative contribution of the petroleum sector between 1964 and 1965, although agriculture increased its contribution slightly from 6.8 “Fred D. Levy, Jr., Eggnomic Planning in Veneznala (New York: Praeger Special Series in International Economics and Development, 1968), pp. 53-56. 123 . 1.8% som mmm new mom mes uouomw Houauasowum< oms.m ems.m omm.m mmm.m emo.m A.mmo cohuosooum ovamoo Mom Houoa mes.o om~.m smm.> mmm.s ~H~.m m00a>u0m umnuo omm.e eem.o omH.e meo.e smm.m moumsaoo mmm.a om~.H mHH.H omo.H moo.” GOAOBOAGBBBOO a :Owuouuocmcoua «no.4H mmo.ea omH.mH mmm.~H and.ma uouomm muofiuums mos 44m msm Sow use mueoeuuomam o soups mmm.a mso.a omm.a mmH.H smo.H coauosuuwcoo Hmm.v smm.e moo.¢ H¢S.m eme.m .mcflusuomuscmz Hma.> mem.m mmm.m vom.m mmm.m uouomw muoocoomm emm.m mom.m moe.o mo~.m emm.m somaouumm Nov mmm mum mam mam masses mmm.~ om~.~ ooo.m mmm.H mem.a musuasoauma HmA.HH one.aa mms.oa 6mm.oa ~¢S.m uopomw mumsflum mos.mm mna.~m ems.m~ omm.mm Hmm.m~ moms omma moms moms Home «moveum Emma up .mm cohaaflzo posooum Hofluouauuma mmouo mBU HMUOB muouomm molaoma .muouoom UHBocoom Homflocanm he Madouoso> uo uozooum Howuouwnhoa mmouo ma WAG¢B 124 302 .muonmaanom Homomum .o wo~oco> mo puma oao>oo oncpasoau c o B .monsoam huossom msmcoo Home so oomph GOauoHoUHoo .mmauumsocw moacflumniawo moosHUcH .mauma.om .coumwm .m mason " D NNH 5H0 H V'V‘N M OGHNDN‘DIOHO‘ o 0 V. O m H mood b o m H b v H H m o v H FHI‘OV‘Q‘NN NN In m .00H vwmd mwma 00 H l‘ \DI-IO’) N N. No. 0. H. m. o. H. m. o. m o. 00H mead mfi.mmv uouomm Housuasoflumc Head A.mmv cowuooooum opamoo mom Houoe mooa>uom nospo wouoasoo coauoUHGSEEOO a coauGHMOchoua uouomm xumauuma mahofluuomam a noun: sawuoouumcoo .osfluouoouosoz uoeoom whoocoomm acoaonudm ones“: muouasoflumd Houoom xuofiflum mew Houoa muouomm mew no cowucnfiuumflo omoucmouom ~.ucoov ma mammm .mmmH n o .xuos mousom 125 percent to 7.1 percent. In the secondary sector, the relative contribution to the GTP increased slightly due to increases in light manufacturing industries. The tertiary sector remained relatively steady with a few negative adjustments. The service industries constituted a relatively high proportion of the GTP (43.9 percent in 1965), probably in response to the growing petroleum industry and its work force. Its growth could also be attributed to increased income and the improved facilities for economic development put in place by huge investments in infrastructure. Meanwhile, the agricultural front intended as the mainstay of the economy was about to experience a major reform. As expected from an economy that depended on agriculture for its foreign exchange earnings, for example Nigeria, the discovery of large deposits of crude oil and the subsequent growth of the petroleum industry as a more powerful generator of earnings brought along greater employment opportunities for the people of Venezuela. That event initiated a wave of urban migration in search of employment in the oil industry. The tradition had been that most of the people lived in the countryside, provided the much needed labor for the as farms. Capital also transferred from agriculture into ”Loring Allen, Veneznelan Ecgnonig Qevalopnanrz A Eglitico-Economic Analysis (Greenwich, CN: Jai Press, 1977), p. 193. 126 industrial, commercial, and service sectors which also benefitted from the petroleum industry. The loss of productive factors in the agricultural sector and increasing food imports permitted by revenue from petroleum exports helped limit the expansion of agriculture. As the importance of agriculture declined it began to loose its ability to meet the increasing food demands of the growing population and the increasing purchasing capacity of oil and service sector employees. The substantial difference in the productivity per person in the agricultural sector, shown at the bottom of Table 16, is an indication of the effects of labor migration to urban areas. This is further emphasized by the reduced rate of increase in agricultural productivity per capita, only reaching 907 bolivars in 1965, which.was less than one-fourth of the per capita product (3,770 bolivars) of Venezuela for that year. The reduction in productivity per capita, however, cannot be entirely attributed to the scaling down of investments in agriculture, even though as shown in Table 17 below, gross fixed investments in. agriculture. showed. no appreciable increase over the 1961-65 period. Between 1962-63, investments in agriculture increased by 1.1 percent over the 1961 level. From 1964-65 the investment level did not reach the 1961 level, even though the net monetary value was higher. The 14.8 percent proportion of investment in agriculture in 1965, 718 million bolivares in 127 value, indicated a reduction in agricultural investment and may have been a measure aimed at compensating for an adverse international exchange rate which rose from 3.35 to 4.50 bolivares per U.S. dollar. Another plausible explanation for the reduction in productivity may be in the small number of people actually engaged in agriculture following the exodus of farm labor to urban areas in search of better employment opportunities. The decline in importance of agriculture was a signal that emphasis was shifting from it, and that Venezuela was responding to the need to concentrate on a sector with the greatest propensity to earn foreign exchange. This argument is based on the observation that the petroleum sector supplied more than 70 percent of the total per capita production for the 1961-65 period, while contribution from agriculture remained steady or showed only a minimum increase as shown in Table 16 above. The relatively uniform growth of all major and secondary sectors of the economy may be reasonably assumed to be the result of a balanced government investment policy. This was possible because of the use of what was termed "rolling" planning put in place by the 1958 interim military regime which also established in 1959, the Central Office of 128 TABLE 17 Gross Fixed Investment in the Agricultural and other Sectors of the Venezuelan Economy, 1961-65. Agriculture Sector' Other Sectors Total Amount Percent Amt. Percent Fixed (Mil.Bs) of (Mil.Bs) of Invest Year Total Total (Mil.Bs) 1961 674 16.8 3,345 83.2 4,019 1962 767 18.3 3,429 81.7 4,196 1963 765 17.5 3,606 82.5 4,371 1964' 696 16.1 3,630 83.9 4,326 1965‘ 718 14.8 4,136 85.2 4,854 fignrga: Louis E. Heaton, The Agricultural development o: Venaauela, Praeger Special Studies in International Economics and Development, New York, 1969. Pp. 23. ' Figures were adjusted downwards by 17.5 percent for 1964 and 1965 to account for fluctuation in international exchange from 3.35 to 4.50 per U.S. dollar. It was assumed that over 50 percent of annual investment in equipment, materials and funds came from foreign sources and that the amount of foreign funds actually was reduced in the last two years, 1964 and 1965, even though the bolivar amounts were higher. 129 Coordination and Planning (CORDIPLAN) .°‘ This office was charged with the constant planning and revision of national development plan, as implementation occurred.87 It can be reasonably argued that CORDIPLAN succeeded to improve economic decisions in Venezuela, especially from the point of view of encouraging equitable investments in the various sectors of the economy. Attempts by the government in 1945 and thereafter to reform the land tenure system neither succeeded in redistributing land to the poor which could have helped subsistence agriculture, nor increase land engaged in farming. It also was not able to stem capital flight from agriculture and as such did not help increase agricultural productivity. By 1950, the total contribution of agriculture to gross territorial product had dropped to less than 10 percent as dependence on imports of food items increased. Production of food for local consumption also decreased with the result that nutritional problems resulted from the inadequacy of food. Venezuela was thus, on the path to continued loss of its agricultural production capacity. "Ibid., pp. 93-95. "The Venezuelan government had published four major plans overseen by the Central Office of Coordination and Planning (CORDIPLAN). These were the 1960-64, 1963-66, 1965-68 and 1970-74 plans. The real essence of CORDIPLAN'S work rested in the coordination of public expenditures as expressed in the annual budgets. 130 The average diet per person in venezuela within the 1961-65 period provided a total of 2,300 to 2,500 calories per day , n which was considered barely adequate. Although there was a great deal of variation by areas and income levels, nutritional deficiencies were considered a major cause of illness in Venezuela during that period and beyond. The quantities of animal protein, fresh fruits, and vegetables consumed were much below desirable dietary standards. The issue «of insufficient food and inadequate nutrition. are problems that even today, still affects the underdeveloped countries of the world. Venezuela and Nigeria share in that poor nutritional fate, and both. have for decades been dealing with the difficulties presented by the decline in agricultural productivity imposed by the shifting of government policy toward the sector that yields more foreign exchange. Eevelopment of Education in Venezuela Venezuela's educational policy in the decades of the 19405 and 19505 was similar to that of Nigeria during the same period. Education in Venezuela within that period was not well suited to fully benefit the labor force nor provide help to directed planning. That was partly due to the inadequacy of' funding, inappropriate institutional. arrangements, and l"Heaton, The hgrignltural development of Venaauela, pp. 66-67 . 131 policies that did not enhance the value of education. Improvements in educational policy of the 19605 and 19705 was aimed at generating new skills and increasing productivity, leading to the improvement of the general level of economic, social, political, and cultural awareness. Venezuela made considerable progress in the decades of the 19605 and 19705 in increasing its educational facilities for regular primary, secondary, and superior education, as well as its technical schools and training facilities.” Between 1955 and 1965 university enrollment increased by 320 percent, while the number of university and college professors increased by 210 percent. The period of 1961-65 witnessed a commitment by the government to change the course and quality of education in Venezuela, and by so doing, it increased the number of schools, teachers, and students generally. As illustrated in'Table 18, since 1957-65 investment in education in‘Venezuela increased.by 266 percent, while the GTP increased only by 56 percent, pointing to the level of work still needed to improve the GTP. The effort of increasing investment in education compares favorably with that of the eastern and.'western regions of' Nigeria between 1952-62, following the 1954 colonial constitutional amendment that granted increased administrative powers to the regional ”Heaton, Tha Agrigultural Development of Veneauala, p. 39. 132 governments. As mentioned earlier, enrollment in primary education in the eastern region of Nigeria doubled, while in the western region, government expenditure in education for the same level increased more than 600 percent.with enrollment increasing 300 percent. The success enjoyed by Venezuela in improving the quality and content of its educational programs during the 1961-65 period was partly due to a change in educational policy which resulted in a special campaign to reduce illiteracy among its people. The campaign was responsible for boosting Venezuela's literacy ranking among other Latin American speaking countries. The cost of public school education in relation to total national budgets from 1961-65 showed a considerable increase. For example, in 1961 12 percent of the national budget was allocated to education. That value for 1962 was 13 percent: 1963, 18 percent: 1964, 15 percent: and 1965, 17 percent. On the average, the fifth year (1965) indicated a 3 percent increase of budgetary allocation to education, over the base year (1961).”0 It must be noted that the consistent increase in the educational budget for five consecutive years for an underdeveloped country represented an unreserved willingness by the government to address a serious deficiency in the ”George I. Sanchez, v o t o d yanaznala (Washington, D.C.: U. S. Department of Health, Education, and Welfare, 1963). 133 TABLE 18 Comparison of Total Educational Costs and Increases in Gross Territorial Product in Venezuela, 1957-65. Total Educational Gross Territorial Costs Product % Amount in % Amount ‘Variation Current Variation Years (Million. from 1957 Bolivars from 1957 BS.) (Million B5.) 1957 434.6‘ 100 23,847 100 1961 1,006.1‘ 232 26,641 112 1962 1,071.9 247 28,506 120 1963 1,415.1 326 30,657 129 1964 1,323.3 305 35,001 147 1965 1,590.3 366 37,001b 156 fignrga: ' u tu v o m n Ve ue , Louis E. Heaton, Eraegar Spegial Studies in International Economics and Eavalopment, Praeger Publishers, New York 1969, Pp. 40. ' The fiscal year budgets were adjusted to calendar year. Estimated figure. 134 quality of manpower. It can also be argued that the need for higher quality manpower became apparent when the Venezuelan government decided to change the course of economic development and, instead, concentrate on the petroleum industry which demanded a more sophisticated workforce than agriculture. It was, therefore, in preparation for that quantum leap that certain steps, for example, educational priority and mass literacy campaigns, were undertaken to ensure that the population benefitted from the change in economic development strategy. That change of development policy was certainly forced by the impressive performance of the petroleum sector. As shown in Table 19, government share of total income from the petroleum sector rose from 52 percent, or 818 million bolivars in 1947 to more than 98 percent, or 42,799 billion bolivars, in 1974. This enormous increase in revenue underlined the need for a change in economic development policy to one directed at enhancing the economic well being of the country and overcoming the economic development inertia, as well as the limitations imposed by the scarcity of capital. The need for ‘Venezuela to respond to the riches provided by the petroleum sector was summarized by the famous slogan of Arturo Uslar Pietri, Venezuela's former ambassador to the United Nations Economic, Social, and Cultural Organization, (UNESCO), and underlines the need for a change 135 TABLE 19 Venezuelan Petroleum Financial Indicators, 1947-1974 (Millions of bolivares) Gov't Total Income Total Profits Share Year Income Tax: Royalties to After of Gov't. Taxes Total Income 1947 2,394 297 397 818 745 52 1948 3,534 479 640 1,290 1,060 55 1949 3,124 272 627 1,055 704 60 1950 3,748 394 519 1,021 970 51 1951 4,405 525 727 1,448 1,201 55 1952 4,677 594 751 1,544 1,262 55 1953 4,892 507 786 1,502 1,261 54 1954 5,337 585 874 1,576 1,412 53 1955 5,875 712 1,003 1,841 1,710 52 1956 6,829 931 1,188 2,281 2,115 52 1957 8,463 1,199 1,550 2,990 2,774 52 1958 7,662 1,465 1,415 3,067 1,616 65 1959 7,284 1,260 1,444 2,860 1,335 68 136 TABLE 19 (cont.) 1960 7,287 1,070 1,503 2,711 1,282 68 1961 7,477 1,216 1,552 2,899 1,477 66 1962 7,703 1,462 1,703 3,225 1,694 66 1963 7,701 1,544 1,731 3,331 1,679 66 1964 10,693 2,251 2,557 4,862 2,457 66 1965 10,725 2,323 2,564 4,937 2,638 65 1966 10,419 2,260 2,531 4,836 2,504 66 1967 10,964 2,752 2,663 5,460 2,514 68 1968 11,119 2,754 2,715 5,513 2,653 68 1969 10,906 2,751 2,722 5,526 2,264 71 1970 11,384 3,270 2,875 6,207 1,739 78 1971 13,720 4,653 2,836 7,546 2,247 77 1972 13,566 5,558 2,797 8,411 1,266 87 1973 19,178 8,828 3,496 12,410 2,812 82 1974 45,354 28,730 fignrce: Loring'.Allen, Venezuelan IEconomig Developnent, A Politico-Economic Analysis, Jai Press, Greenwich Connecticut, 1977. Pp. 305. 