Project - The effect of rapid population increase on economic growth in Nigeria between the period of 1980-2014

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Project – The effect of rapid population increase on economic growth in Nigeria between the period of 1980-2014

Click here to Get this Complete Project Chapter 1-5

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

In the early twenty-first century, the world population had fluctuated around 6 billion, in which developing countries contributed to 80% of the total figure and mostly occur in Asian countries Pham, T. N and Tran, H. H (2011). The fact is, population growth and the economy always have a close relationship. Over periods, the arguments about positive and negative effects of population on economic growth and development are still complicated problems for most of the economists. One of these economists is Thomas R. Malthus who stated in his model in 1826, that the population level can reduce the output per capita because population increases at a geometrical rate while production rises at an arithmetic rate so that output growth rate cannot keep the same pace. Another famous economist is Robert M. Solow (1956) who unlike Malthus, focused on the term, ‘population growth rate’ instead of the ‘population level’. He stated that an increase in the population growth rate can decline the capital per worker as well as the steady-state output per worker. As a result, higher population growth can be detriment to productivity and thus, economic growth.

Moreover, the Nigerian economy over the years has been marred by periodic booms and bursts as reflected in her unsteady and unsustainable economic growth rates, which is not disconnected from her incessant political / ethnic tensions and instabilities, as well as population and macroeconomic mismanagement. Notwithstanding, Nigeria has remained an oil rich country, earning an estimated $2.2 million a day in oil revenue and the 12th largest oil producing nation in the world (World Bank, 2014). However, the atmosphere of economic and demographic mismanagement, instability and political tension has kept the country from achieving its potentials.

The World Bank Country Director for Nigeria using World Bank statistics stated that poverty per capita in Nigeria is at 62.6%, 50% of Nigeria’s 170 million population is unemployed and that at least 71% of Nigerian youths are unemployed bringing unemployment rate to 23.9% as at august 23, 2014. Although, there has been a recent review using a new calculation

methodology placing Nigeria’s unemployment rate at 6.4% of the nation’s 72 million labour force population (Kale, Y. 2014). Furthermore, the World Bank also in 2014, ranked the country third poorest following India and China with first and second respectively. The agency showed that Nigeria

has a Human Poverty Index of 33.1%, with 7% of the world’s 1.2 billion poor persons as Nigerians. The World Bank also stated that more than 58 million of the population of Nigeria is rated ‘poor’ according to standard definitions. These discouraging indicators in the light of the fact that Nigeria

is oil rich and the 26^th largest economy in the world after re-basing, are grossly paradoxical and a clear case of what mainstream economists term “resource curse” with corruption and lack of adequate human capital development & empowerment most glaring.

Furthermore, it may be interesting to note that Nigeria’s population level is at 177 million people as at 2014 and having a growth rate of about 2% per annum. With this, it is strikingly revealing that we record birth rates of at least 3.2 million per year, two hundred and sixty-six thousand, six hundred and sixty seven (266,667) births per month, eight thousand eight hundred and eighty-nine (8,889) births per day, three hundred and seventy (370) birth per hour and six (6) births per minute (Author’s calculation).

However, there are also some optimist views that have stated that population growth can make a positive impact on economic growth. An example is Ahlburg, D. (1998) who believed that larger population can lead to

‘technology-pushed’ and ‘demand–pulled’ advantages. This is to say, that higher population growth can increase the needs for goods and boost the technological development. Therefore, it can increase the labour productivity, income per capita and living conditions all other things being equal. Also stating prima facie, if we focus on massive human capital development, empowerment and industrialization, then our already rapid population (which we can do little or nothing to reduce especially in the short run) will begin to yield more and more positive impacts on the economy. This is the underlying theme of this research work.

This research work therefore, focuses on analyzing the impact of population growth on the economy of Nigeria which is among Africa and Asian developing countries portrayed as one of the most critical situations in the world.

1.2 Statement of the Problem

Over the years, rapid population rate, which have obvious negative impacts on any nation’s economy, have starred grimly at the face of our country Nigeria. Hitherto, writers have emphasized the negative impacts of rapid population on economic growth which include: cancellation of average output of the economy by rapid population; low and stagnant average income; pressure on: agricultural land, food, employment creation, urban housing, space, standard of living, access to quality education, health facilities and other infrastructure; scarcities; economic hardship; malnutrition and high death rate. This provoked high death rate will in turn, balance-off the rapid population. This shows that there exists an inherent reverse mechanism in the long run. Unfortunately as Lord Keynes stated in 1923, ‘The long run is a misguide to current affairs. In the long run, we are all dead’.

Nevertheless, there are also far reaching implicit and explicit positive impacts of rapid population rate on the economy which have been relegated to the background. They include among others: unprecedented opportunity for economic and social development through innovations. This will motivate, human progress, economies of scale or a greater output per unit of input made possible by larger market and by a larger and more specialized labour force, pressure on increased family or community size causing people to work harder and motivating individuals and organizations to develop & adopt innovations or improved method of production (Metras & Weeks, 1994 in Mokgadi, R. L 2004, “Consequences of Rapid population Growth in

Developing Countries: A case of South Africa)”. However, there are certain problems to be answered such as, ‘Is population growth beneficial or detrimental to economic growth?’

1.3 Research Questions

Based on the objectives of this study clearly stated in section 1.4 below, the following research questions have been generated and expected to be answered at the end of this work.

Is there any impact of human capital development on economic growth in Nigeria?
What is the nature of relationship between population growth rate in Nigeria and economic growth?

1.4 Objectives of the Study

The main objective of the study is to evaluate the effect of rapid population increase on economic growth in Nigeria between the period of 1980-2014. Specifically, the study aim to:

Evaluate the impact of human capital development on the economic growth of Nigeria.
Determine the relationship between population growth rate and economic growth of Nigeria

1.5 Research Hypothesis

H₀: There is no significance in relationship between population and economic growth.

1.6 Significance of the Study

This study is intended to be very beneficial to first, our valued policy makers and of course, individuals with some quest for knowledge especially in the field of Economics, Political Science and other disciplines close with the efficacy to effect change in our polity. With the availability of a reliable time series data which has posed a big problem for past researchers, and focus on the unpopular view of demographic trend, policy makers are now better equipped to channel robust policies towards making our vast population advantageous for economic growth and development.

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Project – The effect of rapid population increase on economic growth in Nigeria between the period of 1980-2014

Project – The effect of rapid population increase on economic growth in Nigeria between the period of 1980-2014

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