INTRODUCTION

Nigeria attained independence in 1960, and soon after in 1966, was engulfed in a political
turmoil that ushered in a regime of coups, counter coups, regime changes, political instability
and a civil war between 1966 and 1979. During this period, the country was largely governed by
the military, using coercive instruments and systems of administration that were inimical to
economic growth and development. The ambition and greed among the ranks of the military to
remain in power led to the frequent change in government that virtually rendered the economy of
Nigeria prostrate. The incessant change of government became a serious impediment to the
implementation of some well-meaning policies to such an extent that programs on which
enormous sums of money were already expended got abandoned, and in some cases, were
completely scrapped along with the passage of
government that articulated them. This scenario, among others, depicts the economic waste that
characterized the period of political instability in Nigeria. The period also witnessed deliberate
government policies to reduce foreign participation in the economy, such as the indigenization
decrees of 1972 and 1977. The implementation of these decrees led to substantial transfer of
investments from foreigners to government and a few wealthy Nigerians. The rationale for doing
this which according to the government was to reduce the high repatriation of profit by
foreigners turned out to be a serious disincentive to economic growth. The investments acquired
from the foreigners by government were mismanaged to enrich a few officials, while the
generality of the people for whom the investments were held in trust continued to suffer
deprivation and sharp deterioration in the standard of living. During the period, oil boom
provided government with enormous revenue from the export of crude oil. In addition to the
revenue from crude oil, Nigeria went off-shore to accumulate foreign debt, based on her credit
worthiness to execute a number of ambitious projects most of which were economically
undesirable. The oil wealth coupled with the external borrowing created an impetus for massive
expenditures on projects and programs that were in the main unproductive. The indulgence on
the part of government coupled with other ill-conceived policies led to a rapid expansion of the
government sector that invariably had some crowding out effects on the private sector. The
inefficiency of government operations soon became a major bottleneck to the growth and
development of the economy that led to the long period of

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economic stagnation. This scenario generated intense pressure on the government from within
and outside the country to undertake economic reforms for the purpose of encouraging growth
and development.
DEVELOPMENT IN PRE-COLONIAL AND POST COLONIAL PERIODS
Development in Pre-colonial Nigeria
Before the advent of colonialism, the indigenous economies of various ethnic nationalities in
Nigeria were able to harness the potentials of their natural environment to tackle their survival
needs. Their sustained involvement in result oriented economic activities such as farming,
fishing, trading and the construction of roads networks meant that their level of technology in
infrastructural development was not in doubt. An in-depth study of pre-colonial infrastructural
development brings to the fore a discourse on the dynamics of indigenous economies before
1900 and there about. Foilola (1992:9) observes that the production system was characterized by
remarkable changes and innovations, regional diversities and complex organizations resulting in
the production of a very complex range of goods.
The sectors in the production system comprised agriculture, mining, manufacturing and
the provision of essential services’. Doigan and Gonn (1975:1-3) note that in precolonial
indigenous economies, most African polities settled in small villages with crude technologies but
this observation did not limit their capacity to explore and exploit their natural endowments.
Falola (1992:15) beams a searchlight on the manufacturing sector of pre-colonial African
economy and stresses that much of the raw materials needed were, sourced locally with little
dependence on foreign products. This observation is true in the fishing industry where canoe was
locally produced by skilled men. Abdullahi (2007:254) amply demonstrates that the indigenous
people of the Igbala, Kakanda, territory of Nigeria is Fokoja area. The same observation could be
made concerning the Ijaw of the Niger Delta region who since their settlement in the said area as
early as the mid-19th century have demonstrated ingenuity in canoe-making to aid them in
fishing, their primary occupation. The knowledge of iron manufacture marked a watershed in the
infrastructural development of most pre-colonial communities in Nigeria. In Hausa land, iron
technology provided the viable means of effectively exploiting the natural endowments of their
environment in agriculture and textile production (Abubakar 2007:216).
One important aspect of pre-colonial infrastructure is that the technology applied is the
environment was a semblance of the cultural values of the indigenous people (Obi-Okogbuo,

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2009:8). Within precolonial Nigeria the movement of people, goods and services in their inter-
group relevant was facilitated by a functional means of transportation. Ogunremi (1992:22)
identifies different forms of transportation in the said period viz (human) portage (b) pack
animals and (c) canoes with human head porterage as the commonest. During the heydamp of the
Trans-Saharan trade both herd porterage and pack animal transportation were combined.
Ogunremi (992:22) further observes that before the desiccation of the Sahara about 2000BC,
trade between the northern parts of West Africa and North Africa was carried on foot. The
natural provision various rivers in Nigeria like the Niger, Quaboe, Cross River, Benue, Ogun,
Imo, etc made canoe construction and water transportation feasible “in spite of the limitation
posed at times when the rivers dry up. One striking feature of transportation in pre-colonial
Nigeria is that it was readily available and efficient and there is no doubt that the indigenous
people polled their resources to make it a possibility.
The Colonial Period
From the onset, it must be noted that colonialism created an economy that was exploitative.
Tamuno (1980:393) notes that the primary aim of the (British) government in 1906 was
economic- to use the better financial position of the protectorate of Southern Nigeria to cover the
costs of administration and development in the financially weak Colony and Protectorate of
Lagos, then saddled with the white elephant of a railway in need of extension in 1901. Colonial
rule opened the doors of African indigenous economies to European modes of technology. Falola
(2003:27) observes that with the advent of colonialism Many New European ideas and institution
spread in different areas with varying consequences, new economies emerged that promoted the
cultivation of cash crops for experts and the exploitation of minerals by foreign companies;
physical challenges included the growth of old and new cities the building of railways, roads,
hospitals and telecommunications and western education. While x-raying the nature of the
colonial economy in the British zones including Nigeria, Kaniki (1990:173) identifies four
underlying propelling factors namely (i) the colonies existed as primary sources of raw materials
for the nascent Industrial Revolution that broke out in Britain in the 1760, (ii) the colonies were
to function as dumping grounds for the surplus products from British factories (iii) the colonies
were not expect financial support from the metropolis (iv) the colonies were to serve British
economic interest in all its ramifications. It I a truism that the British embarked in infrastructural
development in their Nigerian colony only in so far as it could pave way for the exploitation of