137 in economic policy. Venezuela must "sow the petroleum," he said in 1936.”’ He went on to add, . . . that the petroleum money must be spent to eliminate the need for petroleum money. Roads, sewers, hospitals, industrial parks, schools, houses,airlines, factories, irrigation, banks, social services, ports, telephones - these and many other capital improvements were lackingu Bit.by bit over the last forty years many have appeared. And more will appear as the petroleum money rolls in. Summary The story of Venezuela is essentially that of the worldwide growth of the petroleum industry. From 1975, when it nationalized the petroleum industry, the structure of its economic outlook changed. The economic transformation stemmed from petroleum plus innovative, nationalistic petroleum policies, coupled with economic policies that helped to develop and diversify the economy and distribute its benefits more equitably. Another important component to venezuelan story was the political transformation that tamed the military and installed a party-based political system that tried to resolve conflicts more amicably. The nature of economic change introduced by the petroleum sector can be easily understood when we recall that in 1935 Venezuela was a backward agricultural country with a petroleum enclave that primarily benefitted foreigners. Most 91 . Allen, V ezue Econom c eve o me c - Ecgnonic Analysis, p. 254. 138 Venezuelans eked out a living in the farm that yielded very low income, with the result, that Per capita income on the national level was less than $150. The country had made little, if any, change from the colonial days. Based on the increasing influence of the petroleum industry in the early 1950's, the economy of Venezuela witnessed real growth of about 7 percent per year for the forty years up to 1974.92 As an illustration, Per capita income in 1974 was more than $2,000, which was several folds over its value in 1935. The 1973-74 quadrupling of petroleum prices in the international market brought in more money than the economy could absorb. The economy was booming; Venezuela was on the march to achieving some form of economic development. To appreciate the progress made by Venezuela, one only has to remember' that in 'the early 19505, industrial production consisting' of' manufacturing, construction, and.‘water' and electricity, claimed an increasing share of gross territorial product as Venezuela struggled to face the issue of development. Also in 1950, contribution to total product from the industrial sector was only 17 percent in 1957 prices, with manufacturing in the lead with 10 percent, construction with less than 7 percent, and electricity with only a fraction. 1”Enrique A. Baloyra, "Oil Policies and Budgets in Venezuela," Latin Amerigan Research Review, Ix, (2) (Summer 1974): 28-72: Allen, Venezuelan Economic Developmant, A 29litisozEsenemie_AEalY§is. PP- 248-249. 139 By 1969 on the same price base industry had edged up to 20 percent, with manufacturing up to 13 percent. The rapid electrification of the country raised that sector's contribution to just below 3 percent, but construction was down to a little more than 4 percent. In the 19705 industrial growth outpaced the rest of the economy; 'The industrial share was up to 23 percent by 1974, measured in 1968 prices, and manufacturing was up to 16 percent. Power and water was now consistently more than 2 percent, while construction was not quite 5 percent. While this record may not represent a great leap forward, it is, nonetheless, an impressive demonstration of the gradual diversification of the economic base.”3 While Venezuela did not become an industrial country, it did build the foundation for the industrialization process. Industry grew more rapidly than the rest of the economy in productivity and employment. A new government policy for industrial growth was defined around the virtues of the petroleum industry. That policy also included a favorable approach to international trade with some elements of protectionism, as well as financial incentives and other useful measures, for example, a stable political climate based on democracy, and the establishment of suitable infrastructure which promoted industrial growth. ”Allen, Venaznelan Economic Deyelopmentll A Egliricg- Eggngnig Analysis, pp. 230-231. 140 These arrangements gave Venezuela a clear advantage over Nigeria and helped define a basis for Venezuela to continue its promotion of balanced growth in all the sectors of her economy. CHAPTER VI NIGERIAN AND VENEZUELAN APPROACH TO ECONOMIC DEVELOPMENT Nigeria's desire for accelerated economic development following independence in 1960 was underlined by the First National Development Plan introduced for the period 1962 to 1968. The plan sought to establish a set of national economic targets that included a savings of 15 percent of the GDP by 1975: a 15 percent increase in government expenditure for the planned period; a 4 percent minimum growth rate of the GDP: greater development in agriculture, industry and manpower: and a fixed investment of more than 2.5 billion naira. The objectives set by Nigeria's First National Development Plan were further improved upon by other National Development Plans that had evolved since 1968. Common among these objectives, as stated by the plans, was the need for economic development. The means of achieving it, in terms of the availability of capital, however, changed with the incidence of the Arab oil embargo of 1974, following the start of the Yom Kippur war between Israel and its Arab neighbors. However, each of Nigeria's Development Plans clearly pointed 141 142 in the direction of a long term development strategy, defined in four explicit steps. The first step was industrialization. The first and second development plans emphasized the growth of export-based agriculture as the source of foreign exchange to meet the development needs of the country. It was widely agreed among the various political interests within Nigeria that efforts to achieve economic development had to begin with an explicit plan. aimed. at steady' growth. and. a jproperly‘ diversified economic base. The benefits of such process would be obvious in the form of increased employment opportunities in the new economic sectors. The second step was a process of structural reform that would open up new opportunities for indigenous entrepreneurs and by so doing, transfer the control of Nigeria's economic future into the hands of its citizens” That step was intended to increase awareness and interest in sectors from which the citizens of Nigeria were excluded during the colonial regime. It was also intended to spur investment and increase productivity. Third was the need for suitable manpower to lead the expanding economic base, which was to be accomplished through federal programs to encourage education and training by the use of subsidies and educational grants to the various regions, for’application to literacy'campaigns and scholarship programs. Fourth, was the need to implement import 143 substitution programs, a measure seen as the only means to encourage local industries heeding the need for development. To accomplish this, import levels for various finished products, especially processed food items, were cut back, while stock orders for intermediate products were reduced sharply to encourage the process of developing local substitutes. Nigeria stayed the course of its plans except for the fact that the original financial means of achieving goals changed considerably following the 1974 Israeli-Arab war that had such a profound impact on the energy markets and championed the cause of the petroleum industry. Further, it is necessary to note that Nigeria's approach to economic development through 1973 did not differ substantially from the approach employed by most industrialized countries. That approach was defined around a viable agricultural sector from which an orderly structural transformation process was expected to begin as the economy evolved into a balanced growth. The Venezuelan approach to economic development since 1912, when oil was first discovered, presented an entirely different picture. First, the direction of its economic policy was plagued by military regimes, starting with General Gomez, which took power in 1908. That preceded the production of the first commercial crude oil reservoir in 1913. Venezuela thus entered the era of growth of the petroleum 144 industry because of the absence of moderating regulations that would have balanced out the economic sectors. This was demonstrated by the fact that in 1928 Venezuela was the largest petroleum exporter in the world, and the second largest producer after the United States. Between 1925 and 1929 exports increased almost seven times, and foreign exchange receipts more than doubled. The fiscal income of the government rose from 21 million to 51 million bolivars. In 1925 petroleum exports were 28 percent of total exports and the corresponding figure for 1929 was 45 percent and rising for each successive year.” Despite the trappings of a modern democracy presented in the form of a written constitution, an elected congress, a functional judiciary, Venezuela was run like the personal fiefdom of General Gomez until he died in 1935. As the rush to acquire concessions grew, chicanery and influence peddling became rampant. Even the chief executive engaged in a series of concession transactions for his own profit.95 Royalties and taxes payable to the government and wealthy land owners were low; no income tax existed. Foreign interests and exploration companies used their legations to 9‘Allen, Venezuelan Economic Development. A Politico- EsenmieAnaleE. PP 36-37- ”Edwin Lieuwin and Anibal Martinez, Petroleum in Vanezuela: A Hisrory, 1955; Anibal Martinez, Cronologia del parroleo vanaaolanoI 1970. History of State Subsoil ownership in Venezuela. 145 influence the government, which in turn, sold concessions for the personal profit of officials. Venezuela, therefore, had only what could be marginally called an economic opportunity, but never quite benefitted from it because of the conditions noted above. Ever since petroleum has played a predominant role in the foreign ‘trade of ‘Venezuela, even. though agriculture contributed substantially, between 1930-45, to the receipt of foreign exchange. The nationalization of the petroleum industry by Venezuela in August, 1975, marked.the beginning of change and the assumption of responsibilities by the government to steer the country into economic development using petroleum as the principal sector. Prior to that Venezuela played an important role in upgrading the value of crude oil in the world market by combating the abuses of international oil companies, who were infamous in their business practices in Third World Countries. Venezuela was also considered to be one of the architects of the present-day increased value of crude oil and a founding member of the Organization of Petroleum Exporting Countries (OPEC). The formation of OPEC in 1960 was aimed at protecting the interests of the oil-producing countries and was also a response to the control of international oil companies. The decision to nationalize the oil sector in Venezuela was aided 146 by the outbreak of war in the Middle East in 1974 between Israel and the Arab States. It was also helped by the presence of intense nationalistic pressures resulting from dissatisfaction with the conduct of foreign oil companies. Prior to 1974 Venezuela had taken steps to restrict foreign domination of the petroleum industry. Two major moves came in the early 19405. The government passed a progressive income tax law, the first of its kind among less developed, petroleum exporting countries. In addition, in 1943 a new petroleum law cancelled all previous concessions that were considered very generous to the oil companies and were sanctioned under a dozen previous laws. These were replaced by a strict 40-year, nonrenewable concession having uniform conditions and higher royalties. These two measures were key elements in the plan to convert petroleum into the engine of Venezuelan economic growth.” Furthermore, the war in the Middle East and the embargo that followed, in conjunction with OPEC's new found authority over oil prices, helped Venezuela realize its dreams of securing the highest value for its crude oil, which resulted in quadrupling oil prices in 1974-75 that ushered in an era of high energy prices. Venezuelan petroleum policy was finally in place with the formation of a nonpolitical holding company, “Abercrombie Thomas, "Venezuela Builds on Oil," mmm-l daggraphig (March 1963): 344-387. 147 Petroleos de Venezuela (Petroven) . Venezuela had achieved its purpose, and had the financial and material resources to show for it. It also had a secure world market, that is, a network of capable international cooperation put in place by the oil companies and a sound economy. Its efforts paid off, and the move was on to apply the enormous potentials of the petroleum sector on the rest of the economy. There was then the need for an economic policy to meet the demand for development. The wealth of Venezuela must be applied to its areas of need. The wealth from the growing oil industry had to be spent efficiently and productively, requiring difficult choices among competing uses. The introduction of a systematic planning framework in the late 19605, punctuated by a conservative fiscal policy and strict cost-benefit studies to guide public expenditures, seemed to be the most prudent approach. That thoughtful, directed approach to change was soon to be overcome in the early 19705 by' the abundant foreign exchange :made available: by the petroleum industry. Venezuela thus had to review its economic development approach and move to implement completely the delphic statement of their former ambassador to UNESCO, Arturo Uslar Pietri. "Venezuela must sow the petroleum," he said in 1936, in order to benefit fully from their good fortune. The seed was thus sowed for implementing etonomic development programs ri de ha: in 148 and achieving industrialization, using the strong arm of the petroleum industry to provide the needed capital. Nigeria and Venezuela are quite similar in their experience of underdevelopment and the inability to create capital forming investments prior to the advent of petroleum. Their similarity continued.in.that.both depended largely on an agrarian economy during the first half of this century, although Venezuela started to produce and export crude oil much earlier. When petroleum became king and events changed for the better following the political events of the 19705, both countries became active members of OPEC and benefitted correspondingly from the price increases that followed the Arab-Israeli war of 1974. Foundation of the Nigerian and Venezuelan Economic Development Models The Nigerian and Venezuelan models of economic development consisted of efforts to set up a useful industrialized economic system capable of responding to the needs of its peoples. That effort was aimed at the transformation of the existing socioeconomic structure through an industrialization program that would. take advantage of the rich natural resource base. In fact, both countries had depended on agriculture for foreign exchange for more than half a century. In Nigeria, for example, after independence in 1960, the growth rate of agriculture started to show 149 noticeable weakness because of unfavorable price fluctuations of agricultural exports in the world market. During this period and for several years the agricultural sector grew at a meager 4-4.5 percent per year.” In Nigeria, as in every developing country, the role of industrialization is crucial if satisfactory economic growth is to be achieved. This spirit guided the government and people of Nigeria in deciding to pursue the primary objective of rapid economic development. It also was the same spirit which led to the three National Development Plans that preceded the 1974 Arab-Israeli.war, that changed the course of events, giving credence to the petroleum industry as a major foreign exchange earner for petroleum exporting underdeveloped countries. Nigeria's desire to pursue the virtues of industrialization in the decade of the 19705 when it had the means, corresponded with Venezuela's own line of thinking, although both countries had travelled different routes to reach that decision. The developmental needs of both countries was the principal reason for their change in development strategy from the conventional balanced sector approach, in 'which all sectors of the economy received approximate equal revenue allocation, to the leading sector n he i erian Journal of Econ mic and Social Studies, 9(2) (July 1967): 161-174. 