Economics

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ANALYSIS OF THE COSTS AND BENEFITS OF A COMMON CURRENCY FOR THE SECOND WEST AFRICAN MONETARY ZONE
(2012-05) OKAFOR, H. O.
The second West African Monetary Zone (WAMZ), comprising The Gambia, Ghana, Guinea, Nigeria and Sierra Leone, was initiated in 1999 to fast-track the common monetary policy objective of the Economic Community of West African States (ECOWAS). However, uncertainties about the economic implications of the policy have been major obstacles to regional integration. Economists and policymakers are yet to agree on the potential costs and benefits of a common currency. Available empirical studies on WAMZ focused separately on the elements of costs and benefits of monetary union, which makes them limited in scope. This study, therefore, offered an integrated analysis of the costs and benefits of a common currency in WAMZ spanning 1980 to 2009. A two-step methodological procedure, based on the Optimum Currency Area (OCA) and the New Optimum Currency Area (NOCA) frameworks, were used to estimate the costs and benefits of monetary union in WAMZ. First, behavioural models, capturing the elements of costs (asymmetric shocks, loss of seigniorage and fiscal policy distortion) and benefits (trade creation, financial integration effects and policy coordination gains), were estimated with the Vector Auto-regression (VAR), Error Correction Model (ECM) for each of the sampled countries and panel estimation techniques for the group. Second, weighted composite indices were constructed for the costs and benefits indicators using the parameter estimates obtained from the various estimation techniques. The VAR impulse response and forecast error methods were employed to estimate countries’ response to shocks. Robustness tests, including data calibration for the net-benefit using a money metric baseline and ranking, were carried out to permit comparison of results among countries. Fiscal policy distortion and loss of seigniorage were the main cost indicators of monetary union in the zone rather than asymmetric shocks. The share of fiscal policy distortion stood at 72.4%, while loss of seigniorage contributed 18.4% to the costs of monetary union. Ghana recorded the highest costs of 36.0% for fiscal policy distortion and 65.0% for loss of seigniorage in the zone. The Gambia had the lowest seigniorage cost of 8.0%. Considerable variations existed among Sierra Leone, The Gambia and Nigeria as fiscal policy distortion accounted for 30.0%, 22.0% and 12.0%, respectively. Trade creation shared 89.0% of the total benefits for the zone. Policy coordination gains had the lowest share of 1.6% for the region. Trade creation gains ranged between 41.0% and 3.0% among the countries with Sierra Leone and Nigeria sharing the highest and lowest gains, respectively. The net-benefit of monetary union for the zone was potentially high with substantial variations among members. Sierra Leone and Nigeria had the highest and lowest net-benefit respectively from the ranking scale. Trade creation accounted for a substantial proportion of the potential benefits of common currency in WAMZ. However, fiscal policy distortion constitutes serious policy challenge to monetary union in the zone. Dealing with this challenge may require in the short-run, systematic macroeconomic adjustments to improve fiscal-monetary policy interactions in order to enhance the benefits of monetary union in the zone.
ANALYSIS OF THE COSTS AND BENEFITS OF A COMMON CURRENCY FOR THE SECOND WEST AFRICAN MONETARY ZONE
(2012-05) OKAFOR, Harrison Oluchukwu
The second West African Monetary Zone (WAMZ), comprising The Gambia, Ghana, Guinea, Nigeria and Sierra Leone, was initiated in 1999 to fast-track the common monetary policy objective of the Economic Community of West African States (ECOWAS). However, uncertainties about the economic implications of the policy have been major obstacles to regional integration. Economists and policymakers are yet to agree on the potential costs and benefits of a common currency. Available empirical studies on WAMZ focused separately on the elements of costs and benefits of monetary union, which makes them limited in scope. This study, therefore, offered an integrated analysis of the costs and benefits of a common currency in WAMZ spanning 1980 to 2009. A two-step methodological procedure, based on the Optimum Currency Area (OCA) and the New Optimum Currency Area (NOCA) frameworks, were used to estimate the costs and benefits of monetary union in WAMZ. First, behavioural models, capturing the elements of costs (asymmetric shocks, loss of seigniorage and fiscal policy distortion) and benefits (trade creation, financial integration effects and policy coordination gains), were estimated with the Vector Auto-regression (VAR), Error Correction Model (ECM) for each of the sampled countries and panel estimation techniques for the group. Second, weighted composite indices were constructed for the costs and benefits indicators using the parameter estimates obtained from the various estimation techniques. The VAR impulse response and forecast error methods were employed to estimate countries‟ response to shocks. Robustness tests, including data calibration for the net-benefit using a money metric baseline and ranking, were carried out to permit comparison of results among