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the indigenous economy. The hospitals were built primarily to attend to the health challenges of
expatriates while the railway groundnuts would be evacuated. Omosini (1980:146) analyses the
policies that birthed railway construction in Nigeria from 1877-1901 alluding still to the
exigencies of the Industrial Revolution and states that the Iddo-Ibadan line was commissioned in
1901. The colonial administration also embarked on the construction of seaports in Nigeria. In
this regard Ogundana (1980:159) notes that the period of colonial rule in Nigeria witnessed
considerable investment of resources in the development of modern transport infrastructure.
During this period there was a rapid transformation of transport facilities especially in
railway, roads and seaports … and the years 1914 to 1954 can be referred to as the colonial
phase in Nigeria’s seaport development. These seaports dotted Nigeria’s coasts serving as the
arrow head in the socio-economic incursion into Nigeria’s hinterland. Ogundana (1980:161)
further notes that as many as fourteen customs ports located at Lagos, Koko, Sapele, Warri,
Burutu, Forkados, Akassa, Brass, Bonny, Degema, Port Harco0urt, Opopo, Calabar and Ikeng
had been established by 1914. Of all these, the Lagos and Port Harcourt’s were very important
because of their strategic locations and functions and were operated directly by Government
agencies, while the rest were managed by private interests and various companies. These ports
were hardly adequate for the volume of commercial transactions expected.
One of the major setbacks of seaport development was the absence of a long-term spatial
plan or land policy (Ogndana 1980:178) and this trend was inherited in the post-colonial period
by Nigeria’s policy makers. Tamuno (1982:249) writing on the development and structural
changes in the colonial economy, notes that Sir W. Egerton in 1904 created a separate Roads
Department under the Supervisor of Roads but at about 1910 both the public works and Roads
Department were merged. The P.W.D was the vanguard of most of infrastructural development
of the colonial administration. Ake (1981:43) security observes that the colonial economy was
characterized by incoherence and submits that the colonizer could not exploit the colonies wealth
at no cost at all. In some cases, the extraction of the colony’s resources entailed some investment
in infrastructure development – roads, water resources, railways, electrical power and
administrative structures. In keeping with the contradiction exploitative tendencies of capitalism.
It must be mentioned that the infrastructure development the colonial administration could offer
was tangential and never led to self-reliance. This is the kind of weak structure that the Nigerian
political leaders inherited at the independence. The technology that anchored these cosmetic

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 developments were not sophisticated enough to make the neo-colonial state of Nigeria less
dependent on the erstwhile colonizers.

COMPOSITION OF THE NIGERIAN ECONOMY

Structurally, the Nigeria economy has been dominated by two sectors. They are agriculture and
crude petroleum sectors. In terms of revenue generation, however, the economy is so far mono-
cultural. In the 1960s and early 1970s, the major revenue earner was agriculture and since the
late 1970s, it has been the oil sector. Accordingly, two approaches will be adopted in the analysis
of the structural performance: the relative contribution to GDP and to revenues. The highlights of
the structure of the Nigerian economy and changes, therein, are as follows:
- Nigeria is the largest geographical unit in West Africa, with land area of 923,768 square
kilometers and an estimated population of 140 million. About 47 percent of who are below 15
years of age and 3 percent aged 65 years and above. These, according to Adedipe (2004), give a
dependency ratio of 1:1 against 1:3 or less in advanced countries.
i. Agriculture dominated the GDP, but its contribution has reduced gradually over the years since
1960. The ratio dropped from 65.6 percent in 1960/61 to 32.00 percent in 2006.
ii. Manufacturing improved in the early post-independence years, reaching a peak of 10.00 percent
contribution in 1981 from a mere 3 percent in 1960/61. Its contribution has nose-dived steadily
since 1990 to as low as 2.57 percent in 2006.
iii. Crude petroleum became prominent, contributing less than one percent to GDP in 1960/61 and
increased steadily to 47.7 percent in 2000 and dripping slightly to 37.6 percent in 2006.
iv. Dualistic nature, in which there is a mix of formal (organized) and informal (curb, markets)
systems. The latter is a huge sector that is difficult to measure, as it owes its existence to
institutional weaknesses, policy inconsistencies, and policy implementation deficiencies.
Estimates often indicate it to represent between 40 and 50 percent of economic activities in
Nigeria (Adedipe, 2004).
v. Increasing inequalities in interpersonal incomes and a widening gap between urban and rural
incomes, especially with the adoption of SAP in 1986.