150 approach where emphasis was placed on the economic sector that had the highest propensity to generate the most revenue. The approach and method of implementation which both countries chose was in complete agreement too. What was important here was that the principles of the Hirschmanian leading sector approach to economic development were adopted and that the national state, in both cases, were to oversee the process." This line of thinking, and other situations in each country prior to 1974, for example Venezuela, was the intense nationalistic pressure to curb the activities of the international oil companies and increase revenue. While in Nigeria, the political pressures brought to bear on the government to cut back on foreign domination of businesses and give Nigerians an opportunity to participate in the economic affairs of their country gave rise to the April 1, 1974, Nigerian Enterprises Promotion Decree that eventually nationalized major industries. Another objective of the decree was to reverse the observed gap growing between the gross domestic product and the gross national product by reducing the increasing dependence of the national economy on foreign capital ownership, control, and management. It must also achieve the needed alignment in investment priorities of the nation by 9"P. C. Asiodu, "Industrial Policy and Incentives in Nigeria": Teriba and Kayode, ' ' Elgaria, Bastarns. Erghlems and Prgspects, pp. 224- 229. 151 pursuing aggressively the potentials of the petroleum sector and applying the foreign exchange revenue generated from the sale of crude oil to other sectors of the economy.” This is in line with the principle of self-reliance, which represents an important component of the leading sector approach to economic development. Nigerian had made its choice and its economic development policy identified three active sectors of the economy for emphasis because of their importance to the development process and also because of their ability to provide more employment. The first and principal sector, was the energy production sector which was then coming of age and showed the highest propensity for generating the required foreign exchange and positively influencing the industrialization program. Second, was the chemical industry, including petrochemicals, organic, and nonorganic products industry which were considered spin-offs of the petroleum industry. This sequence of development was considered appropriate because of the interchangeability of intermediate products between industries in this category. Third, was the ”O. Aboyade, "Indigenizing Foreign Enterprises: Some lessons From The Nigerian Enterprises Promotion Decree": Teriba and Kayode, Industrial Development in Nigerial Earrarna. Brohlans and Erospecta, pp. 379-380. 152 metallurgical, electrical, and mechanical industries which were considered important components of a developing economy. The three stages of development detailed above, were to be implemented in the following order: 1. An initial and primary industrialization stage provided the basic intermediate and final products, such as electrical energy for urban and remote areas, hydrocarbon and products for export and local use, fertilizers for farmers to increase agricultural productivity, steel and steel products for industries and private consumption, and so forth. 2. The second stage led to the development of petrochemical, mechanical, and electrical industries that were to feed off the base industries and provide extensive employment opportunities because of its ability to ramificate easily. .Another reason that was given ‘was that these industries are lighter and, therefore, easier to locate in remote areas where they would provide more service to the population. 3. The third stage was the creation of miscellaneous industries to serve the needs of the population and produce consumption goods. They also fed off the rest of the industries and have the capacity to use more manpower, thereby creating extensive employment opportunities.100 moAsiodu, "Industrial Policy and Incentives in Nigeria": Teriba and Kayode, Industrial Development in Nigeria, Tartarns, Eroblems and Prospects, pp. 224-232. 153 The expectation was that these three development stages would interface smoothly, since they would constitute the structural pillars of the Nigerian industrialization effort and were fundamental to the success of its economic development program. The petroleum industry, which was the lead industry of choice, was to champion the march to economic development and provide the foreign exchange needed to ensure success. It must be noted that this set of policy and priority changes were designed to overcome the state of under- development in.which Nigeria found itself after independence, and by so doing, meet the development needs of its people. Nigeria's choice of the hydrocarbon sector as a lead industry underlined its desire to overcome capital formation difficulties, surmount the internal disequilibriums in the growth of its economy, and make a decisive bid to join the ranks of the industrialized nations of the world. The Venezuelan situation does not present a marked contrast that can be sharply distinguished from the Nigerian developmental approach. The economic intent of Venezuela was amply stated in 1936 by their former ambassador to UNESCO, Arturo Uslar Pietri. Venezuela has been steadfast in the pursuit of the goals stated by Ambassador Arturo. Venezuela's level of economic development prior to 1974-75 was comparable to that of Nigeria, even though revenue, from the largely 154 foreign owned petroleum industry, had been on the increase, following increased taxes and royalties. Role of the Petroleum Sector in the Ecgnomies of Nigeria and Venezuela Nigeria was initially drawn into the petroleum industry scene at a time when she was a British colony. Oil exploration services were conducted by the Royal Dutch/Shell and British Petroleum companies which were given an exclusive invitation by the colonial government to search for oil in Nigeria. As was noted earlier about the activities of the British Foreign Office, colonial mining legislation in Nigeria was formulated with overriding British priorities. With the discovery of oil in the mid-19505, the foreign interest- oriented legislation became an incentive to new entrants. Within a decade from the date of first crude oil export in 1958, all international majors, and several independent oil companies, were represented in Nigeria. There were several factors that served to attract foreign interests to the Nigerian petroleum industry. The most essential ones included the favorable legislative approach of the Nigerian government relative to other producing countries, the location and proximity of Nigeria to the world market, the political conflict in the major producing regions of the Middle East, the quality of Nigerian crude oil and its advantages to the control of air pollution 155 in importing countries, were all advantages that more than compensated for the problems arising from oil exploration and production in a tropical country.101 After independence, Nigeria instituted several new policies that defined the level of state participation in the oil industry which had major repercussions on the oil companies and the future of their activities in the country. A review of the history of the international oil companies policy on concessions, production, and profit sharing in their worldwide operations points to the use of business practices to reduce the role or revenue accruing to their host states. These practices, led to a succession of policy changes culminating in the nationalization of the petroleum industry in several producer countries. An example in the case of Nigeria is the activities of the Royal Dutch/Shell and British Petroleum (Shell/BP) . When they first obtained exploration licenses, they covered almost the entire territory of Nigeria and were to last.for'aiduration of thirty years, with a clause guaranteeing an automatic entitlement to renewal for another thirty years.m 101L. H. Schatzl, Berroleum in Mme 'a (Ibadan, Nigeria, 1967): Scott R. Pearson, Eatroleun and the Eigerian Eggngny (California: Stanford University Press, 1970). lozEno J. Usoro, "Foreign Companies and Recent Nigerian Petroleum Oil Policies"; Teriba and Kayode, Industrial Dexelepment_1n_nigeria. PP- 119-124. 156 This, with the lop-sided profit sharing formula covering the period, was sealed by the "Deeds of Covenant," which among other things stipulated that the assessment and profit sharing of the Petroleum Tax Ordinance of 1959 be applicable for the entire thirty-year term, beginning in 1960. Further evidence of the discriminatory international oil companies policy that adversely influenced government profits was the high proportion of depreciation allowance that was assessed at the source of extraction of the oil rather than on the posted prices. This practice was used also for the reduction of royalties that were due the government and several interest owners. Output by the international majors in Nigeria were also regulated through intra-company decisions made by the foreign head office of each company.103 These questionable policies of the international oil companies to oil legislation available in the host countries suggested the possibility of a disharmony between the host countries and the oil companies, and would later affect the oil companies' freedom of operation and profits. Nigeria's desire to direct major economic activity rested on policy with the following essential elements:m‘ 103Peterson, Petroleum nd the Ni erian Econom , pp. 56- 57. 1°‘Edith T. Penrose, The Lar e International Firm in Eavalgping Conntri es (London: George Allen & Unwin Ltd., 1968), pp. 76-78; P. R. Odell, Oil and World Power (New York: Penguin, 1970), pp.13-15. 157 1. that oil is too fundamental a part of natural resources to be entrusted in the hands of mistrusted private foreign enterprises. 2. nationalist pressures and the need to ensure participation by its citizens. 3. the desire to obtain a greater share of the proceeds from. foreign. companies. whose .activities in. the industry were closed to Nigerian nationals. Unlike other oil-producing countries, Venezuela's main concern was output proration which was intended to influence . 105 prices and thus revenue. On the other hand, Nigeria's short-term policy was to increase output in order to raise government revenue and solve balance of payment problems. These goals conflict and points to the short term needs of each country. With the new state participating policy, the long-term dimension was introduced--the ideology of political nationalism. and the aspiration for future economic independence. The Venezuelan and Nigerian approach, with respect to the petroleum industry, was split into short- and long-term goals, which nonetheless, centered around the revenue issue. The Nigerian government's policy on mining, with particular reference to petroleumf‘"s no longer mslbid” pp. 78, 200. 106 gacgnd national Development Plan 1970-74, Chapter 15. 158 restricted the country to concessionary arrangements geared only to the receipt of rents and royalties in exploration and production. New arrangements aimed at maximizing revenue earnings involved partnerships in exploration, production and even downstream operations. This change in policy was restricted to new oil companies, such as Agip, Occidental, and Safrap Deminex that joined in the Nigerian oil exploration and production venture. By introducing this change, two strands of exploration and production policies then operated simultaneously in Nigeria--concessions for the international majors and partnership between new entrants and the independent. Nigerian. National Oil Company (NNOC). 'This arrangement clearly fitted into the short-term and long-term objectives of the government. Production and revenue would, in the short run, continue to increase under the concessionary arrangements made with. the international majors ‘while the neW' partnership arrangements would ensure the future "development of mineral resources so as to contribute to the overall national development effort."107 These policy changes by the Nigerian government improved oil revenues and established the importance of the petroleum industry to the Nigerian economy. Crude oil's 1°7Ibid., pp. 135-145. 159 increased importance in its contribution to the national gross product, government's revenue and export shares, quickly caught the attention of both individuals and the government. For example, during the 19505, the industry's contribution to the Nigerian GNP was negligible, but in 1966 it rose to 17.7 percent.108 Also in 1963 the percentage contribution of the industry to government current revenue was only 4.3 percent: four years later, it rose to 16.1 percent. The petroleum industry's percentage contribution to total exports showed similar substantial increases during 1960. In that year its percentage share of total Nigerian exports was only 2.7 percent, but by 1970 it had risen to 58.1 percent.109 By 1974 its percentage share of total exports had risen to 95.3 percent, contributing about $11 billion to the national economy and remaining around the 90 percent level well into the 19805. During this period of crude oil production in Nigeria, no other industry contributed as much to the development process in the country or at such a rapid rate. This performance by the oil sector was thought to be the result of at least three related factors. First, the m"Usoro, "Foreign Oil Companies and Recent Nigerian Petroleum Oil Policies": Teriba and Kayode, Industrial havalgpnent in higeriaI Batrerns. Problems and Prospects, pp. 113-117. 1”Annna]. Abstragt of Statistigs (Lagos: Federal Republic of Nigeria, 1970), pp. 73, 113. 160 petroleum industry was on the threshold of becoming the largest industry in the world, and this was partly a function of its yet unverified.but suspected high profit raten Second, it was the only industry operating in underdeveloped countries in which negotiations between the producing countries and the multinational oil companies resulted in substantial financial benefits to the producing countries. Third, the world energy demand, especially in the industrialized countries, witnessed a phenomenal increase in the decade of the 19705 and early 19805 which, in conjunction with the political unrest in the Middle East, gave rise to production cutbacks, embargoes and eventual price increases. The Venezuelan experience was not similar to that of Nigeria, even though oil was discovered in venezuela since 1912. The oil sector became a major contributor to the Venezuelan economy by 1920. 