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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.