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 vi. Weak social and institutional structures in education and health. Enrollment figures show
improved distribution in favor of secondary and tertiary education, but there are concerns about
the quality of education regarding the dynamics of work environment and its requirements.
vii. A vibrant financial system that has seen cycles of stability/prosperity and distress, pronounced in
the early to mid-1990s. The improved enforcement of regulation and increasing commitment to
corporate governance principles by the operators assures soundness of the financial system
moving forward.
viii. External trade is dominated by oil, which accounted for 34. 2 percent of total external trade in
1970 and 64.5 percent in 2003. External trade/GDP ratio stood at 64.6 percent in 2002, making
the economy highly susceptible to external shocks
ix. Raw materials and consumption goods dominate imports, while primary products dominate
exports, contributing over 95 percent of export earnings, further entrenching the Nigerian
economy as import dependent and reliant on crude petroleum as the major export.
Sector 1970 1980 1990 2000 2001 2002 2003 2004 2005 2006
Oil 34.2 59.5 72.4 72.9 65.2 64.6 64.5 72.1 75.2 70.5
Non-oil 65.8 40.5 27.1 27.6 34.8 35.8 35.5 27.9 24.8 29.5
Source: CBN Statistical Bulletin, (2006b)
The above structural issues can be summarized as follows in the last decade and half. Oil
accounts for over 95 percent of export earnings as show in Table 2, about 40 percent of GDP,
and about 70 percent of the Federal Government revenue. It also accounts for over 90 percent of
new investments (CBN, 2000; Adedipe, 2004). There are indications that the oil sector provides
employment for less than 10 percent of Nigerian working population, where the upstream and
gas exploration activities are largely in-tech, while the downstream, that opens more to low skill
workers, is a troubled sub sector (Adedipe, 2004).
Another important factor in the structural analysis of Nigeria’s GDP is aggregate final
consumption, shown in Table below. In the 1975/76, aggregate final consumption stood as 73.9
percent of GDP, which, incidentally, is the lowest. Since then, this has soared reaching an all-
time high of 96.1 percent in 2002. This simply shows that Nigeria is a mere consuming nation as
little is saved for investment.
Sector 1975/76 1985 199 2001 2002 2003 2004 2005 2006
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 Consumption 73.9 84.7 84.0 81.5 96.1 84.2 80.1 78.3 74.4
Savings 26.1 15.3 16.0 18.5 3.9 15.8 19.9 21.7 25.6
Source: CBN 2006b: Statistical Bulletin; and CBN 2006a: Annual Report…
The structural issues, in any economy, are reflected in the changing production patterns and trade
patterns. Of particular importance is the international trade, which impacts on economic growth
cannot be overemphasized. Trade/GDP ratio, used to measure the degree of openness of any
economy as well as the degree of vulnerability for Nigeria (Table 6), shows that the country has
moved from a ratio of 31.5 percent in 1970/71 to as high as 77.5 percent in 2003, making the
economy overly external with the consequence that the economy is always susceptible to
external shocks. Lairson and Skidmore (1993) reported that between the 1960s and 1980s, the
period of high economic growth in Japan, which its ratio of trade to GNP was much like the
United States; at below 30 percent. They stated that “though quite important, foreign trade has a
more limited impact on the Japanese economy”. Over dependence on the international trade with
crude oil as the dominant export earner no doubt has very negative consequences for an
undiversified economy, like Nigeria, and this has serious implications for realizing the goals of
Vision 2020.
ROLES OF SOME SECTORS OF THE ECONOMY TO NATIONAL ECONOMY
Contribution of Mining

Mining operations stimulated development in other sectors. However, this was achieved at the
expense of the local population and local industries within the economy. Mining and extractive
activities are extra-territorial enterprises in which foreign capital was invested. The use of
foreign capital in the development of the mining industry meant a repatriation of profit to the
investing countries. Large sums of money also went as salaries to the European personnel
engaged at the mines. Mining operations affected the indigenous population in many ways. Since
commercial exploitation of the minerals was capital intensive, many Nigerians who had lived off
the mines by working them through the use of traditional methods and implements were
displaced because they could not afford the high cost of the new equipment. Consequently, a
large number of such people were forced to seek employment from the mining companies
instead of prospecting for minerals Mines where independent tin miners were forced out of
business, being unable to compete with the foreign companies which could invest the heavy
capital required for the exploitation of the mineral wealth. The mining activities disrupted the life

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of the communities where the deposits were located. Since the mining enterprises covered wide
areas in many parts of the country, a large part of the land was wasted as a result of
deforestation, exhaustion of worked areas, erosion, and other activities associated with mining.
Apart from aridity or infertility which the mining operations caused to the land, a large number
of the indigenous people who would have remained on the land and devoted their energies to
agriculture were attracted into the mines by the lure of a regular salary or wage. A sharp rise in
the cost of foodstuff in the face of a sharp and persistent decrease in food production in the area
was compounded by population explosion. The agricultural sector suffered persistent drain in
labour to the benefit of the mining operations. For instance, in the oil rich part of the country,
petroleum exploration had not only devastated many areas which could have been utilised for
agricultural purposes, oil spillages in recent times have also rendered the land unsuitable for
agriculture. All these put together then are clear adverse effects of mining on Nigerian
agriculture. Mining, activities did not affect any appreciable transfer of technology to Nigerians.
In spite of the huge were not trained in mining technology. The majority of those engaged at the
mines were either unskilled or semi-skilled persons who only supplied cheap labour. The
complex machinery involved in exploitation and prospecting was controlled by the expatriates.
Thus, all management and skilled labour was recruited from outside Nigeria. Nor did the capital
invested play any important role either in stimulating industrialisation, industrial growth or in
forging permanent linkages with other sectors of the economy. If the mining activities helped to
effect any transfer of technology to. the Nigerians by way of training of manpower for national
development and industrialisation, the help was small indeed and negligible. Most of the
infrastructural development which accompanied the exploitation of the mineral resources was
designed to facilitate operations for higher productivity, and was therefore of little consequence
to or had little impact on the local population since there was no linkage with the society. The
integration of the domestic economy into the export sector however brought about socio-
economic changes. Economic activities were stimulated. Retail trading in imported and local
materials was greatly enhanced as a result of the large influx of people into mining districts.
Similarly, trade in foodstuff received a boost. Hawking of food items became a common feature
around the premises of the mines. Since the workers depended on salaries which often came in at
the end of the month, they often bought food and other items on credit. This led to the
development of rudimentary forms of credit facilities for workers since the food sellers were