'The petroleum sector continued.to grow rapidly, and by 1929, as illustrated in Table 20, Venezuela had.become the leading exporter of crude oil and.the largest producer in the world. Crude oil exports had risen to.about.62 percent of total exports, clearly transforming the fragile and traditional Venezuelan agrarian economy to being the leading oil exporting country in the world. The discovery of oil also brought about major changes in the political, as well as the economic structure of Venezuela and enabled the country to discharge its huge 161 international debt owed to Britain and Italy since 1930. Yet Venezuela was not without the problems brought about by the wealth from oil. In addition to being constantly under the domination of a ruthless military regime, the international oil majors exerted its influence on the economic benefits of oil to the Venezuelan economy through its various business practices as was the case with Nigeria. From 1912, when oil was first discovered, the large number and size of the international majors posed.a problem to the small government of Venezuela under Juan Vincente Gomez, who governed‘Venezuela from 1908 to 1935. In 1929, there were 107 foreign companies engaged in the exploration and production of crude oil in Venezuela. The dominating influence of the international majors presented an opportunity for foreign companies as evidenced by favorable early legislation that regulated the petroleum industry. Their influence was further helped by the venality of the Gomez administration whose members strived to enrich themselves before taking care of the nation's economy.no The government's venality helped perpetuate the exploitative influence of the international majors and resulted in the consequent loss of revenue to the people and government of Venezuela. noLieuwin, Parrolaun in Veneanala; A hisrory, 1955; Martinez, Cronglogia del petroleo venezolano, 1970. 162 TABLE 20 World-Wide Exports of Crude Petroleum by Country - 1929 (long tons)* Country Crude Petroleum Percentage of Exports Total Exports Venezuela 18,916,256 61.888 United States 3,566,804 11.670 Colombia 2,536,500 , 8.299 Mexico 2,344,039 7.669 Persia 1,590,026 5.202 Peru 1,004,006 3.285 Russia 305,364 0.999 Trinidad 124,459 0.407 Canada 101,908 0.333 United Kingdom 48,094 0.157 N.East Indies 22,258 0.073 Formosa 2,612 0.009 Romania 2,502 0.008 Italy 298 0.001 France 25 0.000 fignrga: Jose Amado Gil Ravelo, Qil Bevennes, Disrribntignal Coal 'ons and Economic Develo ment: An Anal sis of the Vanaznalan Case (Tallahassee: Florida State University, 1990. * A long ton is a unit of measure used in the United Kingdom prior to 1974. It is equivalent to 2,240 pounds. 163 The first effort to address this shortcoming came in 1940 when increased taxation and direct participation in the management of the petroleum industry was introduced by the government. Also in 1943 the government renegotiated all existing petroleum concessions and revalidated all agreements for a period of 40 years. According to the terms of the new concessions, all property and rights of the international majors and private foreign companies, were to revert to the government when the concession agreements expired in 1983. The government also sought to receive a higher percentage of annual profits from petroleum by implementing the principle of 50/50 split in 1945u1, using an addendum, to the existing tax law, which required that the annual profit received. by oil companies must not exceed. that of the government.112 In 1950 following a change in government and 111This new approach by the government of Venezuela set the stage for many other governments to demand such profit levels. Similar agreements of the same nature have been made between the international oil companies and theooaa m.mwom Shad o.mm on.aamoa mm.¢nwm m.ooom coma m.mm ah.mmhb 45.noeh w.hhhfl mbma m.mm H¢.mmam mv.hamw N.mvNN ohmH H.mm mm.Hmvm on.aowm n.mvom moma G.Nm mb.NbHN mm.Hth m.meH med b.mh MH.HNQH mN.Nvma m.o~mH Hood «we Am .m.D “moo Add occo>om Mo Aw .m.D GOHHHAZV cohaawzc mamuuom osomsosav omoucooumm osco>om uuomxm Hwo scum coauooooum mo Hao Hosscd Houoa occo>mm Hwo dunno How» Aommauammao woco>OM\muuocxm Hwo dunno I manomaz mm mflmdfi 188 .HHHAx oaoao> .omma .xoom moo» mo.umwumum Hoflococwm HocofiuocumucH .ossm mumuosoz HUGOADCGAUUGH ADV .> ossao> . xoom know moaumwuoum docmcwm ucoscuo>oo .oszm mumpmcoz HocowuocuoucH Ame G.Nm w.om o.mw ¢.mm m.Nm H.5m m.hm o.mm m.hm m.mm oo.an¢H No.mwmm Mb.Homw $0.0bm5 NN.NO>0 om.ommNH mw.bmmdd mw.ONVOH wh.b¢NNH m¢.omomd om.HNNMH mn.momb h¢.H¢Hm mw.¢moh 0N.mmdm mm.hmHNH mm.mmeH mm.HOOOH mb.¢¢mHH om.momhd 1.0:005 mm mamas o.¢owa h.mHmH 0.0mMH G.Nwma o.mo¢a b.Hw¢H m.mH¢H m.MMNH h.mwNH h.mm¢H ommH mama mmmH bwma mmma mme wme mmma mama HmmH .meH "OOHSOW 189 revenue-creating capacity with which the government set forth to transform the nation's economy, or at least build the necessary infrastructure to facilitate the transformation from an agrarian to an industrial economy. Given the initial scope of the Nigerian industrialization program as stated in the various National Development Plans, that is, the First National Development Plan, 1962-68; Second National Development Plan, 1970-74; Third National Development Plan, 1975-80; Fourth National Development Plan, 1981-85; Fifth National Development Plan, 1986-90; the hydrocarbon sector, along with other viable sectors that were supposed to have come into existence over time, such as steel, machinery, and chemicals would have collectively stimulated the development of other ancillary sectors through its various backward and forward linkages. Theoretically, this was to have been accomplished through the creation of complementarities between different sectors, as they used the intermediate products of other industries as their raw material. Generally, these multiplier effects were determined by the use of input-output tables of the various sectors which with respect to Nigeria are unavailable. Venezuela, on the other'hand, shared the same fate with Nigeria. .As illustrated in. Table 29, Venezuela also 190 benefitted from the bounty of the oil industry in the 20-year period of this study. As illustrated in'Table 30 (see also Appendix B-S), the hydrocarbon sector in Venezuela contributed 22.94 percent to 191 m.¢m O¢.NmNmH mN.mmNmH N.bmHN ome ~.mm He.m~mea mm.ovmma o.momm mums H.mm Ho.mmHm m~.memm m.HeH~ mmma «.mm He.mmmm mo.mHHm m.mmm~ Gems ~.am mm.mmmm am.~msm e.mm- mmma 6.4m mm.mmmo mm.aamm m.mom~ mmm. m.mm HH.SmoHH ma.mmmoa m.mmmm esmn G.Nm ao.momm ma.mome m.mmmm ammo ~.Hm mo.aa~m om.ommm m.ma~m mums «.mm ma.mmam mm.mom~ m.~emm Hams Aww.occo>om Am .m.D “woo Add mamuuom Hobos mo Am .m.o coeaaazo ooeaamso oncogenes omoucoouom oscm>om unomxm Hao comm Gowuooooum mo Hwo Hooccd Houoa ossd>mm Hflo dosuo Hod» Aommauasmao mocm>om\muuomxm Hwo ooouo wadsuoco> mm mdmda 192 Usoao> .> oesao> .xoom know m0wumaumum oocmsam ucoscuo>oo .ocsm xnmuosoz HchauocumucH Amy m.ow m.vb m.mb m.~m h.mw 0.Nm b.5w m.Hm h.¢m m.¢m oo.mwmo~ Hm.mmeH mm.mamm on.aobm O¢.NHmw ¢¢.wmmma Hm.m¢omd om.oomNH mm.momoa wo.bMHom oo.vmmMH on.amooa Nm.¢NHh om.hme m¢.mHHm N0.NHOHH mm.NmHMH mm.mhhHH hm.nn0md mm.m¢omd ..u:ooo mm mamflfi 0.50HN 0.5NBH o.mva 0.0me o.N¢©H w.m¢ma n.0HhH w.mhbd o.mmmH 0.mOHN ommH mmmH wme hme ome mmmH vwmd mmmH NmmH HmmH .HHHAx .ommH .xoo Doom Mohamauoum Hmaocmsfim Hoco.umcuoucH .ocsm muouocoz HmcoaumcumucH ADV .Hmmd "mmmmmw 193 TABLE 30 Venezuela's Gross Domestic Product by Industrial Origin at Current Prices Million Venezuelan Bolivares (1971-1990) Periodic (5 year) Sectoral (%) Distribution 1971- 1976- 1981- 1986- 75 80 85 90 Agriculture, Hunting, 6.14 5.78 6.31 6.20 Forestry & Fishing Mining & Quarrying Incl. 22.94 21.71 18.70 14.70 Hydrocarbons Electricity, Gas & Water 1.37 1.16 1.63 1.54 Manufacturing 16.52 16.28 18.06 21.08 Construction 4.69 6.95 5.06 5.88 SUBTOTAL Industry 45.53 46.10 43.46 43.20 Transportation, Storage & 9.73 11.05 10.27 5.49 Communications Wholesale & Retail Trade, 9.52 9.61 11.15 18.13 Restaurants & Hotels Non-Government Services 17.65 17.70 20.44 17.68 SUBTOTAL Services 36.90 38.36 41.85 41.29 Total Value Added (excl. Govt. Services) Gross Domestic Production 88.57 90.24 89.74 90.69 PLUS Government Services 11.43 9.76 10.26 9.31 EQUALS Gross Domestic Product 100 100 100 100 m: United Nations Conference on Trade and Development, Taarbooh of International Commodity Statistics, 1971- 90. 194 the GDP in the 1971-75 cycle. That level remained almost the same for the 1976-80 cycle at 21.71 percent with only a minor adjustment of 1.23 percent. The ten-year period covering two distinct cycles (1981-85 and 1986-90), however, showed a lesser contribution to the GDP of 18.70 and 14 70 percentage points, respectively. This represented a net loss of 5.63 percent from the average of the two previous cycles (1971- 1980). This loss placed the hydrocarbon sector on the same level of contribution with the manufacturing sector at an average of 17.98 percent with only a 1.53 percent difference between them. This was in sharp contrast to Nigeria, as shown in Table 25, where the difference in the next best sector other than agriculture, the manufacturing industry, was as much as 16.12 percent averaged over the 20-year period of this study. Also, the oil sector's share in the total export revenue of Venezuela has shown some impressive signs of diversification. The share of oil in the total annual export revenue was at 95.2 percent in 1971 and continued to be more than 90 percent from 1971 to 1984, when it declined to 87.7 percent and stood at 66.49 percent in 1990. This decline marked an emphasis on the slow, but consistent, growth of other sectors which pointed to a strong effort by Venezuela to diversify its economic base. 195 From the perspective of total revenue contributed by the oil industry from 1971, Table 29 indicated that the increase may have been related to increased prices obtained in the world market, since there was a decline of about 40.52 percent in the total volume of export sales of crude oil. On the average, crude oil exports maintained an 88.18 percent level of revenue contribution to the central government for the 20-year period covered by this study. These high levels of contribution of the hydrocarbon sector to the GDP and total export revenues of both countries clearly pointed to its importance to their economic well being. havalopment gr Agriculture The objective here was to analyze the evolution of agriculture from 1971 to 1990 and identify any changes or trends that.may have affected.this important sector'during'the study period. As illustrated by Table 25, the contribution of the agricultural sector to the GDP in the case of Nigeria stayed at almost the same level except for the 1976-80 five-year cycle, when it declined to 22.16 percent from 32.44 percent between 1971-1985. This decline was due to both the rapid increase in hydrocarbon production and the traditional slow growth process associated with the agricultural sector. In 196 fact, it grew at only 2 to 4 percentage points for the 20-year period. In addition, the combination of rapid population growth rate of between 2.5 and 3 percent with an annual growth in food demand of 3.5 percent, as shown in Table 31, and rising per capita income (3.2 percent per year), resulted in food shortage. Thus, from a position of self-sufficiency in food production of the late 19605 and early 19705, Nigeria declined to the level of being a major food importer; by 1979, food imports accounted for 17 percent of total imports, twice the level of 1971. Production of both food and export crops declined progressively, especially in the 19705. This resulted from the decline of land area (hectarage) actively engaged in agriculture as indicated in Table 32. The estimated areas planted with maize declined from 1,050 thousand hectares in the 1972/73 planting season to 519,000 hectares in the 1981/82 season. In the same period hectarage for groundnut declined from 2,032 thousand to 650; cotton went down from 236 to 45 hectares. Virtually all crops witnessed decline, and are still declining, from the prolonged period of underinvestment in agriculture. This loss in production was manifested in the foreign trade (imports) of Nigeria where, as illustrated by Table 33 (see also Appendix C-4), an average of the 5 year periodic 197 cycle ending in 1985, showed a persistent 24.99 percent contribution of food imports to the food requirements of Nigeria. The importation of food in Nigeria accounted for 20.51 percent of the total import bill between 1971-1975. That value increased to 27.86 percent for’the 1976-1980 cycle, posting a net increase of 7.35 percent, the highest for the 20-year study period. The 1981-1985 cycle recorded a 26.60 percent increase indicating that the trend was still going to rise. Attempts by the central government to encourage the resurgence of export agriculture through its structural adjustment program of 1986 produced only limited results. The use of more liberal incentive programs, such as short-term loans, and the abolition of the Marketing, Commodity and Grains Boards failed to re-energize and sustain the agricultural sector, because of the inability of the system to enforce accountability and reform the Land Use Act. The minor growth experienced by the agricultural sector from 33.58 percent in the 1981-1985 cycle to 35.48 percentage points in the 1986-1990 period, as illustrated by Table 25, was not a strong evidence that would lead one to conclude that the structural adjustment program was beneficial to the sector. As can be observed from Table 32, the hope for solving the food shortage problems of Nigeria was not bright, 198 TABLE 31 Annual Rate of Growth in Food Supply and Demand in Nigeria. Food items Percentage Percentage rate of rate of growth in growth in food Supply food Demand per year. ppergyear. Food Crops 1.8 2.7 Cassava 1.0 1.8 Potatoes 1.0 1.8 Plantains 1.5 1.8 Maize 2.5 3.7 Millet 2.5 3.7 Sorghum 2.5 3.7 Rice 10.0 5.5 Cowpeas 6.0 2.8 Palm Oil 1.0 4.6 Groundnut 1.0 4.6 Oil Vegetables 3.5 5.5 Oil seeds 2.5 2.8 and Nuts Local Wine 2.5 3.7 Others 6.5 Livestock 3.5 7.5 Products Fish 6.5 9.2 Aggregate 2.2 3.4 Egnrga: 'Tayo Lambo, Nigerian Economy; A Textbook of Appliad Eggngniga, Evans Brothers (Nigeria Publishers) Limited, 1987, Pp 26. 199 TABLE 32 Estimated Land Area Planted with Major Crops in Nigeria. (Thousand Hectares) Crop 1972- 1973- 1974- 1975- 1976- 73 74 75 76 77 Millet 3692 5651 4787 5476 3930 Guinea Corn 1792 5516 4653 5721 4842 Groundnut 2032 2076 1796 1472 684 Beans 2468 3256 2937 3035 2721 Yam 788 833 671 776 679 Cotton 236 121 478 403 384 Maize 1050 1130 579 971 892 Cassava 344 361 415 313 308 (Old) Rice 237 373 269 261 193 Melon 326 427 91 236 184 Beniseed 11 17 2 43 32 Cocoyam 268 167 108 113 102 200 Source: Fountain Publications, Ibadan Nigeria, TABLE 32 (cont.) Crop 1977- 1978- 1979-' 1980-' 1981- 78 79 80 81 82 Millet 3089 2377 2544 2811 3122 Guinea Corn 3479 3008 2641 2275 3175 Groundnut 755 810 565 631 650 Beans 1652 1472 1398 1304 1173 Yam 577 470 493 498 434 Cotton 278 201 136 116 45 Maize 610 631 425 465 519 Cassava 197 181 124 87 90 (Old) Rice 244 152 70 69 91 Melon 167 131 113 76 62 Beniseed 13 16 4 2 1 Cocoyam 79 37 38 49 63 Efiong Essien, Nigeria Under Structural Adjustment, 1990. Pp. 22. 201 TABLE 33 Nigeria Sectoral Distribution Averages for Imports in Percentage by Major Groups and Values (5 Year Periodic Cycles) 1971-75 1976-80 1981-85 1986-90 Foodstuffs Value 20.51 27.86 26.60 ----- Oil & Oil Products Value 3.96 5.05 1.59 ----- Raw Materials Value 2.03 1.67 1.51 ----- Semi-Manufactured Goods Value 24.09 20.81 19.44 ----- Capital Goods for Agriculture Value 3.55 3.79 3.83 ----- Capital Goods for Industry Value 29.11 31.52 40.87 ----- Consumer Goods Value 16.75 16.69 6.47 ----- Source: United Nations Conference on Trade and Development, Iaarhggh gr International gommodity Statistics, 1970-90 (see also Appendix C4). 