What is Nigeria’s best chance at high economic growth?
Election campaign season is upon us, and presidential candidates are gearing up to tell Nigerians how they plan to improve their lives over the coming years if elected. On the other hand, Nigerians are eager to hear not just what the aspirants plan to do but, more importantly, how they plan to do them.
As usual, these candidates will probably list their most ambitious goals: record-high GDP growth, more jobs than ever, and so much more. They are ambitious because history (at least from the last two presidents) has shown us that successful candidates struggle to meet these goals. For example, President Buhari promised 10% annual growth and yet only managed less than 3% and two recessions (negative growth).
Key takeaways:
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The first step to generating and sustaining rapid economic growth is deciding on the sector for resource allocation.
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The government could decide this by selecting a sector with comparative advantage, but the key to rapid growth is using the output of that sector to unlock growth in other sectors.
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A more appropriate way is for the government to ensure adequate resource allocation by creating an enabling environment for business competition and equipping labour with the right skills to keep up with the rapidly changing economy.
Ultimately, double-digit growth (the kind of growth typical of emerging economies) can be possible with the right policies in place. Two weeks ago, I wrote about how India, with its consistently high GDP growth, surpassed the UK as the fifth largest economy in the world while implementing protectionist policies similar to Nigeria.
India achieved this by building its domestic industries by being an open economy, which increased savings and investment in the economy. They did this by market-led resource allocation (restructuring the economy through competition), opening up to the world, stabilising the economy and increasing savings and investment.
Many other countries have also implemented these four policy areas, including
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