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assured of payments at month ends. Mining activities on the whole gave an impetus to the
improvement of transportation, particularly the development of the railway. The construction of
railway tracks from Port Harcourt to Enugu and beyond was designed to facilitate the haulage of
coal to the sea-port while the extension of the Baro-Kano railway to Bukuru and then Jos was
dictated by a similar consideration. On the other hand, the railways greatly benefited from the
mining operations, since they were solely responsible for transporting the ores to the ports. Apart
from haulage, the extension of the railway to the mines opened up many areas, brought to many
more people improved means of communication and enhanced the growth of economic
activities, including remarkably the stimulation of local demand for imported manufactured
goods. The view has been expressed that the colonial government derived considerable revenue
from the exploitation of mineral resources in Nigeria. For example, Godfrey Fell has noted that
tin and other minerals contributed significantly to the revenue base and the general development
of the country. The royalties and rents paid by the companies to the government, the revenue that
accrued to the railway from plants, freight carried to and from the mines, and the annual wages
of about 500,000 pounds paid to Nigerians employed at the mines and other services boosted the
economy. Perhaps, fell has not only exaggerated the gain in revenue but has also failed to see the
prohibitive costs and adverse effects on the environment in the mining areas. Apart from the fact
that the revenue derived by the government was small in comparison with those which accrued
to the companies involved in the mining industry, the salaries paid to the African workers were
also small, varying from 25% to 50% throughout the colonial period. Both the prospecting
companies and the United African Company (U.A.C.) which shared the royalties with the
government got the bulk of the profit of the enterprise. In addition, the Nigerian government paid
off the mineral rights of U.A.C. at the cost of 1 million pounds, which further increased the gains
to foreign capital at the expense of Nigeria. All taken together, the gains made by Nigeria were
small. The enterprises had operated to the benefit of the metropolis and the foreign capitals.

Role of Industry in Economic Development

Large scale production: The use of machines which is a major part of industry leads to large
scale production. Industry increases production over a period of time, especially when compared
with human labour. Output is greatly increased when machines are used in production.

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Urbanization: Urbanization is the movement of more people from the rural areas and suburbs to
the cities. It is one of the upsides of industry. It happens when people migrate from the villages
to the bigger towns to seek greener pastures. With the advent of industry in Nigeria, big cities
have more advancement in basic amenities such as housing, medical care, transportation and
education. For this reason, people leave their underdeveloped villages to seek a better life in
these cities.

More productivity in less time: The history of industrial development in Nigeria and other parts
of the world shows that technological advancement came due to the need to reduce labour while
simultaneously improving output in the agricultural sector. Industrialization has since its
invention helped the farmer get more work done in less time. It also helps other producers in the
manufacturing sector of any economy get more work done in less time. For example, the time it
takes a tailor to sew a cloth with needle and thread is reduced to the barest, when she uses a
sewing machine.

Rise in GDP: Industry is beneficial to not only the individual or company; it is equally
beneficial to the country as a whole. The Gross Domestic Product of any country experiences a
significant rise with the introduction of industry into the economy. Let me briefly explain what
GDP means. Gross Domestic Product (GDP for short) is the total value of everything produced
in a country. The GDP shows the growth rate of the economy of a country. So, the more goods
that are produced in a country, the more robust a country’s economy will be.

Promotion of trade: Advanced countries are known for being exporters of finished products,
while underdeveloped countries export raw materials and are left no choice but to import
finished goods. In the global market, agricultural products (raw materials) are sold at lower
prices while industrial products (processed goods) are given greater value. This is one
importance of manufacturing industries in Nigeria.

Employment opportunities: The use of industry creates more employment opportunities. The
need for human labour or workforce is necessitated by industrialization which involves
exploration of raw materials, processing of raw materials, final production, packaging,
distribution and exportation of goods. A large workforce is needed to carry out these production
and distribution steps. Therefore, a portion of the population is gainfully employed as a result of
the use of industry.

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More goods/services: A country that is industrialized will have more goods and services. The
citizens and other residents of such a country will live more comfortably and have much better
infrastructure to enjoy.

Cheap cost of production: Production is cheaper for countries that have machines and
technological advancement. This is particularly so, if the country has both the raw materials and
the machines to process the raw materials.

Increased revenue: There are taxes attached to the production and distribution of goods and
services in a country. These are sales duty, custom duty, corporate duty and excise duty. These
taxes generate more revenue for the government. So, the more companies that produce goods and
services in a country, the more revenue generated for the state. Revenue generation is a vital role
of industries in economic development.

Diversification of economy: The Nigerian economy is highly dependent on petroleum and its
by-products. This has brought the country into difficult times, especially with the global fall of
prices of crude oil that began in 2014. However, if Nigeria produces other goods and diversifies
her economy away from the petroleum sector, there will be more income from various sources.
Nigeria will also not be at the mercy of economic powers when prices fluctuate in any sector.
This is a call for industrial development in Nigeria. The vast benefits of industry have been
pinpointed above. However, everything that has an advantage also has a disadvantage. Below are
the disadvantages of industrialization.

Economic Contribution of Transportation

The Economic Importance of Transportation: Development can be defined as improving the

welfare of a society through appropriate social, political, and economic conditions. The expected
outcomes are quantitative and qualitative improvements in human capital (e.g. income and
education levels) as well as physical capital such as infrastructures (utilities, transport,
telecommunications). The development of transportation systems takes place in a socioeconomic
context. While development policies and strategies focus on physical capital, recent years have
seen a better balance by including human capital issues. Irrespective of the relative importance of
physical versus human capital, development cannot occur without both interacting as
infrastructures cannot remain effective without proper operations and maintenance. At the same

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time, economic activities cannot take place without an infrastructure base. The highly
transactional and service-oriented functions of many transport activities underline the complex
relationship between its physical and human capital needs. For instance, effective logistics rely
on infrastructures and managerial expertise.