202 given the persistent loss of arable land and cutbacks in food production. This pattern of events did not hold well for the long term. In Table 32, it was also observed that major staple food items such as yams, cassava, rice, cocoyam, and the like, lost 44.92, 73.84, 61.60 and 76.49 percentage points of their normal level of land use. The food situation, in the case of ‘Venezuela as illustrated by Table 34 (see also Appendix D-l), was even worse than that of Nigeria as evidenced by higher food imports. In the 1971-1975 period, food imports accounted for 21.37 percent of all imports. The trend changed to 23.93 percent in the 1976-1980 five-year' period 'with. a small difference of 2.56 percent increase over the previous cycle. However, the 1981-1985 cycle saw the food import component of total import jump to 37.68 percent and even to 64.82 percent for' the 1986-1990 cycle, registering' an approximate 175 percent increase just over a 15-year period. In conclusion, the agricultural sector in these two countries was at a point where contrary to the period before the advent of oil production, the continued loss of land due to inadequate production incentives and change of government policy may have led to a permanent dependence on imported food and the eventual loss of the input from subsistence farm lands. TABLE 34 Venezuela Sectoral Distribution Averages for Imports by Major Groups and Value (5 Year Periodic Cycles) Foodstuffs Value Oil & Oil Products Value Raw Materials Value Semi-Manufactured Goods Value Capital Goods for Agriculture Value Capital Goods for Industry Value Consumer Goods Value Source 3 r J 1971-75 21.37 28.92 22.21 17.78 1976-80 24.93 27.19 19.32 20.25 1981-85 37.68 25.92 16.02 26.87 1986-90 64.82 15.02 11.19 United Nations Conference on Trade and Development, Tearbook of International Commodity Statistics, 1970-90 (see also Appendix D1). 204 W The approach that was adopted here was to interpret data as shown in Appendices C-l to C-3 and Table 28, export trade for Nigeria, and compare those with data shown in Appendices D-6 to D-8 and Table 29 for Venezuela as it related to the evolution and structure of exports. Our evaluation focused on the analysis of exports by major groups, volume and value, including the export of hydrocarbons. As was observed from Appendix C-l for Nigeria, the growth rate of major export groups fluctuated widely during the period of study. In the 1971-1975 cycle, consumer goods exports and raw materials exports showed the only positive growth rates of 32.75 percent and 13.95 percent, respectively. In the same cycle, crude oil exports recorded an average of 38.86 percent growth. As illustrated by the figures in Appendices C-1 and Table 28, the growth pattern of exports was dictated by the events in the hydrocarbon sector» ‘The first large increase in exports took place in 1974 because of the increase in export prices of hydrocarbons. 'This was followed by several years of high export revenue that peaked in 1980 when Nigeria earned the largest export revenue of $25816.36 billion, with 96 percent of that coming from crude oil export sale. As indicated in Table 28, crude oil export had consistently contributed more than 90 percent of Nigeria's 205 total export revenue since 1974. This demonstrated Nigeria's total dependence on oil exports and the well- being of the hydrocarbon sector. Prior to 1974 the oil sector contributed approximately 65 percent of the export revenue, with agricultural and mineral ores export playing significant roles. The expansion of hydrocarbon exports was followed by the absolute decline of nonpetroleum sectors, primarily because of neglect by the government. Traditionally strong export components, such as cotton, groundnut, and palm produce lost their contribution to exports and even declined to a point where land areas usually used for their production was lost or abandoned, as illustrated in Table 32. Export revenue from such important sources, such as tropical beverages made from cocoa, declined to insignificant levels. Even mineral ores exports, such as tin and other mineral raw materials, declined precipitously. As an illustration from Appendix C-l, the 10-year period from 1981 to 1990 which comprised two five-year cycles, recorded a negative growth rate for 1981-1985 at -54.23 percent and.a minor positive 3.82 percentage points between 1986-1990. The only sector that was visibly strong in Nigeria and had been responsible for more than 90 percent of total export revenue since 1974 was the oil sector, a fact that pointed to its continued dominance of the economic activity of Nigeria. 206 Venezuela did not present a different picture, even though there was evidence of a more diverse export activity as demonstrated in Table 29, by the decreasing revenue receipts from crude oil sales from 1986. Some components of the export market, for example, semimanufactured goods, capital goods for industry, and even export of some foodstuff, as evidenced in Appendix D-8, showed active participation in the export trade from 1983, corresponding with the drop in crude oil exports from 94.7 to 91.3 percentage points in 1982. Nonetheless, the hydrocarbon sector in Venezuela remained dominant at 66.49 percent of total government revenue in 1990. Eyolurion or Imports Our analysis was based on the evaluation of data presented in Table 33 and Appendices C-4 through C-8 for Nigeria and Table 34, D-l through D-5 for Venezuela, for imports by major groups, value, and volume. Imports of goods into Nigeria for the 20-year period covered.by this study as shown in Appendix C-8 fluctuated from just over $561 million in 1971 to about $2.5 billion in 1986. The highest level of imports was in 1981 with a total of about $12.3 billion. The export sale of crude oil was also at its peak in 1981 with a contribution of $19.0 billion from the previous year. A striking observation from the reference on imports listed above is that changes in the growth pattern of 207 imports largely depended on the revenue from the export of crude oil and the priorities of the government, in terms of investments, levels of consumption, and the desire to maintain an acceptable balance of trade. In that same year, 1981, the import bill was just over $12 billion. The same is true for the next two years, which leads one to conclude that large import bills followed closely on the heels of a successful world crude oil market characterized by high energy costs. A review of the simple growth rate of some of the major groups of economic activity, as shown in Appendix C-7, indicated that the highest beneficiaries of these high import volumes were those sectors that had some form.of production capacity: This reflected.the intent to encourage the growth of other sectors of the economy other than oil through an increase in the importation of investment goods. On the average, imports of semimanufactured goods and goods for industries, as seen in Table 33, enjoyed 5-year growth rates of 29.11 percent in 1971-1975, 31.52 percent in 1976-1980 and 40.87 percent in 1981-1985, the last five-year period for which data were available. Imports of foodstuff also continued to rise, as shown in the data presented in Table 33, to an average of approximately 25 percent following continued signs of stagnation and loss of productive capacity by the agricultural sector and the influence of increasing population. An 208 important observation from the data table was the very reduced level of raw material imports. This may have been because most of the imports were in the form of semimanufactured products because of the absence of industrial capacity to process raw materials. The oil and oil products sector also showed very reduced import levels which reflected the country's self—sufficiency in petroleum and its products. Venezuela's imports presented an identical picture. Although the 5-year cyclical averages might have been different, its pattern of imports followed the trend set by Nigeria in the areas of foodstuff, semimanufactured goods, capital goods for industry, and consumer goods. As presented in Table 34, the import of foodstuffs rose from 21.37 percent in 1971-75 to 24.93 percent in 1976-1980, 37.68 percent in 1981-1985, and 64.82 percent between 1986-1990. This reflected a strong dependence on imported food to meet the pressing needs of a growing population. What appeared.clear in the trade:development.of'Nigeria and Venezuela was that the strong oil sector was only able to increase the volume of import commerce between these countries and their trading partners. The stated benefit of the choice of the leading sector approach to economic development was to facilitate the restructuring of trade and increase exports, while decreasing the importation of traditional goods. This effect, with respect to Nigeria, was not observed during this 209 study to have been explicit enough as to lead to a decisive support for the adopted economic development approach. Instead, imports increased.although.not.in instances where the capacity for local production existed. The consequence of increased imports were seen in the form.of increased.debt, and unfavorable balance of payments by the two countries. The result of all this was higher dependence on the oil sector and the vagaries of the international energy market conferred on Nigeria by the failure of the leading sector approach to economic development to restructure the Nigerian export trade. Foreign Debt Our analysis focused on the interpretation of the data presented in Table 35 for Nigeria and Table 36 for Venezuela. The objective, as stated earlier, was to evaluate the evolution of foreign debt for the 20-year period (1971-1990), and identify any changes or trends during this period. As shown in Table 35, Nigeria's total debt rose from $1.4 billion in 1975 to $36.4 billion in 1990. Debt service jumped from $402 million in 1975 to $2.5 billion in 1990, an increase of 83.95 percent over 15 years. A break down of the debt service charges indicated that amortization rose from $131 million in 1975 to $1.05 billion in 1990, while interest charges rose from $271 million in 1975 to $1.45 billion in 1990. This placed an enormous burden on the economy of 210 Nigeria, as evidenced from debt service ratios as percentage of exports that soared from 5.16 percent in 1975, to as much as 44.24 percent in 1988, declining to just under 39 percent in 1989 and eventually settling at 17.43 percent in 1990. With respect to total debt as a percentage of GNP, it jumped from 3.50 percent in 1975 to 41.47 percent in 1986, and continued to soar to 122.10 percent in 1989 as the GNP declined. The economy of Venezuela, as illustrated in Table 36, was also under the same crushing effect of a bloated foreign debt situation. Its foreign debt load jumped from $2.26 billion in 1975 to a high of $30.66 billion in 1988, finally settling at $26.10 billions. Total external debt, as a percentage of GNP, rose from 6.94 percent in 1975 to 70.10 percent in 1989. These figures highlighted the magnitude and seriousness of the foreign debt situation. It also pointed to the devastating effects it brought to bear on the fragile economies of debtor countries. The data presented pointed to the case of choking off any development effort.made by Nigeria and Venezuela. The effect of an enormous debt load was very apparent for Nigeria. The established intent of holding external debt at a level that would have required the use of only 25 percent of export revenue for debt service and amortization failed 211 TABLE 35 Nigeria External Debt Million U.S. Dollars (1975, 1981-1990) (Percentages) 1975 1981 1982 1983 1984 1985 Total External 1399 5248 14101 15629 15837 17904 Debt of which: --Long Term 1399 4712 9816 12262 12342 13016 --Short Term -- 536 4285 3367 3494 4888 Total External 3.50 5.57 15.29 17.56 17.14 20.28 Debt as % of GNP Debt Service 402 1189 2461 2343 3415 4444 of which: --Interest 271 837 1621 1273 1387 1553 --Amortization 131 352 840 1070 2028 2891 Debt Service Ratio 5.16 6.58 20.10 22.48 28.56 35.38 1986 1987 1988 1989 1990 Total External 24564 31431 30993 33754 36423 Debt of which: --Long Term 18672 25085 25750 28224 30205 --Short Term 5892 6346 5243 5530 6218 Total External 41.47 134.39 111.96 122.10 Debt as % of GNP Debt Service 2038 1845 3053 3190 2505 of which: --Interest 923 1317 2418 2695 1453 --Amortization 1115 528 635 495 1052 Debt Service Ratio 30.41 25.01 44.24 38.59 17.43 Shame: Organization for Economic Cooperation and Development, (OECD), Paris. Financing and External Debt of eve 'n C tries, 1975-1990. 212 TABLE 36 (Venezuela External Debt Million U.S. Dollars (1975, 1981-1990) (Percentages) 1975 1981 1982 1983 1984 1985 Total External 2257 13832 33233 31117 29001. 29326 Debt of which: --Long Term 2257 9652 17507 16021 17857 17203 --Short Term --- 4180 15725 15096 11144 12123 Total External 6.94 15.72 42.73 46.22 47.36 46.09 Debt as % of GNP Debt Service 500 4707 6045 4666 4469 3559 of which: --Interest 410 3215 3919 3346 3184 2735 --Amortization 90 1492 2126 1320 1285 824 Debt Service 5.69 23.37 36.62 36.17 29.70 26.68 Ratio 1986 1987 1988 1989 1990 Total External 28897 28598 30656 29066 26099 Debt of which: --Long Term 19318 22759 23691 22688 21468 --Short Term 9579 5839 6965 6378 4631 Total External 52.74 57.32 56.81 70.10 Debt as % of GNP Debt Service 4437 3966 4746 3488 3250 of which: --Interest 2482 1873 2336 2708 2125 --Amortization 1955 2092 2410 740 1125 Debt Service Ratio 49.78 45.37 50.96 26.06 15.49 Source: Organization for Economic COOperation and Development (OECD), Paris. Einancing and External Debt, of Eeveloping Countries. 1975-90- 213 following the stagnation of export revenue and increasing debt load. Employnent and Income Distribution Our analysis turned out to be threefold: first, analysis of the trend in employment as it relates to the various economic sectors. Second, establish whether there were any significant changes in the employment structure for the 20-year period (1971-1990) covered by this study. Third, relate the data to income distribution as it related to the economic sectors. v u io of Ni eri 's Em lo ent Structure (1971-90) According to estimates by the World Bank, the population of Nigeria in 1970 was in the neighborhood of 55 million. That number jumped to about 108 million in 1990,“‘ as shown in Table 37. This literally amounted to doubling of the population in just twenty years because of high birth rates--3-4 percent annually. Projections beyond 1990 pointed to a very frightening picture of a population growth rate of about 5 percent. This very worrisome demographic picture established the lowest limit for the growth in Gross Domestic Product. It also posed a very serious problem of population shifts. For 114 Economic Integration and Structural Adjustment in Airina (The African Development Bank, African Development lReport 1993), p. A-3. 214 example, the growth rate of population in the urban areas of Nigeria before 1975 was just 1.5 to szercent per'yearu After 1975 and because of the availability of employment opportunities in the petroleum sector, urban population growth surged to near record levels of 6.4 to 7 percent. At the same time, the rural population grew much more slowly at 1.5 percent or less, and its share of total population fell in 1975 to just under 63 percent. As illustrated in Table 37, most of the future labor force in Nigeria were all in the age group of 0-50 years. Those make up the urban labor force and represented the group with the highest risk of unemployment. This risk of unemployment was higher with the youth than it was with those near-SO-years old. Even in this group, the main concentration (69.5 percent) was in the 15-30 years age group, leading one to conclude that unemployment was going to be severe in the future as the ranks of these unemployed youths increased with newborns. If the trend of migration into urban areas continued, a very severe shortage of rural labor would develop, leading to decreasing agricultural output and worsening food problems in Nigeria. Presently, the level of unemployment in the urban areas is worsened by the increasing demand on existing urban infrastructure, such as shelter, social services, health, and education. The increasing cost of foodstuff in the urban 215 TABLE 37 Population Statistics for Nigeria 1970 1975 1980 1985 1988 1989 1990 Resid Pop. 57 66 78 92 102 105 109 (Millions) hge Qist. (pergentage) 0-5 yrs. 26 27 27 29 28 31 34 6-14yrs 26 27 21 24 26 28 31 15-50yrs 39 42 45 47 47 48 48 51yrs & over 11 13 14 13 16 15 13 deg Distr. Male 54 51 52 56 49 57 62 Female 23 24 34 36 36 34 35 Source: International labor organization, World Employment Program, African Employment Report, Jobs and Skills Program for Africa, Addis Ababa, 1991. 