Features Of Developing Economy
The economy of most developing country can best be described as a mixed one where it is either capitalist west nor the socialist east although it is a mixed economy. In developing countries like Nigeria the public sector in terms of capital formation has been having a relatively larger share. When we talk about the features of developing economy, we make reference to the modern, the public sector is the largest employer of labour excluding the traditional sector agriculture. By definition as simply defined by Nigerian constitution, the public sector includes the civil service, boards, corporations, and limited liability companies in which the government has majority equity shares.
Here the government includes the federal, state and the local government. The constitution gives the government the mandate to perform certain economic activities especially in the sensitivity areas of the economy, for example, defense, printing and minting of money, power generation and other statutory corporations.
By all context, one of the features of developing economy like we have in the Nigerian economy is mainly agriculture and these accounts for about two thirds of the total labour force in terms of providing a means of livelihood. The economy is a mono cultural one and in the past decade oil has accounted for about 90% of the total national revenue.
A developing economy like the one Nigeria has is an export oriented for instance it is dependent on external sector and what happens to the external sector of the economy is usually transmitted to the other sector in the past decades, the external sector has been dominated by the oil sector.
The Nigerian economy can be said to have a small manufacturing sector in compairsm to the traditional sector. The investment in the sector has failed to achieve the Keynesian multiplier for example there has been little or no backward linkage rather there has been serious leakages.
However, government policy today is that firms and companies should endeavor to get some of their raw materials locally in line with the government policy. The Coca-cola or Sapanda industries the Guinness company, and similar firms have started the more to get some of their raw materials locally.
General Outline And Structure Of An Economy
An economy refers to the economic system of an area, region or country “it is a system by which people get a living”. For instance, the economy of any country consists of farms, factories, mines, shops, banks, ships, roads and railways, aircraft, offices, schools, cinemas, hospitals, houses, and the rest which gives a nation foods and services which they either use themselves or sell abroad in order to be able to buy imports.
An economy is a system of parts which are interrelated and inter dependent like the cells of an animals or plant. Despite the complexities of the specialization involved. It is a system of manual exchanges between producers and consumers. As put by sir john hicks, an economy consist of nothing else but an immense cooperation of workers or producers to make things and do things which consumers want.
Vital Process Of An Economy
Just as feeding, digestion and growth are the vital process of living beings, similar productions, consumptions and growth are essentials of economics. Economics might differ in their organisation but all performs these three functions, which are discussed below in terms of the country’s economy.
Production – The first vital process of an economy is production which goes on continuously, production includes any activity and the provision of services. This satisfies and is expected to satisfy want. In this wide sense production which includes products produced on farms, like yam, cassava, cocoa, vegetables, wheat etc and those manufacturing in the factories such as clothes, bicycles, television sets, electric appliances and the like. It also includes the services of shopkeepers, traders, transporters, actors, doctors, civil servants teachers etc who help in satisfying the wants of the people in the economy through the services they render. But the term “production” excludes certain goods and services though they satisfy human wants, in essence domestic work done within the family by the housewife, husband or the children.
Production on it’s own has a very wide definition when you want to relate it different aspect of the economy, banking as a distinctive meaning of products as well as services, stock brokers have their own meaning to the word production, the market woman who sells in the market has her own definition to the word production, while the manufacturing industry has their own definition of the word. In all the definition, one of the common reoccurring phrase is the goods and services which is meant to be consumed by the people.
Consumption – The second vital process of an economy is the consumption which means the use of economic goods and services in the satisfaction of human wants. This points only comes second because there can only be consumption where there is production, the production of goods and services alike guarantees the consumption the goods and services produced. In essence, the two aspect as a vital economic process can only function hand in hand.
In a situation where one doesn’t exist, the other will not. A closer look at the theory of demand and supply adds a brighter explanation to this fact. In this stead, we can place supply as production and demand as consumption. Now when demand for a product increases, the price of the product increases while the production capacity reduces unless production capacity is increased to match the demand, this goes in both direction (Vis-a-Vis), as a situation where supply increases, price of the product supplied will decrease, as the supply would have surpassed the demand of the product.
Until there is a product in the market, there won’t be a demand for the product since there is nothing to demand for. Consumption is only possible where there is production.
Growth – here we look at the process by which an economy grows like living things. Economic growth is “the process whereby the real per capital income, of a country increases over a long period of time”. Therefore, working population is the first cause of growth, qualified personnel capital in the form of trained and qualified personnel improve capital equipment, this is another aspect as they bring in that technical knowledge about a new method of production which leads to inventions and development of new equipment.
Similarly changes in equipments requires knowledge for producing it and training personnel in their manufacturing and use. Having briefly gone through production and growth for that is where the issue of employment and unemployment primarily lie.
In conclusion, monetary theory and policy concepts, types, characteristics and categories all revolves around the ability of a country’s economy to be functional, since there is production, which can lead to output, consumption as well as growth.
Fun Fact On The Nigerian Economy
As at 1960’s agriculture was contributing over 80% to the country’s GDP (Gross Domestic Product), the agricultural sector was the main stay of the country’s economy as the sector accounted for about 64% of the country’s total exports, by the year 1970, the numbers shocking declined to 2.7%, and by 1978 the numbers slightly increased to 9% of the country’s foreign exchange earnings. By the year 1984, it accounted for only 1%.