Because of its intensive use of infrastructures, the transport sector is an important

component of the economy and a common tool used for development. This is even more so in a
global economy where economic opportunities have been increasingly related to the mobility of
people and freight, including information and communication technologies. A relation between
the quantity and quality of transport infrastructure and the level of economic development is
apparent. High-density transport infrastructure and highly connected networks are commonly
associated with high levels of development. When transport systems are efficient, they provide
economic and social opportunities and benefits that result in positive multiplier effects such as
better accessibility to markets, employment, and additional investments. When transport systems
are deficient in terms of capacity or reliability, they can have an economic cost such as reduced
or missed opportunities and lower quality of life.

Transportation and Economic Opportunities: Transportation developments that have taken

place since the beginning of the industrial revolution have been linked to growing economic
opportunities. At each development stage of the global economy, a particular transport
technology has been developed or adapted with an array of impacts. Economic cycles are
associated with a variety of innovations, including transportation, influencing economic
opportunities for production, distribution, and consumption. Historically, six major waves of
economic development where a specific transport technology created new economic, market, and
social opportunities can be suggested:

Seaports: The historical importance of seaports in trade has been enduring. This importance was
reinforced with the early stages of European expansion from the 16th to the 18th centuries,
commonly known as the age of exploration. Seaports supported the early development of
international trade through colonial empires but were constrained by limited inland access. Later
in the industrial revolution, many ports became important industrial platforms. With
globalization and containerization, seaports increased their importance in supporting
international trade and global supply chains. The cargo handled by seaports is reflective of the

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 economic complexity of their hinterlands. Simple economies are usually associated with bulk
cargoes, while complex economies generate more containerized flows. Technological and
commercial developments have incited a greater reliance on the oceans as an economic and
circulation space.

 Rivers and canals: River trade has prevailed through history, and even canals were built where
no significant altitude change existed since lock technology was rudimentary. The first stage of
the industrial revolution in the late 18th and early 19th centuries was linked with the
development of canal systems with locks in Western Europe and North America, mainly to
transport heavy goods. This permitted the development of rudimentary and constrained inland
distribution systems, many of which are still used today.
 Railways: The second stage of the industrial revolution in the 19th century was linked with the
development and implementation of rail systems enabling more flexible and high capacity inland
transportation systems. This opened substantial economic and social opportunities through the
extraction of resources, the settlement of regions, and the growing mobility of freight and
passengers.
 Roads: The 20th century saw the rapid development of comprehensive road transportation
systems, such as national highway systems and automobile manufacturing, as a major economic
sector. Individual transportation became widely available to mid-income social classes,
particularly after the Second World War. This was associated with significant economic
opportunities to service industrial and commercial markets with reliable door-to-door deliveries.
The automobile also permitted new forms of social opportunities, particularly with
suburbanization.
 Airways and information technologies: The second half of the 20th century saw the
development of global air and telecommunication networks in conjunction with economic
globalization. New organizational and managerial forms became possible, especially in the
rapidly developing realm of logistics and supply chain management. Although maritime
transportation is the physical linchpin of globalization, air transportation and IT support the
accelerated mobility of passengers, specialized cargoes, and their associated information flows.

Economic Returns of Transport Investments: A common expectation is that transport

investments will generate economic returns, which in the long run, should justify the initial

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 capital commitment. Like most infrastructure projects, transportation infrastructure can generate
a 5 to 20% annual return on the capital invested, with such figures often used to promote and
justify investments. However, transport investments tend to have declining marginal returns
(diminishing returns). While initial infrastructure investments tend to have a high return since
they provide an entirely new range of mobility options, the more the system is developed, the
more likely additional investment would lower returns. At some point, the marginal returns can
be close to zero or even negative. A common fallacy assumes that additional transport
investments will have a similar multiplying effect than the initial investments had, which can
lead to capital misallocation. The most common reasons for the declining marginal returns of
transport investments are:

 High accumulation of existing infrastructure: Where there is a high level of accessibility and
where transportation networks that are already extensive, further investments usually result in
marginal improvements. This means that the economic impacts of transport investments tend to
be significant when infrastructures were previously lacking and tend to be marginal when an
extensive network is already present. Additional investments can thus have a limited impact
outside convenience.
 Economic changes: As economies develop, their function tends to shift from the primary
(resource extraction) and secondary (manufacturing) sectors towards advanced manufacturing,
distribution, and services. These sectors rely on different transport systems and capabilities.
While an economy depending on manufacturing will rely on road, rail, and port infrastructures, a
service economy is more oriented towards the efficiency of logistics and urban transportation. In
all cases, transport infrastructure is important, but their relative importance in supporting the
economy may shift.
 Clustering: Due to clustering and agglomeration, several locations develop advantages that
cannot be readily reversed through improvements in accessibility. Transportation can be a factor
of concentration and dispersion depending on the context and the level of development. Less
accessible regions thus do not necessarily benefit from transport investments if they are
embedded in a system of unequal relations.
 Therefore, each transport development project must be considered independently and
contextually. Since transport infrastructures are capital intensive fixed assets, they are
particularly vulnerable to misallocations and mal-investments. The standard assumption is that

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 transportation investments tend to be more wealth-producing as opposed to wealth consuming
investments such as services. Still, several transportation investments can be wealth consuming if
they merely provide conveniences, such as parking and sidewalks, or service a market size well
below any possible economic return, with, for instance, projects labeled “bridges to nowhere”. In
such a context, transport investment projects can be counterproductive by draining the resources
of an economy instead of creating wealth and additional opportunities.
 Types of Transportation Impacts: The relationship between transportation and economic
development is difficult to formally establish and has been debated for many years. In some
circumstances, transport investments appear to be a catalyst for economic growth, while in
others, economic growth puts pressures on existing transport infrastructures and incite additional
investments. Transport markets and related transport infrastructure networks are key drivers in
the promotion of more balanced and sustainable development, particularly by improving
accessibility and the opportunities of less developed regions or disadvantaged social groups.
Initially, there are different impacts on transport providers (transport companies) and transport
users. There are several layers of activity that transportation can valorize, from a suitable
location that experiences the development of its accessibility through infrastructure investment to
better usage of existing transport assets through more efficient management.