216 areas, especially for the unemployed, added to the existing misery and hardship. As is illustrated in'Table 38, a spot sampling of urban unemployment by gender showed that the highest level of urban unemployment was found among very young and able-bodied youths. On closer review, the highest risk was more with the 18-23 year-old group, where 52.3 percent were unemployed. The next two groups who presented difficulties were the 15-17 and the 24-29 year-old.age groups, with.tota1 unemployment at 20.1 and 15.6 percents. An important observation to be made here is that these age groups constitute the prime supply of farm labor that migrated to urban areas. It can also be observed from Table 38 that the total rate of unemployment decreased as the age grades increased toward 50 years and dropped to 0.5 percent for those 51-55- year olds. Table 39 presented the available labor market in Nigeria for the period 1970 through 1985 for both agriculture and nonagricultural sectors and pointed to some important trends in the labor market. Although the agricultural sector was still the leading sector for employment, it experienced a continuous decline from about 70 percentage points in 1970 to just 58 percent in 1985. This loss of 12 percentage points to the nonagricultural sector also pointed to one of the causes of the food shortage problem in Nigeria. The nonagricultural 217 TABLE 38 Percentage Distribution of Urban Unemployed Persons, by Age and Gender Age Group Males Females Percentage Total 15-17 18.6 25.3 20.1 18-23 50.9 27.5 52.3 24-29 16.6 12.5 15.6 30-35 7.4 2.0 6.3 36-40 2.4 2.3 2.4 42-45 2.0 0.0 1.6 46-50 1.4 0.3 1.2 51-55 0.6 0.1 0.5 Total 99.8 100.0 100.0 £23192: A.E. Okoroafor and E.C. Iwuji, "Urbanization and Nigerian Economic Development"; paper presented at the Annual ggnfierenge of the Nigerian Economic Society, Kaduna, September, 1977, p. 4. 218 sector, on the other’hand, increased its relative share of the labor force from just more than 30 percent in 1970 to 42 percent in 1985. On closer observation, one can easily see that small-scale establishments were the most important sources of employment in the nonagricultural sector. They accounted for at least 80 percent of the employment in this sector between 1970 and 1985. It must be noted that the data shown for unemployment gap defined as the difference between the number of people in the labor force and those gainfully employed was misleading. As can. be observed from ‘the table under reference, it indicated that the level of unemployment declined from 7.8 percent in 1970 to 4.0 percent in 1985. This could not have been correct given that the last time Nigeria had an acceptable census data ‘was in 1960 and. that population statistics ever since then have been based on estimates. Venezuela did not present a different picture. According to the International Labor Organization, unemployment in Venezuela rose from 6.3 percent in 1968 to 6.4 percent in 1973 and even declined to 4.8 percent in 1978. That was essentially helped by the oil boom which started to falter in the early 19805 and the rate of unemployment jumped from 7.1 percent in 1982 to 13.4 percent in 1984. Correspondingly, employment in the agricultural sector declined from 19.5 219 TABLE 39 The Labor Market Category 1970 1975 No % No % (Million) (Million) Labour Force 26.080 --- 29.22 --- Unemployment Gap 2.030 7.8 1.31 4.5 Gainful Occupation 24.054 --- 27.91 --- Agriculture 16.790 69.8 17.86 64.0 Non-Agriculture 7.264 30.2 10.05 36.0 Medium/Large Scale 0.695 9.6 1.40 14.2 Small Scale 6.569 90.4 8.45 85.8 Wage Employment by Sector 1.389 5.8 2.18 7.8 Agriculture 0.170 12.2 0.21 9.5 Large/Medium --- --- 0.10 47.6 Small Scale --- --- 0.11 52.4 Non-Agriculture 1.215 87.8 1.97 90.5 Large/Medium --- --- 1.40 71.1 Small Scale --- -—- 0.57 28.9 Self Account, Unpaid 22.669 94.2 25.73 92.2 housewasher & Apprentices Agriculture 16.620 73.3 17.83 69.3 Non-Agriculture 6.049 26.7 7.90 30.7 220 TABLE 39 (cont.) aa=====fl-—==--=-=---—== Category 1980 1985 No % No % (Million) ((Million) Labour Force 32.20 --- 36.08 --- Unemployment Gap 1.40 4.4 1.48 4.0 Gainful Occupation 30.30 -—- 34.60 --- Agriculture 18.48 60.0 20.07 58.0 Non-Agriculture 12.32 40.0 14.53 42.0 Medium/Large Scale 2.25 18.3 2.9 20.0 Small Scale 10.07 81.7 12.28 80.0 Wage Employment by Sector 3.0 9.7 3.75 10.8 Agriculture 0.26 8.7 0.30 8.0 Large/Medium 0.12 46.2 0.14 46.7 Small Scale 0.14 53.8 0.16 53.3 Non-Agriculture 2.74 91.3 3.45 92.0 Large/Medium 2.01 73.4 2.55 74.0 Small Scale 0.73 26.6 0.90 26.0 Self Account, Unpaid 27.80 90.3 30.85 89.2 Housewasher & Apprentices Agriculture 18.30 66.0 19.13 62.0 Non-Agriculture 9.50 34.0 11.72 38.0 Source: 'Tayo Lambo, Nigerian Economy; A Textbook of Applied Economics, Evans Brothers (Nig. Publishers) Limited, 1987, Pp. 268. 221 percent of total available labor force in 1973 to 13.4 percent in 1984. A striking similarity between Nigeria and Venezuela was in the make up of the unemployed and the difficulties imposed on existing urban facilities by the influx of employment seekers from the rural areas. Those need not be repeated in the context of this text, since one can reasonably conclude that the problems of developing countries seemed to stem from a common base of poverty and deprivation. These two factors underlined the need for migration to urban areas in search of employment, especially in developing countries where the hydrocarbon sector had been of significance. Nigeria's Income Distribution Pattern One of the major goals of diversification of the industrial base was to achieve a fair distribution of income across sectors and ensure an improvement in living standard. This had to be accomplished with minimum shortfalls caused by large differentials that arose from the specifics of a sector of employment or the location of the employment. As illustrated in Table 40, real minimum wages in Nigeria fell (1980 = 100) from a high of 148 in 1981 to 79 in 1985. This represented an across-the-board loss of 46.62 percent in just five years and suggested a disappointing and difficult economic performance. It can be assumed that most (of the loss in wages came from small-scale establishments, 222 noting that they constituted the highest employers and were essentially cottage firms with the least resistance to adverse economic times. Table 39 presented some very interesting data on income distribution in Nigeria. As can be observed, the proportion of wage earners grew from 5.8 percent of 24.054 million gainfully employed people in 1970 to only 10.8 percent in 1985. This implied that most of the working population were self-employed or unpaid houseworkers and apprentices. Their proportion fell from 94.2 percent in 1970 to 89.2 percent in 1985. Most of the self employed were in the agricultural sector; The proportion of people in the sector fell from 73.3 percent in 1970 to 62 percent in 1985. For those in the nonagricultural sector, their proportion rose from 26.7 percent in 1970 to 38 percent in 1985, indicating the slow but steady growth of entrepreneurship and self employment. Another important component was the growth of the proportion of large and medium-scale workers in the nonagricultural sector. The large/medium nonagricultural sector grew from 71.1 percent in 1975 to 74 percent in 1985, posting a growth rate of about 3 percentage points. An analysis of the sharp fluctuation of the per capita revenue of Nigerians during the period covered by this study *would enable us to understand the seriousness of the 223 TABLE 40 Real Minimum Wages for Nigeria '80 '81 '82 '83 '84 '85 '86 '87 '88 '90 100 148 138 115 81 79 na na na na Source: International Labor Organization, (ILO), Governing Body Committee on Employment: Wages, Labor cost and their impact on adjustment employment and growth. ILO. Geneva, Nov. 1990. situation. In addition, it would also enable us overcome the problems presented by the unavailability of data covering urban and rural income profiles that would have enabled us to understand the trend in income distribution. Nigeria's per capita revenue rose from $219.07 in 1971, to a high of $1120 in 1982, but quickly dropped to $250 in 1989, posting a 77.68 percent decline during a 7-year period. This confirmed an earlier observation by the International Labor Organization, as shown in Table 40, that pointed to the precipitous decline of income in Nigeria. Venezuela, on the other hand, did not lose as much ground as Nigeria did, even though its per capita income declined substantially too. .Available data indicated that at its peak in 1980, Venezuela's per capita revenue was $4070. This declined to $2450 in 1989, a drop of 39.8 percent, but still substantially high when compared to that of Nigeria. 224 An important observation made here was the huge difference in population between the two countries. Wbrld Bank estimates for Nigeria in 1990 stood at approximately 108 million people, while Venezuela was at 19.25 million. These figures obviously affected the growth of per capita revenue and tended to emphasize the disadvantage of an uncontrolled population growth rate. In conclusion, it must be recognized that regardless of increases in population, income distribution in Nigeria and Venezuela varied widely. Those variations arose from the broad differences between earnings in the agricultural sector and the major industrial sectors. In other words, there were wide 'margins in income between rural farmers and their employed urban counterparts. In general, those margins were always in favor of employed urban residents, who retained the edge over their rural counterparts. CHAPTER VIII CONCLUSION Summa of Find s The purpose of the study was to examine the impact of Nigeria's choice of the leading sector approach for achieving economic development over the 1971 to 1990 period. This was to be achieved by comparison between the development methods proposed by the leading sector approach to economic development used by Nigeria and the balanced growth method used by Venezuela. These two countries, as stated earlier, are OPEC member states, reasonably equal in their development standards prior to the 1974 increases in the price of the world's energy market for crude oil, and its consequent effect on the financial strength of the members of OPEC. Nigeria, prior to 1974, had demonstrated the ability to pursue a carefully directed plan of development based on encouraging the growth of all sectors of the economy. This fact earned her a place in the list of the world's major export producers of agricultural products. She continued to hold on to the principles of balanced growth development in all sectors of the economy until the Middle East crisis of 1974. Following 225 226 that event, OPEC appeared on the scene as a uniting force that bound together most of the major oil producing countries, clearing the way for huge foreign exchange revenue receipts from the petroleum industry. Crude oil, therefore, became the principal foreign exchange earner, and Nigeria switched its development approach from the balanced growth method to dependence on the hydrocarbon sector and the leading sector approach to economic development. By doing so, Nigeria intended to bring about an accelerated transformation of the fragile economic structure inherited from the colonial period. Its intent was to overcome the bottleneck imposed by the scarcity of foreign exchange, usually earned by the sale of agricultural products, and rationed out to the various economic sectors. The rapid build-up of a strongly integrated industrial base around the hydrocarbon sector was viewed as the best way to foster diversified economic, social and political growth. This approach was to facilitate the achievement of economic independence and the improvement of living standards. Nigeria's Third Development Plan that began in 1975 envisaged that the oil sector would primarily serve as a base for restructuring the Nigerian economy through backward linkages and later through forward linkages as the industrial sector developed. It also looked up to the oil sector to provide the necessary financing for the development of other 227 sectors through increased export earnings. An analysis of this strategy showed.that revenue from the oil sector was used to set up an industrial sector“with several major attainments: 1. Estimates of GDP at 1977-78 factor cost grew from a level of about 27,365 million naira in 1975-76 to 35,196 million naira in 1979-80. This represented an average growth rate of about 5 percent per year. 2. The fastest growing sector over the plan period was manufacturing which recorded an average growth rate of 18.1 percent per year. Agriculture recorded a negative growth rate of -2.1 percent as against the projected 5 percent increase. 3. Structurally, agriculture, mining, and manufacturing were projected to account for 22.6 percent, 44.2 percent and 5.5 percent, respectively, of the constant price GDP in 1975- 76. However, actual estimates indicated that the shares of these sectors were 27.3, 22.5, and 5.6 percent, respectively, during the year. The main reason for this unexpected distribution pattern was traced to the decline experienced by the oil sector between the last quarter of 1976 and the end of 1978. 4. The Plan initially envisaged that the gross capital formation would rise from 3.5 million naira in 1975-76 to 9.08 .million in 1979-80, and also that a total of 30 billion naira would be invested over the 5-year-plan period. Available information showed, however, that these figures were exceeded. 228 In all, total capital formation for the plan period amounted to more than 42 billion naira. Dependence on the oil sector soon brought problems of enormous proportions. The manufacturing sector was doing relatively well as the exodus of rural farm labor reached its peak. Employment across the various economic sectors, except agriculture, were at their highest, while the agricultural sector that was teetering on the verge of collapse due to neglect and the change of policy by the government eventually gave way as the tempo of food importation escalated. There were other plausible, although, important reasons why the agricultural sector fared very poorly. The first was identified by Moyart as the psychological resistancen5 exhibited by Nigerian investors toward new investments in agriculture. His review discussed the trade spirit as the first mental barrier towards new investments in agriculture. By that he meant that it was much easier to make large and quick profits on trade rather than on agriculture. The expression "quick money" was very symptomatic of this phenomenon, and the situation was considerably aggravated by the oil boom of 1973 when large profits were made easily by entrepreneurs who simply bought and sold imported goods. It 1”M. G. Moyart, "An approach to the Problems of Nigerian Agriculture", in The Development= of Nigerien Agrieultgre, Proceedings of a Symposium Sponsored by Societe Generale Bank (Nig) Limited, edited by Adeniyi Osutogun, Lagos: Philippie Chasse and Rex Ugorji, 1982, pp.12-14. 