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MIXED ECONOMIC MODEL OF DEVELOPMENT: TOWARDS A RADICAL
ALTERNATIVE
ABUBAKAR YAKUBU
Department of Sociology, Federal University, Kashere P.M.B. 0182 Gombe State Nigeria
ABSTRACT
In order to achieve national development objectives, there are wide and different methods that
can be applied, but the objective of any Model adopted remains the greatest possible amount of
human satisfaction to the Citizenry from available resources. In this paper it has been pointed
that the utility or success of the mixed economic strategy of development in Nigeria is better
understood with regard to the sustainability and adaptation. The problem of development at both
micro macro levels were analysed using grand sociological perspectives to shed light on the
relationship between mixed economic strategy of development and other variables, The paper
concludes that a mixed economy is a healthy economy if properly adapted and maintained but
certain recommendations are to observed especially from best practices in India, China and the
tigers
Historical analysis of Nigeria’s Mixed Economic experience
In Nigeria immediately after independence, all the regional government realized the need for a
move towards industrialization and economic development. At such an early stage, there were
agitations especially among politicians as to what strategy he country should adopt for
development. There was a heated debate in the regional assemblies in which state intervention in
the economy was mostly favoured. A SIGNIFICANT FACtor that ld to this choice was the heavy
presence of Britons in the civil service. Their dominant advice reflected British interest in state
interventionism, and at the end it all appears that there was a need for the ascertainment of the
degree of government control or intervention compatible with nationalism on one hand and on
another there was support for attraction of foreign capital.
By 1945, public corporations were established at both federal and regional levels. Important
among which are the companies with or without private participation were established by
regional government for industrial development. This was in addition to the degree of
government intervention has been achieved prior to independence in 1960. However, the debate
about nationalization of shipping, airways and insurance assume importance when socialism as
political ideology was traded to give force to the argument for more government control. For
example, the action group adopted democratic socialism as its official policy; its manifesto
envisaged a mixed socialist economy in which the state and private enterprise exist side by side
within the framework of a Nigerian plan. Other regional leaders also advocate for socialism in
June 1962, a development plan was launched, the main thrust of which was to stimulate
industrial growth. The second national development plan was from 1970 to 74. This plan was
aimed at the transformation of the whole society and was to be directed by the federal
government. The federal government was to occupy commanding heights in the quest for
purposeful national development and this was reflected in the constitution. The 1979 constitution
reaffirmed the mixed economic system for Nigeria in line with the strategy contained in the
second national development plan. The 1999 constitution further retained some of the basic
features of a mixed economy. While the state is expected to manage and operate the major
sectors of the economy, the citizen has the right to participate in areas the economy allowed for
private participation within the mix economic model, different strategies such as growth for
private participation within the mix economic model, different strategies such as growth,
redistribute and basic needs were used. Fadanusi (1984).
The major characteristics of the Nigerian economy manifested so far are balance of payments
problems and adverse terms of trade, macroeconomic distortions, periodic devaluation and
depreciation of domestic currency, mountains of external and internal debts, low credit
worthiness and high country risk. There is high and persistent inflation, more dependence on the
monolithic economy of crude oil, mass unemployment collapse of social and economic
infrastructure, insecurity to life and poverty and wide spread poverty, among others. As at 2002,
seventy percent of Nigerians live in poverty according to a world Bank and international
monetary fund report (2002) and one third of the population under 15 years is illiterate, as such,
investors are not even interested in Nigeria because it is rated very high on the risk chart.