Transportation as an Economic Factor: Contemporary trends have underlined that economic

development has become less dependent on relations with the environment (resources) and more
dependent on relations across space. While resources remain the foundation of economic
activities, the commodification of the economy has been linked with higher levels of material
flows of all kinds. Concomitantly, resources, capital, and even labor have shown increasing
levels of mobility. This is particularly the case for multinational firms that can benefit from
transport improvements in two significant markets:

 Commodity market: Improvement in the efficiency with which firms have access to raw
materials and parts as well as to their respective customers. Thus, transportation expands
opportunities to acquire and sell a variety of commodities necessary for industrial and
manufacturing systems.
 Labor market: Improvement in access to labor and a reduction in access costs, mainly by
improved commuting (local scale) or the use of lower-cost labor (global scale). Transportation

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 provides market accessibility by linking producers and consumers so that transactions can take
place. A common fallacy in assessing the importance and impact of transportation on the
economy is to focus only on transportation costs, which tend to be relatively low; in the range of
5 to 10% of the value of a good. Transportation is an economic factor of production of goods and
services, implying that it is fundamental in their generation, even if it accounts for a small share
of input costs. This means that irrespective of the cost, an activity cannot take place without the
transportation factor and the mobility it provides. Thus, relatively small changes in transport
cost, capacity, and performance can have substantial impacts on dependent economic activities.
An efficient transport system with modern infrastructures favors many economic changes, most
of them positive. The major impacts of transport on economic factors can be categorized as
follows:
 Geographic specialization: Improvements in transportation and communication favor a process
of geographical specialization that increases productivity and spatial interactions. An economic
entity tends to produce goods and services with the most appropriate combination of capital,
labor, and raw materials. A region will thus tend to specialize in the production of goods and
services for which it has the greatest advantages (or the least disadvantages) compared to other
regions as long as appropriate transport is available for trade. Through geographic specialization
supported by efficient transportation, economic productivity is promoted. This process is known
in economic theory as comparative advantages that have enabled the economic specialization of
regions.
 Scale and scope of production: An efficient transport system offering cost, time, and reliability
advantages enable goods to be transported over longer distances. This facilitates mass production
through economies of scale because larger markets can be accessed. The concept of “just-in-
time” in supply chain management has further expanded the productivity of production and
distribution with benefits such as lower inventory levels and better responses to shifting market
conditions. Thus, the more efficient transportation becomes the larger the markets that can be
serviced, and the larger the scale of production. This results in lower unit costs.
 Increased competition: When transport is efficient, the potential market for a given product (or
service) increases, and so does competition. A wider array of goods and services becomes
available to consumers through competition, which tends to reduce costs and promote quality

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 and innovation. Globalization has clearly been associated with a competitive environment that
spans the world and enables consumers to have access to a wider range of goods and services.
 Increased land value: Land which is adjacent or serviced by good transport services generally
has greater value due to the utility it confers. Consumers can have access to a wider range of
services and retail goods. In contrast, residents can have better accessibility to employment,
services, and social networks, all of which transcribes in higher land value. Irrespective of if used
or not, the accessibility conveyed by transportation is impacting the land value. In some cases,
due to the externalities there generate transportation activities can lower land value, particularly
for residential activities. Land located near airports and highways, near noise and pollution
sources, will thus be impacted by corresponding diminishing land value.

Role of Manufacturing in Economic Development

There are a lot of theoretical and empirical evidence for the importance of industrialization for
economic development which can summarize in the following points:
i. The manufacturing sector offers special opportunities for capital accumulation. Capital
accumulation is one of the aggregate sources of growth (Szirmai, 2009). It is much lower in
agriculture and services; thus, an increasing share of manufacturing will contribute to economic
growth.
ii. The manufacturing sector offers special opportunities for economies of scale, which are less
available in agriculture or services (fagerberg and verspagen, 1999), (Kaldor, 1966, 1997).
iii. The manufacturing sector offers special opportunities for technological progress (Cornwall,
1977). Technological advance is concentrated in the manufacturing sector and diffuses from
there to other economic sectors such as the service sector. The capital goods that are employed in
other sectors are produced in the manufacturing sector. It is also for this reason that in the older
development economics literature the capital goods sector - machines to make machines - was
given a prominent role.
iv. Linkage and spillover effects refer to the direct backward and forward linkages between different
sectors and subsectors create positive externalities to investments in given sectors (Cornwall,
Tregenna, 2007) are stronger in manufacturing than in agriculture or services Productivity is
higher in the manufacturing sector than in the agricultural sector. The transfer of resources from
agriculture to manufacturing provides a structural change bonus.

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 So, there is a positive relation between the degree of industrialization and per capital
income in developing countries. The developing countries which now have higher per capita
incomes have seen the share of manufacturing in GDP and employment increase. In many
service sectors, the possibilities for productivity growth are limited due to the inherently labour
intensive nature of service production. This implies that an increasing share of services results in
a productivity slowdown (Baumol’s law). Such service sectors include personal services,
restaurants and hotels, health care and medical services and government. What productivity
improvement there is, often takes the place of reducing quality of output or simply providing less
services for the same price, so it should not show up in productivity indices if these were
correctly measured using hedonic price indices. Baumol’s law has recently come under fire,
because there are some very important market service sectors such as the financial sector and
sales and distribution where there are major productivity improvements, based on ICT
technologies.