229 was, therefore, logical that people resisted investing in agriculture which, by its nature, yielded a relatively slow return on investment over an extended period of time. The second reason was the acquired consumer stereotyped food habits. The need to change from the consumption of traditional Nigerian food toward import-generating foods and drinks increased in importance during the 1974-90 period and impressed on Nigerian minds new eating habits which had an adverse effect on the balance of trade. The final reason was described as the lack of respect for the farmer and the overinvolvement of government in the agricultural sector leading to the withdrawal of investment capital by entrepreneurs fearing excessive government regulation. As the above factors interplayed, population problems intensified because of the excessive flow of wealth from surplus government coffers, and the availability of lavish government programs that gave the indication that the good times were indeed there to stay. The dominance of the oil sector spurred a host of other related problems that eventually frustrated the development efforts of Nigeria. In fact, Nigeria's total dependence on a nonrenewable resource became evident when the flow of financial resources from the sale of crude oil was reduced later in the 1980s. Its problems became manifest in the form of huge external debt and negative balance of payments which quickly was felt in Nigeria 230 as austere economic times when the government tightened its belt. In turn, the undesirable changes forced upon Nigeria by the resultant shortfalls in foreign exchange resulted in substantial economic and social imbalances which adversely affected the overall performance of the country. This is not to say that Nigeria did not make enormous strides with the bounty from the petroleum sector. Evidence abounds that indicated that for whatever it was worth, Nigeria benefitted immensely from the change of development policy from the balanced growth method to the leading sector approach which they chose to adopt in 1974 in response to the changes of the world's energy market. In the bid to maximize benefits, the agricultural sector became an eventual loser, although it must be noted that its slide did not begin with the adoption of the new development policy. Within this context, and evaluating Nigeria's performance with Venezuela, one can ask whether Nigeria would have been better off without the hydrocarbon sector as the leading sector in the economy. The response would not have been far-fetched. It would simply be that it ‘would have been difficult even to contemplate development of any kind without the support provided by the hydrocarbon sector. The march would have been excruciatingly slow and 231 tedious and even worse should have been the level of foreign indebtedness. Nigeria made mistakes that were principally administrative that may have emanated from lack of quality experience, directed planning, or a thorough understanding of the development process. Those mistakes may be defined as the inability to make forward linking decisions that meant the aggressive pursuit of a diversification program as the hydrocarbon sector led the way with huge foreign exchange receipts. Venezuela, on the other hand, made the same mistakes because they also failed fully to encourage the simultaneous growth of all sectors of their economy, even though their development approach was firmly defined around the balanced sector approach. The above conclusion agreed with Hirschman's observation stated earlier in the text, as a limitation faced by developing countries: Our diagnosis is simply that countries fail to take advantage of their development potential because, for reasons largely related to their image of change, they find it difficult to take decisions needed for developlment in the required number and at required speed. What happened in both Nigeria and Venezuela could be described as a "leap of faith," undertaken for the best interest of both countries without the necessary knowledge and experience on how to get best results. The intended outcome, m‘Hirschman, The Strategy of Economic Develepmenr, p. 25. 232 although reasonably successful, was tempered by the vagaries generally associated with the lack of directed change, which in turn, created more difficulties for the respective countries. It may be worthwhile to view the lack of attention to all the economic sectors, especially' agriculture, as an underestimation of the consequences of unbalanced growth from the standpoint of adequate food supplies and the maintenance of suitable nutritional levels. On the other hand, even the balanced growth approach adopted by venezuela did not give adequate attention to agriculture. All of this may lead one to conclude that the adoption of either one of the two approaches to economic development did not make much difference after all. For developing countries such as Nigeria and Venezuela, the failure to capture fully the benefits of capital provided by the hydrocarbon sector may also be attributed to a host of other factors, some of which were discussed here, and the lack of experience in pursuing successful economic development programs may have led to an unpleasant learning curve. An exhaustive study of the weighted contribution of these factors as relevant to Nigeria, could certainly be the subject of another study. There is no doubt that Nigeria and Venezuela constitutes another example of an economic development venture 233 that stumbled because of inadequate planning, lack of directed change, experience and so forth. Science generally requires a clear-cut conclusion based on a thoughtful analysis and interpretation of the data used for a study. Given the above, a suitable conclusion to this study should be one based only on the performance of the Nigerian economy over the period of the study. Therefore, based on the data presented, one can arguably conclude that Nigeria scored reasonably well in economic development, considering where it started, although not on the level it would have if it had the benefit of directed planning and experience. An example is the agricultural sector which grew at 2-4 percentage points from 1971 to 1990. If the planning process had been directed with appropriate projections for high population growth rates resulting from the economic boom, investment in the agricultural sector would have kept pace with demand for food, thereby offsetting the high food import bills while maintaining a healthy balance of payments and a viable agricultural sector. That would have meant a higher growth rate of about 6-8 percentage points for the agricultural sector. The above observation also recognized that Venezuela did not present a better picture than Nigeria with respect to the food situation and the agricultural sector and that the same recommendation would apply. 234 My conclusion based on the analysis conducted in Chapter VII is that it did not matter what theoretical construct was adopted to address economic development needs. The failure to achieve satisfactory economic development as related to Nigeria and Venezuela was mostly defined by the lack of directed implementation of their economic policies. This was borne out by the fact that neither country achieved its desired goal of a diversified economic base during the period covered by the study. 235 Today, Nigeria's development prospects are highly dependent on its ability to restore the role of agriculture as the sector of prime importance» In doing so, it will overcome the enormous food import bills that have served to deplete her foreign exchange reserves. It also should attempt to reverse the tide of urban migration that became the order of the day ' since crude oil became the principal foreign exchange earner. One plausible approach will be to review its practise of locating industries and manufacturing centers in urban areas. The need for Nigeria to diversify its export base is essential to its economic success for a variety of reasons among which are, first, it will mitigate the risk of external vulnerability to foreign exchange fluctuations; and second, it will remove the dependency on the oil sector and the negative effects of the unstable world energy market. Implementing these recommendations will restore equitable resource allocation to all the sectors of the economy and ensure that the economic system will be able to absorb an ever growing and younger population. It will also restore social equity among the various sections of the society and across economic sectors. 236 ec e Among the several relevant policy changes that need to be made are the following: 1. Reorientation of the investment program with greater emphasis on agriculture. 2. Diversification of exports and reduction in the dependency on the hydrocarbon sector to earn foreign exchange to finance food imports. 3. Allocation of scarce resources through a realistic and meaningful method that will assure equity between the various economic sectors. 4. Creation of appropriate conditions that will enhance efficiency in both the manufacturing and industrial sectors. 5. Reduction in the level of foreign debt. 6. Slowing down of the demographic movement to urban areas. 7. Introduction of fiscal policies that will increase productivity and assure the elimination of sectoral inequalities. 8. A cessation of the present import oriented policy with the aim of curbing preference to imported food and consumer goods. The above policy changes will sharpen the focus of the Nigerian economic development approach and ensure the realization of the desired benefits resulting from capital made available by the hydrocarbon sector. 237 O T R S This study focused on the use of some economic indicators to measure the success of economic development between Nigeria and Venezuela that essentially adopted different economic development approaches. In the process of conducting the study, it became evident that several other factors outside its scope may have also played significant roles. To facilitate a better understanding of the success of economic development programs in underdeveloped countries, it is recommended that the effect of the following be considered in future studies: - policy formation methods at the cabinet level and the difficulties of implementation at the lower levels of government - revenue allocation policies that tend to guide sectoral growth of the economy - the effect of corruption on the economic development process - the effect of low absorptive capacities of the economies of underdeveloped countries on the overall adevelopment process. APPENDICES APPENDIX SOURCES OF DATA UN Year Book of National Account Statistics, various issues. The African Bank, African Development Report 1993 UN Survey of Economic and Social Conditions in Africa, 1985- 1989. World Bank Tables, various issues. IMF International Financial Statistics, various issues. IMF World Debt Tables, various issues. The World Bank - African Development Indicators 1992. The World Bank - Trends in Developing Economies 1992. UN Economic Commission for Latin America and the Caribbean - Statistical Yearbook for Latin America and the Caribbean. Inter-American Development Bank - Economic and Social Progress in Latin America. 1992 Report, Special Section: Latin America's Exports of Manufactured Goods, October 1992. United Nations Development Program. The World Bank, African Economic and Financial Data, September 1989. Organization for Economic Cooperation and Development (OECD): Financing and External debt of developing countries, 1975-1990 (several copies). United Nations Conference on Trade and Development, Yearbook of International Commodity Statistics, 1984-1990. 238 2539 m.mmmw¢ o.-moe ~.~ommm Hmmnn n.~mmm~ m.~o-~ mHmmH «.m~v~H e.m~vn Hmmm «.mvmm m.mn- m.e¢o~ m.v¢o~ ¢.m~mH ~.moo~ m.¢~HH mum coo“ NNm e.-o¢¢ “.mmwmm m.m~mam ~.momm~ m.mm~m~ ~.¢ommH ~.ooeu~ «.momo~ «.mmmm mane m.mummfi ~.om¢- n.5mmofi m.~msm “.mmom mn~mmu m.mmo¢ v.5omm ~.m~o~ Nwofi mmmN ~.HHNN H.~¢o~ ~.¢umfi H.Hmo~ m.om¢fi m.m-~ m.~mm m.muu -~ m.-nm v.H~mm ~.vo- m.mmmm m.¢mmm m.mmme m.omom o.m-~ e.¢om cum m.~mNH o.n¢vm ”.mnufi ~.mmoH ~.~mm m.m~m ~.~Hm m.e¢¢ u.m- n¢~ m.~om- ~.om~w~ m.movm~ m.m¢m- «.mvmcn m.m-~ H.m~fiw c.0mmm m.~mm~ ~m- ~.Hsmm m.~m~m ~.~som m.omm~ m.mom~ m.vaH ~.m~m~ ~.m-~ «.mem mom «.vmmm _.smo~ o.mm- o.mmm~ m.vo¢~ ¢.o-H ~.~mm e.~mm m.~Hm mum m.¢o~ ~.Ho~ m.-~ s.mm o.ms «.mm o.¢m ~.¢m v.mv mm ¢.Nhomu m.mmmHH m.m~vm o.moms m.nmnm «.mmme m.~wom m.o~o~ o.oN~H Hem o.~mmm m.m~om m.mmom m.mom~ m.-~m ~.emmm ~.mmme m.mMam ¢.voom mmvm comm mum“ mung sum" mmm" mmm" chm" «mam mmm” usmfi m buaoomm umhmmzoa mmomu <~mmu~z m< x~ozwma< puanoga uwummeoo macaw mn<=am mmup>gmm ucmscgm>ow .magm cosuusucta uwumosoo macro Amou_>gmm .»>om .puxmv umuu< m=P~> —~uop mouw>gmm Lme u:m3ctm>ou-=oz «page: a mucataaumum .mumth penuma a spammpocz "cosuau_:=esou a «museum .comuaugoamcmth auumsvcu Lgmm acmecgm>oo mag; gowuuauoga fimmmcm movmfim mmmmmfi nmmHoH fiofism mmmmw oovmm Nummm momnv vmflme umumosoo «mega Amauw>rmm .u>ou,.puxmv umuv< a=_~> smack ommmm Hammv mmmvm mmumm omcom omen“ omen“ undo“ noHvH ¢m~m~ mmoP>Lom aumm u:m5=uo>ou-=oz . ‘ «pupa: a macmgaaummm .muag» ommmm ommNm memmw momma comm Hmmm mmom Hmnm such mmmofi pwmumm a upmmmpozz measuauF==esou a Noam mmmc mmmv m~mv “mac comm swam NHsN "snw mNHN «museum .c0wumpgoamcmsh ommmofl muomm emmmw eommm «msmfi mmmom News" mmmm~ owns" ommmn spouses“ Lm huzooxm unhmmzoo mmomu <~ mum: A.a=ouc ~< xsozmaa< 24]. mm.~l ~¢.m~ ~m.m ~k.¢s m¢.H~ on.- oo.mm m~.mm 4n.¢~ a¢.o2 o~.oH o sm.o~ ~m.- m¢.om ma.- Aso.m~c ek.- NH.MH mk.ml ca.m oo.ms ..- ¢~.Ha so.mm ma.am Hm.v~ mo.o~ 20.52 mm.m ma.s~ mm.m~ mH.m~ m_.m~ m.Hh Anm.~c mm.“ “a.“ -.m om.o~ ma.HH ma.m~ 42.52 .ma.°a o~.a~ kN.a k¢.a~ 3k.” mm.m~ ~M.H~ ma.om oo.- ~a.mm "N.m~ Hm.ks om.ol al.42 anal “a.o~ on..~ km.- ~k.ae au.vm s¢.H~ km.ms an.» om.- m¢.a~ Ava.¢c .¢.~m hm.am. om.m. 4°.MH Hm.m 2m.~ km.- sm.om m¢.k~ "6.4” «H.2m “4.44 m¢.m~ mm.~l mm.- mm.m so.o~ Nm.mq Ao~.oc mk.- No.m~ ol.H~ mo.o~ mm.- o.m~ mm.o~ mm.¢l .hn.oc ck.°H a¢.-. Bk.¢~ mu.m~ No.8 Ho.¢~ ~m.am Alm.m~c Hm.sm on.an mm.mm Ams.~v k“.o_ m~.a o~.o~ mm.- "n.42 am._m m~.¢ ma.s_ cams aka" mks" kkm_ ska“ mama ska" mama Nuas "has u mwhm huaooma umhmmzoo mmomu gum unas=Lu>ow mag; cowuuacoga ovumoaoa "mega Amuu_>tmm .u>ow .Puxmv umuv< u=_~> Faun» muuw>tom Lgum acuectu>ou-=oz “Pane: a mucataaumux .muarp Panama 2 usamupogz acovuau_:=ssou a mmngoum .copuautonmcagh sgumaucm Ltmm acue=Lu>2u magm co2uuauotm uwumuaoo 22222 22au2>gom .»>22 .FUxuv 22222 22222 22222 mouw>Lum 2Lum acuscga>ou-=oz 22222: a mucntamumum .uu2th 222222 2 22222222: meowuau2==esou a mungOpm .co2umuuoamcauh 22222622 2<2o22=m 222222222222 mcptauuaeacnz . 2222: 2 22¢ .2u2u2tuuopu mconguuogvaz .2222 m222222=c a m=2=2z m222222 2 22222222 .mc2222: .22=u~=u_gm< ‘243 22.22 22.22 22.22 22.22 22.22 22.22 22.2 22.22 22.22 22.2 22.22 22.22 22.22 22.2 22.22 22.22 22.22 22.22 22.2 22.22 22.22 22.2 22.22 22.22 22.2 22.22 22.22 22.22 22.22 222.22 22.22 22.22 22.22 222.222 22.22 22.22 22.22 22.22 22.22 22.22 22.22 22.22 22.22 22.22 22.22 222.22 22.22 22.22 22.22 22.22 22.22 22.22 22-2222 .22-2222 22-2222 22-2222 m< xuozuam< 2222222 2222222: 22222 m2<=om 22222222 2222222>2u mag; 2222222222 22222229 22222 22222>Lom .2>2u .puxwv 2222< 2222> 22222 mwu2>umm 2Lom 2222222>2u-2oz 22222: 2 22222222222 .22222 222222 2 22222222: 22222222225522 2 2222222 .22222222222222 22222222 2m buzooam u—pmmzoo mmomu <2mmw~z 241l oo~ ooH ooH co" oofi cog oo~ co" co" oo~ me.m ~m.m co.o mv.m s~.m mm.n No.0 0.x ~n.¢~ Nm.¢~ vm.¢m mm.¢m om.mm em.mm m~.mm cv.~m mm.mm oo.~m mo.mm mm.mm Hm.m~ ~m.om on.an Amm.om oo.om on.an mm.m~ m¢.~m cm.mH vm.mg ¢H.m m¢.m mo.m ~m.m m~.o mm.o mo.m m~.m mm.m mm.m mm.o~ us.- mo.o~ ~w.- ~o.o~ mm.o~ Hm.m~ ~¢.m~ mm.o~ oo.- m~.m um.m mm.m m~.m o~.m m~.m m~.~ mm.m Ho.m ~m.~ o~.me .om.~¢ om.mm mm.mm em.o¢ am.om mm.m¢ mm.mm ov.~m me.- mm.~ mm.n mo.m mv.m mm.m om.m fig.“ m~.m unqu m¢.m mo.m mo.m u~.m ~m.e m¢.m ~m.m um.m su.m mm.» ~n.m ve.o o¢.o mm.o ~m.o m~.o om.o m~.o nv.o mm.o mm.o nm.~m oo.m~ mm.v~ mm.v~ m~.m~ ~o.- mm.~m om.n~ m¢.m~ ~m.m sm.mm m~.- m~.m~ mo.MN mm.- m~.m~ mn.¢~ um.s~ ¢v.o¢ mm.¢¢ ommfi msma «sag sum” mung mum" cum“ mum" whoa finmfi “cam"-fismfiv <¢Hm huaoomm uHhmmzco mmogu <_¢ u~ v< xuozmmm< “annex; u_umusoo ”mogu ma<=am «mu_>gmm acchsa>ou mad; cowuuacogg u.umwsoo “mega Ammuw>gam .u>ou .Fuxmv vmuv< m=p~> pmuoh ”mu.