Nigeria’s number one problem is infrastructure with 22% of industries expenditure going to
electricity generators. When compared to Indonesia, the per capita domestic product is four times
that of Nigeria. (Africa today, September 2002). Furthermore, a recent US central intelligence
(CIA) report posted on the internet explained that, the Nigerian Economy has been hobbled by
political instability, corruption, and poor macroeconomic management, in addition, Nigeria’s
former military rulers failed to diversify the economy away from over dependence on the capitalintensive oil sector, which provides 20% of GDP, 95% of foreign exchange earnings, and about
65% of budgetary revenues. The largely subsistence agriculture sector has not kept up with rapid
population growth, and Nigeria, once a large net exporter of food, now must import food. The oil
boom of the 1970s led Nigeria o neglect its strong agricultural and light manufacturing bases in
favour of an unhealthy dependence on crude oil. In 2000, oil and gas exports accounted for more
than 98% of export earnings and about 83% of federal government revenue. The result is
massive migration to the cities and increasing widespread poverty, especially in rural areas. A
collapse of basic infrastructure had plunged to about one-quarter of its mid-1970s high, below
the level at independence. Along with the endemic malaise of Nigeria’s non-oil sectors, the
economy continues to witness massive growth of “informal sector” economic activities,
estimated by some to be as high as 75% of the total economy.
Nigeria’s proven oil reserves are estimated to be 35 billion barrels; Natural gas reserves are also
being exploited. Nigeria is a member of the Organization of Petroleum Exporting Countries
(OPEC). Agriculture has suffered from years of mismanagement, inconsistent and poor
conceived government policies, and the lack of basic infrastructure. Nigeria is no longer a major
exporter of cocoa, groundnut, peanuts, rubber, and palm oil. Cocoa production, mostly from
obsolete varieties and overage trees, with agricultural production stagnant at around 180,000 tons
annually, while 25 years ago, it was 300,000 tons. Again Nigeria was once the biggest poultry
producer in Africa, however corporate poultry, output has been slashes from 40 million birds
annually to about 18 million. Import constraints limit the availability of many agricultural and
food processing inputs for poultry and other sectors. Fisheries, which are most critical for the
country’s future, are poor managed. Nigeria’s land tenure system does not encourage long-term
investment in technology or modern production methods and does not inspire the availability of
rural credit.
Nigeria’s official foreign debt is about $28.5 billion, about 75% of which is owed to Paris Club
countries. A large part of this debt is interest and payment of arrears. Stability of the Naira to the
Dollar is one hundred and twenty naira for a dollar. Expanded government spending also has led
to upward pressure on consumer prices. Inflation, which had fallen to 0% in April 2000, reached
14.5% by the end of the year and 18.7% in August 2001. In 2000, high world oil prices resulted
in government revenue of over $16 billion, about double the 1999 level. Therefore, the private
sector-led economic growths remain stymied by the high cost of doing business in Nigeria. These
include the need for essential infrastructure, the threat of crime and associated need for security
counter measures, the lack of effective due process, and non transparent economic decision
making, especially in government contracting.
Nigeria’s publicly owned transportation infrastructure is another major constraint of economic
development. Principal ports are at Lagos, Port Harcourt and Calabar, these ports lack adequate
facilities. Nigeria’s airways are virtually moribund due o mismanagement, high debt and a vastly
shrunken fleet. The Federal government’s privatization program in the year 2002 showed signs
of real turnover to the private sector from state ownership of banks, fuel distribution companies,
and cement plants, key parastatals such as the state telephone company NITEL and Nigerian
Airways. The government still intends to pursue deregulation despite significant internal
opposition, particularly from Nigeria Labour Congress. (Wikipedia internet encyclopaedia).
Since The term mixed economy was coined to identify economic systems which stray from the
ideals of either capitalism or various command economies and “mix” with elements of each
other. However what is describe may not exist in practice, for example what is obtained as the
picture of development in Nigeria does not provide a near perfect representation, the Nigerian
system diverges to a significant extent from an idealized economic model or ideology and the
task it ought to perform. Hence, the term mixed economy does not fit into the description of the
Nigerian economy for so many obvious reasons. This brings into light the reasons for the failure
of the mixed economic system in Nigeria.