Role of Agriculture in Economic Development

Feeding The Nation: One of mankind's primary needs is food and one of the earliest known
roles of agriculture has been the provision of food for mankind. This important function will
continue as long as there is life. Through the years, man has sought various ways of perfecting
both the quality and quantity of food available through experimentation, breeding and improved
farming techniques. ln almost all developed countries, efforts are being directed at achieving
self-sufficiency in food production partly because of the need to stabilize their economies and
also for reasons of national security. A country that depends largely on external sources for its
food requirements may find itself in real danger if its traditional sources of supply should be cut
off during the period of crisis. Several years ago, Nigeria was able to produce most of her food
requirements. But in recent years, Nigerians have tended to increase their dependence on
external
sources for much of their food items. Yet, with her vegetation and climatic conditions, and other
available resources, Nigeria has the capacity to produce more than her food requirements.
Available statistics reveal that by 1970, the value of Nigeria's food imports was N57.8 million. ln
1973, it rose by 118.3 per cent to N126.2 million. Between 1973 and the end of 1977 the value of

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the country's food imports rose by more than six times to N790.3 million. Such a situation
definitely is not healthy both in terms of the foreign exchange implications and the country’s
national security.
Labour Employment: Apart from being the source of food supply, it is generally known that all
over the world, especially among the less developed communities, agriculture is an important
source of employment of labour. The only problem has been that in the less developed countries,
the wages of agricultural workers are generally low, relative to those in the other sectors. ln
Nigeria in spite of the rapid growth of other sectors, agriculture still retains its leading position as
the largest provider of employment for the working population and also the main source of raw
materials for the expanding industrial sector, it is estimated that nearly 70 per cent of the labour
force is employed in the sector while about 90 per cent of the rural population depends largely on
agriculture. With the rapid growth of other sectors of the economy, there will be an increase in
demand for labour. This should come from the agricultural sector. This means that the
agricultural sector itself should be modernized so as to facilitate the release of labour to other
sectors.

Provision of Raw Materials for Industries: The role of agriculture as a source of raw materials
for manufacturing industries cannot be over emphasised. It is a well-known fast that the
industrialized countries depend largely on the less developed ones as sources of raw materials for
their industries. ln Nigeria, effort have been made over the years to establish and expand our
local manufacturing industries. As a matter of fact, it is in the interest of our domestic industries
that agriculture should be able to meet adequately the needs for our local industries. industrial
ventures like textiles, seed crushing, sugar manufacturing, tobacco processing, tyre
manufacturing etc. cannot take off or expand satisfactorily without adequate supply of the
necessary raw materials from agriculture. We cannot afford to depend on foreign sources for the
supply of such raw materials that our manufacturing industries need and which we can easily and
profitably produce locally. But as a result of the very poor performance of our agricultural sector
leading to shortages of raw materials, some of our local industries have had to suspend
operations while the existence of others is being threatened. ln some cases, some of our
manufacturing industries have resorted- to the importation of such raw materials as we normally
have the capacity to produce and this has resulted in an inevitable foreign exchange leakage.

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Foreign Exchange Earner: Primary producing countries depend largely on agricultural exports
for their foreign exchange earnings which they use to finance their imports? Economic
development in most countries has been financed mainly with earnings from agriculture. Such
was the case with Nigeria before the impact of petroleum on our economic scene became so
prominent.
ln 1962 for example, agriculture, including forestry products accounted for about N229.8 million
or 82 per cent of the total value of exports of the country. This position has since altered
drastically to the extent that by 1976 the N274.2 million contributed by agriculture and forestry
products constituted only 4 per cent of the total value of exports with minerals and mineral
products dominating the scene. However, with the intensification of various governments and
private efforts
towards improving agriculture, one hopes that the position may change so that we may once
more look on of finance for our major development programmes, especially as our expectations
from the oil sector are beginning to dampen.
Contribution to National Income: It is worth noting that agriculture has over the years made
remarkable contributions to the growth of the national income. For example, at current prices,
the share of the agriculture in the Gross Domestic Products (GDP) has varied from 36.5 per cent
in 1973/74 to 24.4 per cent in 1977 /78. A sectoral breakdown of the GDP indicates that
agriculture including livestock, forestry and fishing which formed the most important sector of
the Nigerian economy in the 1960s had given way to the petroleum industry as the dynamic
engine of growth. Its relative share of GDP at current factor cost fell from 61.2 per cent in
1962to 23.3 per cent in 1976/77. This decline is attributable in part to the phenomenal growth of
crude petroleum
and the poor performance of the agricultural sector itself. There is thus a definite decline but no
doubt, agriculture, forestry and fishing have still contributed over one quarter of the total GDP
for
nearly all the years.
CONTEMPORARY ECONOMIC SECTORS AND THEIR CONTRIBUTIONS TO THE
ECONOMY