>gmm 4smm u:m5=gm>ou-coz m—muo: a mucmgaaumum .ovagp ~_~um¢ a mpammponz mac—uauwcaesou a «magnum .covumugoamcagh agpmaucm 4m buaoomm ughmmzoa mmoau <~¢mu~z A.u=ouv ¢< xHozmam< uuaucgm ovumueoo mmogw m4<=am mmuw>gom acmscgo>ou ”=45 cowausuogm uwamoeoo mmogu Ammup>gmm .u>ow .puxov umuv< o=p~> punch «mu—>gum 4gmm a:m2=gu>oo-coz m—ouoz a mucmgamumom .uuagh F,~uu¢ a ”Pamu_°;3 m=o_u~u_c=eaou a mmagoum .copuaugonmcagp agumaucm 4gmm ucme=Lo>ou mag; cowuuavogq uFHmmeoo «mega Amuuv>gmm .u>ow .Fuxav vwvu< mapa> Favor mouw>gmm agum u:u§=gu>ou-=oz “Page: a mucagaaumma .wumgh Pwapwg a «Famupogz mccwunuw=355ou a amagoam .=o_u~ugoamcagh xgumavcu 4m huaoomm UHPmmzoo mmoau Hm xuozmam< mmummm Fmemau h< zuwmuo 4<~¢hm=oz~ >m huaaomm uHhmmzoo mmomw ausvogm upamasoo ”mega m4<=cm mauv>gmm acmscgm>ou mag; =o_au=vogm u_ummeoa “mega Amuuw>gum .u>ou .puxuv uovv< mapa> Punch mmup>gom 4gmm u:m§cgm>ou-=oz m_auo: a “peasanummm .uuagh Fwnuum a upamapogz «cowamu.:=seou a omugoam .cowuaugonmcagh agamsucm 4 ..u=ouv mm xuozmmm< mmuHmm kzummau h< zmunmo a<~¢hm=oz~ >m husoomm umhmuzoo mmomu guanogm u*ummsoa mmogu mu<=om mmuP>me u:m5cgm>oa mad; copuusuogm ufiummsoo «nose Ammu.>gmm .u>ou .Fuxmv cmuv< w=F~> paper mmup>gom 4gmm pewscgm>ou-:oz upmuoz a mucmgaaumam .mcmgh F_~um¢ a «Pammposz acowuauvcaesou a mmagcum .ca_uaugoam=~gh agumsucm 4gmm “cuscgm>ow ”=4; coFuuauogm mm.- mo.m~ mm.» vm.m_ N¢.NH m~.¢ ~m.mm ¢m.- ¢¢.mH u_ummaoa ”mega Amauw>gmm .u>ow .Fuxmv uuuu< u=_~> papoh mm.m~ -.oH “H.¢~ ~N.@g -.o~ co.- mm.m~ 0H.o~ mm.- mauw>gmm 4gom ~=m3=Lo>ow-=oz “Page: a mucagaaumom .uungh mm.“ ~o.o mm.m mm.~_ m¢.mfi mm.m~ ~¢.m_ em.m om.o_ F.~»o¢ a ¢_~mugo;= mco'uau.==asou a mm.o ~m.o om.- ~m.o~ mo.mH mm.- m~.mH co.» n..a~ omagogm .co.a~pgoam=~.p mo.mH -.¢~ ~m.m m~.°_ No.o~ Amo.mv m~.m¢ mm.¢~ m~.o~ agum=u=~.4ngom z<4maNmzm> zo~44~z mug—mm hzuamzu h< zmuHmo 4<~¢hm=oz~ >m buaooam ouhmmzoa mmomw <4m=Nmzm> um xHozmmm< 25C) a~.mm m~.~¢ m~.o~ m~.m~ mm.¢ m_.- -.m_ Ah~.°v mo.~ N¢.°~ m~.m ¢¢.N¢ .m~.ov mm.¢¢ Ao~.-v mm.mm om.~m. Anm.¢fiv om.m ¢H.~ mo.mm Nm._¢ em.- mu.- mm.m -.o~ m~.m~ om._ _~._ -.H~ co.°m mm.¢m ¢m.m~ m¢.m~ _m.m_ em.m_ om.- ¢m.m m~.m mm.m_ mm.om mm._m _m.¢~ m~.¢~ ¢m.¢_ mm.- NH.H~ mm.m Nm.m c~.~_ mm.m~ Vo.mm ~¢.N~ mm.a~ o¢.m~ m~.m¢ ma.- cm.- Km.m um.c~ ¢m.om mm.m~ m~.- mm.m~ m~.m_ Amm.¢mv ~m.- .co.mv .m.m~ m~.m~ mm.mm H¢.m¢ m¢.m~ o~.m~ .mm.ov mH.m~ ¢¢.¢~ Am“... .mH.mV m~.~ “c.9m ~¢.~H -.m~ ~m.s~ mm.m~ m~.mo “Hm.uwv “um.mv Am".0v “a.“ e~.Hm No.~¢ "H.o~ mm.o~ mm.o_ Hm.mm m~.- mc.m om.“ mm.¢ on.an ~H.m¢ mm.mH Nm.m~ ¢¢.m ~¢.m~ m¢.o -.a «m.m~ m~.mm -.m¢ mm.¢o mo.m~ H~.m¢ Amm.a~v Amm.mv eo.Nm ANN.MHV Am~.mfiv OH.“ mm.m~ ”H.5m m¢.m~ -.n~ v0.8" m~.~H _~.m~ ~m.m mg.“ eo.~H. ommfi mmm" mmm" 5mm” mmm” mmm” «mmfl mmmfi . Nmmfi Ham“ <4u=Nmzm> A.ucou. um xuozuaa< Aommfi-mnm~v mm¢<>~4om z<4m=Nmzu> on44~= mmufigm hzumaau h< znafigo 4<~¢hm=oz_ >m puaooaa u_»mmzoo mmomu Hugues; u.»mu§oa “Mega m4<=cu mmuF>me acuecso>ou mag; cowuuavcum uwumeoo mmogo Ammup>gmm .u>ou .Fuxuv umuu< m=P~> Fauoh mauv>gom 4xmm acoscgm>ou-=oz mpauoz a mucmgaaummm .muagh P.~ua¢ a «Pammpogz acovuuuwcssEou a omngogm .covuaugoamcagh xgumsvcu a mm xmczmmm< Aoomfiufismmv mu¢<>~gom z<4u3Nmzm> zo~44~z mmu~¢m hzummao h< zuuumo 4<~mhmaoz~ >m hunoomm umpwmzoo mmomu oo~ oo~ com co“ oo~ co” co" cog co“ oo~ NH.oH mm.m mo.m e~.m -.o~_ o~.o~ om.m -.HH om.~fi ¢m.m~ mm.mw mm.om em.om m~.om mw.mm en.mm cv.om m~.mm o~.~m om.mm nn.mm co.nm Nm.~v -.wn o~.nm ~m.mm mm.m~ m~.mm mm.oe mo.o¢ .No.mH mfi.n~ -.w~ mm.n~ mm.o~ ma.m~ w~.¢~ ¢n.o~ m~.m~ m~.w~ o~.m v~.m mm.o~ mH.o~ n~.o~ me.m om.“ om.m o~.o~ ~m.o~ mm.m m~.- Km.~H oo.- so.o~ nm.a mn.h mo.oH Ho.ng m¢.o~ mm.ne em.m¢ ~e.m¢ mm.mv m_.se -.mv ~m.mm ¢~.¢e mm.am me.am o~.m o~.~ uv.m mm.“ NH.m m~.m mm.m HN.m mo.m oc.¢ H~.m~ Nn.mH o~.m~ ~m.m~ vm.oH mm.m~ mm.- ~¢.mm m~.w~ oo.m~ “o." o~.H mm.“ NH.~ ¢~.H an.“ mo.H ~v.~ em.H mm.“ mv.¢~ Hm.- oo.m~ H~.- mo.m~ am.m~ om.~m o~.H~ co.- om.hH mm.m mn.m oo.m mm.m ~m.m Hm.m ¢c.m m~.m mm.o ea.“ ommm mnm~ mum“ sum“ mum" mum“ vumfi mung who" "um" a 2o #2 «h H <¢o~u m uuauogm ovumoaoa mmogu m4<=cm mouw>gam “coecgu>ou mag; cowuuauogm uwumusoc ”mega Ammu.>gom .u>ow .Fuxov umuu< a=Pa> Punch mmuw>gom 4gum u:m2=gu>ou-=oz upouo: a mucmuauummm .uvagh P_~um¢ a upmmmpogz m=o*umu.==esou a momsoum .=o_umugoamcugp xuumacc~ 4ngom z<4ma~mzm> zomagmz muumma hzummnu h< zuwumo 4<~mhmzcz~ >m huaoomm uahmmzoo mmomu <4m=Nmzm> A.u=ouv mm xHo2mm¢< unsung; ovummsoa mmogw m4<=cm mmu_>gom acme=Lo>oo mag; =o.uu=vogm ufiummsoa mmcgu Ammuv>gam .a>ou .Puxov umuu< ¢=P~> Fauop mmuw>umm 4gmm u:m3=gm>ou-=oz “yuan: a mucmgaaumum .uumgh F_~umm a «pammpogz m=o_u~u.:=esou a mongoum .=a_u~ugoamcagh xgum=u=_ 4gum acoscgo>ow mag; co.pu=uoga ovumueoo mmogu Amuu.>gom .u>cw .Fuxo. umuu< a=_~> Pauop mmuv>sum 4gom wcuscgm>ow-coz mpuuo: a mucmgauummm .auagh _w~»u¢ a uP~m~Fogz meo_u~u*==ssou a mmagoum .=o*uaugagmcagh agum=u=_ 4~4om z<4m=Nmzm> zoaddmz ¢m x_ozmm¢<. muumma hzmmaau h< zmummo 4m huaaomm umhmmzoo mmomu <4maNmzm> 25h4 co“ con oo— ooH Hm.m w~.o~ os.m m¢.- mc.om e~.mm ¢~.om sm.mm m~.~e mm.~v mm.wm on.an mm.s~ ee.c~ o~.n~ mm.- mH.mH m~.- ~o.m Nm.m m¢.m s~-o~ mo._~ m~.m o~.mv o¢.mv o~.o¢ mm.me mm.m mo.m mm.w mm.¢ mo.- mo.m~ w~.m~ ~m.m~ cm." mo.— ma." an.H‘ o~.v~ o~.mH -.~N cm.- o~.m ~m.o w~.m v~.m om-mmm~ mm-nmm~ om-o~m~ ms-~sm— . puzuogq uwumaeoo «mogu m4<=am mmuw>gmm pcoEcuu>ou . m=4¢ covuusuogm ovumman ”mega Ammup>gum .u>ou .Fuxmv vuuu< m=p~> punch muuv>gwm 4gmm acmscgu>ou-=oz upmuoz a mucagsaumma .muagh _¢~u~¢ a mpmmu_a;3 m:o_u~u*c=ssou a mmmgoum .comumugonmcagp zgumavcu 4~aom z<4m=Nmzm> zo~44_: mmuuma hzmmmzu h< z—w~¢o a<~mhmmoz~ >m huaocma uuhmmzoa mmomw <4u=N zm> mm xuozmaa< 255 .......... ~m.mm «Hm.mq HM.NH Amm.~gv m¢.m~ Amo.~V A~0.NHV A¢o._v ~_.o m~.~m Aem.mv Asm.mmv MN.NH mm.mH Km.- Amm.ov mH.w Aoo.¢fiv oa-omm~ mm-Hma_ om-m~a_ m~-~so_ w=p~> muoow cmgauummscmz-Psmm mzpm> mgsapau_gm< so» mvooa Paupamu mzpm> xgamzucu gs; muooa Paupamu mspm> muooo stzmcou m=P~> mpawgmuaz ram m=F~> mmmaumuocm mu=4<> oz< mmaomu moam mpmomxm mo; mwu< umooammm mh<¢ zhzoma mdazfim mboou vwgzauawacaz- FEmm ----- ----- .......... . ----- ----- ----- ----- ----- o=P~> ug=»_=u.gm< Lo; “coca Faumaau m~.Nm Amm.ov mo.m_ ¢.¢H A¢m.m~V ANN.~V ~°.~H «mo.fifiv ----- m=P~> agumaucm Low macaw pauvaau m~.~ No.0" Aoo.¢v ac.“ o~.o cm.m mm.m¢ Hm.mm .om.-v u=P~> muoou Lusamcou -.o~ m¢.mH mm.e~ mH.m~ _m.NH A¢m.mv mn.¢m ~m.o~ Asm.fl~v o=F~> upavgmumz In: Afim.mv mfi.~m Aos.ofiv no.“ ¢o.N_ Aem.¢m. mm.m~ ~¢.mm Amv.m~v o=F~> . “myaumnoom 0mm“ asafi 05m" “Km“ mum“ msafi «Rafi mxmfi -m_ Hum" mmu 92¢ ”macaw moa<= >m Admo moaxu uzfioaduxmv mpmomxu «an mup<¢ zhzozu magzmm <~¢wwmz Nu xaozumm< 257' mh.h .mm.mmv “a.~a Aem.c-v o.m¢ mm.mm Nmfi.¢~v H.~m om,u=~:ugm= agoqxu FauOF ----- ----- Am~.mm. Amm.mm. .mm.m. so.mm A-.mv ----- ----- ----- u=_~> macaw uogauuamacaz-wsom ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- u=—~> «Lap—=u_gm< Lo» muoou F~u_auu mm.ofl HH.¢_ ¢o.o¢ ~_.¢ ----- AoH.mV as." ~¢.mfi Amfi.-v Amm.5~v m=F~> xgumsucm Low mucou Paqumu mfi._ “Am.~mv -.m¢ .mo.mmv me.o~ Amm.ofiv Aum.mfiv _~.m~ Am~.o~v Ho.mH u=F~> avocu Lmaamcou ¢~.o .N~.¢mv ¢m.m¢ Amm.~mv. ofi.m~ mm.o oo.~ A¢N.~hv ~m.m~ Amo.~mV . ¢=_~> mpmwgmuaz 3am Amm.¢v “mo.Hv mm.o~ _m.~H ofi.- “o.m Rem.sv. «5.0m ANm.~nv Amo.Hmv ~=.~> mmuaumvoom cam” mmm” mmmfi 5mm” omafi mom“ «can ma¢~ Nam“ “mm“ m w oz< museum mowm “Jae moaau uz~a=duxuv mngmxm «on mwh<¢ =p=omw “dazfim <~¢mu~z A.H=ou. Nu xHazmmg< 25¢! om.omm~ “.mmmn m.mmoH no.-m ~.mmn ~.m~o n.e~m N.unm m.~mm o.mm¢ n.o m.¢m m.m n~.m~ m.n~ m.m «.mm m.m~ .m.~H n.m~ ~.~ w.~ H.m o.m ~.m o.m m.m n.m a.» ----- m.¢e ~.om m.om o.m~ e.- ~.m~ m.w~ u.m~ H.m~ ----- H.-~ m.em~ ¢.om~ m.~¢~ m.v- ¢.c_~ m.~m~ ~.mon m.mv Nm mom m¢m ”KN cmw mmm o- mmw ¢m~ New mmu om.oom o¢.mom om.mmm oo.m~m om.mmm ~.¢mm ~.vmm m.~m~ m.mm~ mmm mwu m¢~ mum mm“ mmv awn «mm o~.cn¢ wan mHm s.~m~ on.me~ on.aoH om.o- om.HH_ om.~m oe.m- o~.om~ on.-~ m.mmH ommm mmm“ msmfi “mm” onmg mum” vso" mnma -m~ flnmfi .mmaoxw moam whaomxm az< mu==4o> mu x~azmmm< mmwvcagugm: ugoaxm -uoh oe=Fo> o=F~> ”vooo umgzuuamacaz-vemm oezpo> a=F~> ogaupauwgm< Low muoow Fan—nag weapo> u=P~> xgamaucH Low mvoom —~u_a~u ue=Fo> aapm> macaw gmeamcou oaapa> mzpa> wrawguuaz 3am we=Fo> m=—~> mmmaumvoom 1259 “.mmo m.H “.mm H.om~ we“ mmcfi ¢.mm~ m.o~m --'-- n.mm «.mvH m.mo~ fiwmfi ~.~¢~ ~.-c~ m.~ ~.m¢ m.~¢m ~.~om vm- ¢.om~ ~.vmm ~.m ~.m~ n.~m~ ~.¢o~ om- mmm om.mmw ~.~H o.m~ H.-m m.~om QNNH ~.m~H. ~.mmm ¢.- H.m~ ”.mmu H.m- mwfifi em“ om.mmm ~.m o.m~ ~.oom m.¢- swam ~.mm~ c.~nn m.m m.h~ v.5mm ~.o- mama ~.HmH om.mm_~ N.o m.~ m.m~ ~.om~ mm~ om.mmn NMH m.cm ~.smo~ 5.0 ¢.~ ¢.~m m.w~m mmfi om.mom mug m.om cam“ mme mmm“ Nam" mmm“ mmmm emu“ mwmg Nmmfi "mm“ ompucmgugmx ugoaxm puuoh waspo> o=F~> macaw vmgsuuuu==~=-wsom me=Po> m=p~> ugaupauvgm< Lo» avoou Pauwnuu ue=~o> m=p~> agumaucm Lou muoae -»_n~u asapo> a=P~> mooou Lussmcou mas—o> o=p~> m—awgmumz :mg waspo> m=p~> mmmaumuoou mzop uflmhmz mo maz az< mm==4o> .maaozu goa<= >m mpaogxm muocu Lmszmcou ..... ~m.o¢ mm.Hm fiH.m~ wst> agumzucm gem muocu paupaau ..... mm.m m~.m mm.m w=F~> mgappzupgm< gem muoou Pmppqau ..... ve.m~ Hm.o~ mo.¢~ m=F~> macaw umgauumw==~=-_smm ..... Hm.“ no." mo.~ m=_~> mpmpgmuaz 3mm ..... mm.~ mo.m mm.m m=F~> mausuogq pwo a F_o ..... oo.o~ om.- Hm.o~ m=_a> mmmaumuoou om-mmm~ mm-HmaH ow-o~m~ m~--m~ mm4u>u uHoonmm m m mm=4<> oz< mmzomw moam mo< zomhzmamhmuo 4<¢Ohumm <~muo~z cu xmozumm< 261 mm.- mm.m ve.e~ om.w~ o~.mH m~.u~ mm.e~ mm.m~ -.m~ no.5H ----- ~m.mm ~m.mm mm.mN cm.v~ m~.m~ nv.~m o~.~m Ho.~m m~.- ----- Hm.~ mm.~ ~w.e hm.m ¢¢.o wo.~ ~m.~ ~v.m mm.m mm.mm m~.m~ mm.vH oo.Q~ me.m~ mm.o~ mm.n~ -.mw m¢.- mm.om ----- no.” om.~ eh.“ ms.“ mo.~ ms.~ on.~ mm.~ ~5.~ om.v oo.¢ mm.m No.¢ om.w v~.m mm.m mn.~ ¢~.~ mm.~ mh.mm mm.m~ ~m.m~ wo.- ~m.- o¢.w~ vm.m~ mm.- em.o~ om.- omm~ mmm” m~m~ numu mmmfl msmg vsmm mum“ Numm “nag m24<> oz< mmaoaw oa mhmoazu mom mwu macaw guzzmcou mapa> agumaucH Lou mecca Pau_aau mapa> mgaupauwgm< Lou muoou Fau.q~u u=P~> muocu wug:uu~m=c~2-_amm m=P~> mpawgauaz 3am o=p~> muuauogm p_o a F_o mapa> mmmaumuoom 262? ..... ----- ----- ----- mm.~ mo.n mo.m No.m mo.m oo.- unpa> mUOOG Lug—:mcou ----- ---- ----- ----- o~.mm -.- ¢~.~m ¢¢.Nm om.~m cm.mm asp“, auumzucu Lo» mucou F~u_aau ----- ----- ----- ----- m¢.m mm.m cu.” om.m o~.~ mo.¢ o=P~> ogaapauwgm< so$ mecca paw—nag --- ---- --- --- . mo.m~ om.~m na.¢~ ~m.HH mH.mH m~.m~ _ uspa> muoou uogapuumacaz-«sum ..... ----- ----- ---- ¢~.H mN.~ ¢m.~ mm.o ----- m~.~ a:_a> mP~.gu»~= 3am ----- -.--- ----- ---- mm.o mm.“ mm._ ~m.o ~mJ~ Na.“ m=F~> muuavogm ~.o a p.c --- ---------- --- m¢.- 24m 3.2.” omdm 3.3 Séu 2;; mumsuuvoou cam“ mmmfi mmm" smog mmm“ mmm" can" mama Nam" “wag a <> oz< macaw moa mpmoazm mo“ mmw ----- Aom.n~v mm.m_ ¢m.m~ ~=P~> muoou Lmsamcou ----- ----- ”H.5m ----- ue=Po> ----- Amm.mfiv m~.m~ No.0m u=F~>. agamaucu Lam ”coca paupnmu ----- ----- Aem.mmv mo.mm asapo> ----- ov.m A~¢.mv ¢~.~m a=F~> mgaup=u_gm< Lou avoou paa.m~u --- --- --- --- wszpo> ----- A¢~.MHV -.m~ om.om mapm> . «noou cagauuamacaz-_som ----- ----- mm.mH mm.Hn ue=_o> ----- ----- mm.mH mo.cm u=F~> mpuvgmumz 3mm --- --- --- --- cs=~o> ----- “am.m~v H¢.o~ ~¢.H¢ a=F~> mpuauagm P.o a Fvo ----- ----- mm.¢m m¢.m ue=Fo> AmH.~Hv Ama.~_v mm.m~ ~5.N~ m=P~> ‘ mkmaumuccu oa-mmm~ mm-Hmm~ om-ohm~ m~--m~ mhgomzm «cm uu<¢m>< uuoouzmm mh<¢ :hzomw mamzmm (mama—z mu x~ozmmm< 2(h4 --- --- --- --- --- --- --- --- --- weapo> o~.m. «Hm.o.. mo.o~ wo.m~ ~m.m~ am.mm mm.- -.HH mo.- . o=_~> - . muoow gueamcou ----- .m.mm mm.mH .mm.m. oo.m ----- ----- ----- mas—o, AN n.5HV .NM.NH. 5m.mm H¢.m~ m~.m mm.se om.m~ ¢m.m~ mo.m¢ m=_~> agamsucm Lou muoou paupqau ----- ----- om.o «mo.mv A¢m..~v -.mm A_~.-. -.ofi Hm.m_ ae=_o> ----- A~¢.omV Amm.ov ~0.- am.~ mm.¢o mH.¢H “mo.hv .Hm.m~ o=_.> assupauwgm< Lam muoou pau.qau ----- --- --- --- _ --- --- --- --- --- asapo> -.mn ¢m.o Rm.- mo.m_ m¢.¢~ oo.¢¢ no.mm mo.m~ Aoo.mv u=_~> mucou bugs-«unusual- Baum ~\: ~\: Am¢.m_v ma.o¢ mu.” ~w.m¢ m~.~¢ Aom.mv Ao~.-v ca=_o> «\c Ao~.mV mm.o~ cm.m~ mm." oc.mm mm.~m 5m.H~ .co.¢_v o=_~> mpavguuaz 3mm ~\= «\c «\c Aco.~mv N..om ~o.¢. ----- «\c «\c agape, . 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o~¢ ommm mmem m¢~v moan ~m¢e mmmm mmvw once mvoo soke com o~.o~ Hw.mm ~m.~m ¢~.~m mo.o¢ mm.~¢ N~.m¢ m~.~¢ Nn.m~ vm.m 33 £8 moon 33 2mm m-- 3:: mac: mwnmn cm; .1 mozw mmmmw Smmu mmumm 3mg m8: mmm: Huog 3m: mmmm Emu amomu mmomm omoom mmmmw 3mg mummu 803 ::m mmwmm ~82 smum 82 32 mag 32 mag 32 32 mag 32 8mm :2 ammwgmm pawn copum~¢ugos<-- ammgmacfi-- u;u_;3 mo. muP>gmm acme mza “o x mm “goo Pacgmuxm _~u0h snob ugogm-- Egmp m=o4-- "gums: $o game .mcgmuxu _~uop 3(H5 nv.- mm.mm e~.¢v ~°.m~ ~v.om mm.mm mm.m~ m¢.- o~.o~ mm.o on.m umoH mm¢ mmm mum m-~ mmwu mmcm osofi oem mmm ~m~ mmv~ mmou wHeN NHMH mum mmm— mmm_ muum Hum“ “mm “mm momu omfim mmom mvwa mmou «eve m~¢m m¢m~ Hmcm mm- Nov o~.-~ om.-~ mm.vm_ n¢.~¢ m~.o~ c—.- mm.- m~.m~ Nm.m om.m w-u ommm m¢~m memo womm wwwc vmvm “mmm mwuc mmm -- mouom ¢-m~ omsmm mmomm msowg ofiom~ ~cm- NoNNH cgmm Name mmm“ n~¢om ¢m~mn mmmom fimefim eomeu vows“ ummmfi mmmm~ ~o~v~ mewm mmm~ oom~ mmm~ mmm" “mmm mmm" mmm~ cam“ mma~ mmm“ ~mm~ msom ~mm¢<~zuummqu ~= xHozwmm< “cam“-mwm~ .msamv m¢<44oo .m.= zo~44~= hmmo 4gum game =o.a-.ugo§<-- «muguu:~-- "cups: mo muw>gom yawn mzo we a mu paw: pacgmuxm Pauoh sump ugogm-- sump mco4-- ";u_;z mo ugwo Pacgmuxw punch BI BLI OGRAPHY BIBLIOGRAPHY Aboyade, O. "Indigenizing Foreign Enterprises: Some lessons From The Nigerian Enterprises Promotion Decree. " in Teriba, 0., and Kayode, M. O. n us 'a ev lo ment i N e ° Patterns. Problems and Pnospegts. pp. 379, Ibadan University Press, 1977. ' er' - (Rome: Food and Agriculture Organization of the United Nations, 1966). Allen, Loring. ‘Venezuelan Economic Development; A Politico-economic Analysis. Greenwich, CN: Jai Press, 1977. Annnal Anstragt of Statistics. Lagos: Federal Republic of Nigeria, 1970, pp. 73, 113. Annual Reports. Central Bank of Nigeria's Economic and Financial Reviews, 1965-1980. Annual Reports. Central Bank of Venezuela for 1945 to 1965. Asiodu, P. C. "Industrial Policy and Incentives in Nigeria." in Teriba, O., and Kayode, M. O. Industrial Qevelonment in Nigeria: Patternsl Problems nnd Prospect . pp. 244, Ibadan University Press, 1977. Baloyra, Enrique A. "Oil Policies and Budgets in Venezuela." gtin flenican Research Review, IX, (2) (Summer 1974): pp. 28-72 Betancourt, Romulo. Venezuela: Politica v P troleo, Chapter V,1956. Black, C. E. The Dynamics of Modernization. New York, 1966. Chenery, Hollis B. Redistribution with Growth. London: Oxford University Press, 1974. Chenery, Hollis B., and Utatanabe, Tsunehiko. International Companisons of tne Stnucture 9; Production. Econometrica, 26(4) (October 1958): pp. 485-522. 306 307 Datta, Amlan. Perspectives of Economic Development; §tpetegie§ 0: Economic Development (India: Macmillan Company, 1973), pp. 100. Econemie Integration and Structural Adjustment in Africe. The African Development Bank, African Development Report 1993, pp. A-3. Eicher, Cark K., and Liedholm, Carl, eds., gteytn__eng Qevelepnent e: the Nigezien Economy (East Lansing, MI: Michigan State University Press, 1970), pp. 9. Eicher, Cark K., and Liedholm, Carl. "The Influence of Colonial Policy on the Growth and Development of Nigeria's industrial Sector." In Growth and Development e: tne Nigetian Economy, pp. 52-58. East Lansing, MI: Michigan State University Press, 1970. Ellis, H. D., and Wallich, H. C., eds. "Notes on the Big Push." Economic Development for Latin America. London: Macmillan, 1961. Frankel, S. H. Capital investment in Africa. London: Oxford University Press, 1938, pp. 231-321. Fundacion John Boulton, Politica Y Economia en Venezuela: lng-l97fi (Caracas, Venezuela: Editorial Monte .Avila, 1976). Ghai, Dharam P. "Incomes Policy in Kenya: Need, Criteria and Machinery." East Africa Economic Review (June 1968): pp. 20. Hailey, Lord. Q African Survey. London: Oxford University Press, 1938, pp. 1501. Hanson, J. A. The Leading Sector Development Strategy and tne lmportance o: lnstitutionel Reform: A Reintetpretetien gentnal e: Economic Studiee (May 1976), 1,1. Harrod, Roy, ed. Assisted by Douglas Hague. 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