Despite planning along the mix economic strategy, meaningful development has remained an
illusion to Nigeria. This can be attributed to the origin of the Nigerian economic system from the
British colonial masters. Gofwen (2001), traced the origin of development planning in Nigerian
and posited that, Nigeria as an entity was a British honey enclave that was carved out in the
nineteenth century to quench the thirst of global capitalism in its phase of monopoly with
resultant consequence of colonialism as a survival imperative. Nigeria then emerged within this
context as a raw material producing nation within the scheme of global capitalism. The
incorporation of the Nigerian state into the world capitalist order was through the twin process of
western imperialism and colonialism. This was to have a devastating consequence not only on
our economic organization but also on our culture and process of development. The origin of the
economic system and its domination by capitalism becomes glaring, for example Nigeria’s post
independence national development plan 1960 to 1968 and 1975 to 1980, was informed in theory
and practice by neo Keynesian socio-economic value systems. The attendant mass poverty and
political instability witnessed in the Nigerian state is therefore not a surprise because of the
domination of the development strategy by capitalist ideology.
When we consider the state of development in the third world countries with specific reference
to Africa, no matter the form of concepts used in naming a development model, the existing
relationship between the Northern and Southern hemisphere has always been a limiting factor; as
such, development remains an illusion in the third world. A critical view of this relationship
reveals that, the third world produces approximately 20% of global output mostly clothing, shoes
and common consumer goods instead of complex consumer appliances, industrial machinery and
technology, while 80% of global manufacturing output is still produced in the US, Western
Europe and Japan. Foreign direct investment from the North constitutes only 5% of total world
investment, while 95% of total capitalist investment takes place in the boundaries of the
industrialized countries. Out of the 5% of the total global investment that is foreign direct
investment, 72% flows from one industrialized country to another. Only 2% of total global
investment flows from the north to the south of the world economy. 75% of foreign direct
investment, especially the investment in Africa, Asia and Latin America, takes the form of
buying existing plant and equipment, mergers and acquisitions of existing privately owned
companies, or the purchase of recently privatized public enterprises such as telecommunications
and oil. Only 25% of foreign direct investment takes the form of building new plants overseas.
With the decline of the United States and Union of Soviet Socialist Republic, there is now a
change to finance –dominated world economy and global competiveness among imperial
powers and the intensification of control over the economies of former and existing colonies. The
social repercussions of this process are therefore profound. The dismantling of social welfare,
monetarist policies, and the privatization of state assets enable the concentration and
centralization of wealth, while political decision-making processes are increasingly removed
from parliamentary control and policing and militarization are intensified. Under such condition
there is complete absence of freedom to choose a development alternative; such processes are
being enforced only within the periphery, thought imposition of structural adjustment programs
and indebtedness, the undermining of economic activities through protectionist measures, direct
and indirect military intervention. With the rising dominance of financial capital, abetted by a
scramble for new markets resulting from the collapse of the collapse of USSR and the economic
reforms in China in the late 1980s, there is now a shift towards demolishing the former welfarebased strategy of profit-rate maintenance in favour of greater market liberalization. Particularly
to African countries that now rely on foreign aid; what this has immediately meant in general as
in all former colonies in the Caribbean, and the Pacific regions, is the loss of much development
assistance as more investment and aid have been redirected towards Eastern Europe and East
Asia. In addition, even if aid will be given to the periphery it is increasingly contingent upon the
adoption of free trade agreements in accordance with World Trade Organization rules mainly to
encourage cash-crop exports. Yet, development aid, especially sic the early 1990s, has bolstered
the profitability of large firms in the receiving countries, whereas the firms are protected from
external market competitors to the detriment of the periphery, the introduction of political and
economic preconditions for loans and aid and through the increase of pressures for state asset
privatization and market liberalization. State of nature (Capitalism expansionism)
Finally, we can agree that a healthy economy is a mixed economy. What is needed includes the
expansion of manufacturing sector, halts the trend towards an over-reliance on oil, and imported
goods and the expansion of manufacturing. Industries should be the bedrock of our economy and
the core around which a high-skill, high-pay service sector is built to discourage brain drain.