Roles of Tourism in Economic Development

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i. Tourism is vital for the success of many economies around the world. There are several benefits
of tourism on host destinations. Tourism boosts the revenue of the economy, creates thousands
of jobs, develops the infrastructures of a country, and plants a sense of cultural exchange
between foreigners and citizens. The number of jobs created by tourism in many different areas
is significant. These jobs are not only a part of the tourism sector but may also include the
agricultural sector, communication sector, health sector, and the educational sector. Many
tourists travel to experience the hosting destination’s culture, different traditions, and
gastronomy. This is very profitable to local restaurants, shopping centers, and stores. Melbourne,
Australia’s population is greatly affected by tourism. It has a population of around 4 million
people and around 22,000 citizens are employed by the tourism sector only.
ii. Governments that rely on tourism for a big percentage of their revenue invest a lot in the
infrastructure of the country. They want more and more tourists to visit their country which
means that safe and advanced facilities are necessary. This leads to new roads and highways,
developed parks, improved public spaces, new airports, and possibly better schools and hospitals.
Safe and innovative infrastructures allow for a smooth flow of goods and services. Moreover,
local people experience an opportunity for economic and educational growth.
iii. Tourism creates a cultural exchange between tourists and local citizens. Exhibitions,
conferences, and events usually attract foreigners. Organizing authorities usually gain profits
from registration fees, gift sales, exhibition spaces, and sales of media copyright. Furthermore,
foreign tourists bring diversity and cultural enrichment to the hosting country.
iv. Tourism is a great opportunity for foreigners to learn about a new culture, but it also creates
many opportunities for local citizens. It allows young entrepreneurs to establish new products
and services that would not be sustainable on the local population of residents alone. Moreover,
residents experience the benefits that come with tourism occurring in their own country.
v. Tourism increases revenues earned in a country. For instance, if a country receives
approximately 1000 tourists who spend $ 100 daily, then the country could enjoy $100,000
increases in daily revenue. If the country can sustain that expenditure over 3 months, then it can
enjoy approximately $9,000,000 worth of revenue over that period. Consequently, retail centers,
amusement parts, hotels and other recreational industries will enjoy part of that 9 million.
However, since businesses need to purchase imported supplies then perhaps 30% of those
earnings would be used to offset that income. The remaining percentage remains in the country

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 and facilitates creation of tourism jobs or profits enjoyed by entrepreneurs. Therefore, a country
would develop its economy if it invested in the tourism industry.
vi. Aside from direct revenues, there is multiplier effect that arises from tourism as an economic
activity. After receiving the above mentioned amount of revenue, tourist employees in the
concerned country will use the amount they earned from wages and salaries to purchase services
and goods. As a consequence, more businesses in the nation will benefit from the tourist
activities. Jobs will also be created for those individuals selling goods and services to employees
in the tourist industry. Therefore, one dollar earned in revenue from tourism leads to a multiplier
effect of more jobs and sales in other industries. UNEP (421) explain that tourism allows
countries to harness their cultural heritage, natural landscape, and biodiversity in order facilitate
development. It is through this platform that countries can convert what they are endowed with
into tangible employment opportunities.
vii. Since tourism relies on labor quite intensively, then this can provide an opportunity for
disadvantaged groups or the unemployed to become entrepreneurs. This is an industry in which
micro enterprises thrive; making handicrafts, jewelry and other small commodities is
synonymous with it. Products of tourism span across a wide array of industries ranging from
transport, infrastructure, agriculture, energy to art. Consequently, financial benefits can spread
across different areas of the economy.
viii. Tourism also manifests itself in the form of improved investment in facilities like roads, energy
and water supply. Before tourists can visit any nation, they need access to it through airports.
Tourist-dependent nations often have many air transport hubs.
ix. Furthermore, those visitors will expect to enjoy certain basic comforts such as street lights, good
sever systems, and good roads. While these amenities may be prevalent in developed nations, the
same is not true for underdeveloped ones. Countries interested in growing their tourism industry
will need to build their infrastructure. The effects of these endeavors will trickle down to other
members of the society. Whole populations can utilize these facilities and thus improve their
quality of life. With regard to the poverty cycle, this industry employs the youth and women in
large numbers thus fostering independence. In fact, many households are able to break out of the
poverty cycle owing to their participation in tourism.
Contributions of Music Industry to the Economy

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The problem of rising of unemployed and underemployed in Nigeria is assuming frightening
dimension every passing day as the economy remains in the doldrums and socio-economic
environment is becoming harsher for businesses to thrive, thereby frustrating the capacity of
businesses to sustain and create employment. Since more than half of population in Nigeria is
youths, the government and ministry of Youth and Social Development is faced with the burden
of keeping them busy and engaged, creating jobs. One of the solutions to employment is
entrepreneurship and in the creative sector, a great number of educated youths have taken destiny
into their hands and created jobs by being a film maker, music producer, doing comedy
productions as well as being actors and musicians.

Nigerian music has attracted global attention to itself due to the abundant talent and the
drive to make a success in their careers. More than sixty-five percent of musicians today came
from a poor home and has seen the talent of music as a singer or producer as the gateway to
wealth and a goodbye to poverty. The likes of Indigenous rappers Olamide, Reminisce, who
came from a poor home as it were have become continental icons and a success story in the
Nigerian music scene. These musicians as case study employ music producers who cook and
make music hits for them to ride on. For a musician who has gotten a breakthrough having
released hit songs upon hit songs, four or five persons are employed to serve them and make
their job easy. A musician will have a manager, music producer, personal assistant and of course
tour manager when he decides to go on tour not to talk of a cook and personal accountant cum
financial manager who takes accounts of his revenue and other persons via indirect employment.

The music industry is a multi-million-naira industry and has attracted foreign investors
like music and production companies like Universal Records and Sony Music. All that is needed
is to deepen organization and build capacity which top music artistes, record label owners and
music aficionados have to lead the way and professionalize and rebrand the industry. Also in the
movie industry named Nollywood, it has contributed immensely to the GDP. In 2016, the movie
industry was reported to have contributed more than 1.4percent of the Gross Domestic Product
of the country. This is laudable considering that the movie industry which dates back to the pre-
independence era with the likes of late Chief Hubert Ogunde, Duro Ladipo, Ade Afolayan
having an assemblage of casts and crew- actors and camera men numbering dozens in stage play
tours called ‘Alarinjo’ which means travelling theatre. Sometimes forty to fifty persons including

23
their wives who were part of the casts will travel from one end of the South Western states up
north to stage their plays.

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