countries. Fiscal policy distortion and loss of seigniorage were the main cost indicators of monetary union in the zone rather than asymmetric shocks. The share of fiscal policy distortion stood at 72.4%, while loss of seigniorage contributed 18.4% to the costs of monetary union. Ghana recorded the highest costs of 36.0% for fiscal policy distortion and 65.0% for loss of seigniorage in the zone. The Gambia had the lowest seigniorage cost of 8.0%. Considerable variations existed among Sierra Leone, The Gambia and Nigeria as fiscal policy distortion accounted for 30.0%, 22.0% and 12.0%, respectively. Trade creation shared 89.0% of the total benefits for the zone. Policy coordination gains had the lowest share of 1.6% for the region. Trade creation gains ranged between 41.0% and 3.0% among the countries with Sierra Leone and Nigeria sharing the highest UNIVERSITY OF IBADAN LIBRARY iii and lowest gains, respectively. The net-benefit of monetary union for the zone was potentially high with substantial variations among members. Sierra Leone and Nigeria had the highest and lowest net-benefit respectively from the ranking scale. Trade creation accounted for a substantial proportion of the potential benefits of common currency in WAMZ. However, fiscal policy distortion constitutes serious policy challenge to monetary union in the zone. Dealing with this challenge may require in the short-run, systematic macroeconomic adjustments to improve fiscal-monetary policy interactions in order to enhance the benefits of monetary union in the zone. Key words: Optimum Currency Area, Behavioural models, Seigniorage, Fiscal policy distortion, Asymmetric shocks. Word count: 489
ANALYSIS OF THE IMPACT OF ECONOMIC AND POLITICAL INSTITUTIONS ON ECONOMIC GROWTH IN AFRICA
(2012-10) KILISHI, A. A.
The importance of economic and political institutions to economic growth has been demonstrated in the literature. However, little is known on how such institutions impact on growth and what determine the quality of economic institutions in Africa. Therefore, this study was aimed at examining the impact of economic and political institutions on growth as well as the impact of political transition on the quality of economic institutions. Game theory was used to develop a political economy model that incorporated institutional variables into the neoclassical Solow growth model. This model described the interactions among political power (de-jure and de-facto powers), institutions and economic growth. The model was empirically tested using data drawn from 29 African countries covering the period 1996 to 2009. The selection of countries was guided by availability of data and they spread across the continent. Indexes of economic and political institutions were computed from the World Bank’s governance indicators and the Polity IV database. The Ordinary Least Squares (OLS), fixed effect and Generalized Methods of Moments (GMM) techniques were used to test the impact of economic and political institutions on economic growth. A treatment analysis was also employed to test the impact of political transition on the quality of economic institutions and growth. Strong economic and political institutions had significant and positive impacts on economic growth. Countries with higher institutional qualities are found to be growing faster while those with lower quality grow slower. Generally, a 1.00% increase in the indexes of economic and political institutions led to 0.44% and 0.55% increase in economic growth respectively. However, the impacts of the two indexes differed across different sub-regions. The impact of economic institutions on growth was highest in the Southern African countries with a coefficient of 0.78% and lowest in West Africa with a coefficient of 0.20%. An increase in the index of political institution had the highest impact in the Central African countries and lowest in North Africa. Specifically, political institution was found to aid growth in Central Africa by 1.19% while it slowed down growth in North Africa by 0.49%. Countries that transited to democracy recorded 1.28% improvement in their quality of economic institutions and they grew about 0.51% faster than their pre-transition era. However, for countries where political elites persisted in power after the transition, the quality of economic institutions declined by 1.10% and they experienced a lower growth rate of 0.16%. Improvement in the quality economic institutions promote growth. Competitiveness of political system improved the quality of economic institutions and growth, while elites’ persistence in power reduced the two. Economic growth in Africa can be improved by building and strengthening institutions as well as promoting competitive democracy.
AN APPLICATION OF GOAL PROGRAMMING TO ACADEMIC RESOURCE ALLOCATION PLANNING
(1982-12) SOYIBO, A.
Since the last decade, universities in Nigeria have been experiencing a progressive decline in required inputs, like funds, materials and academic staff. In spite of this, there has been a continuing rise in the demand for their services, as shown by rising student enrolment figures (Nigeria, 1981). Confronted with such a problem, universities require more than ever before, formal decision models for planning the allocation of their scarce resources as efficiently as possible. This study applies goal programming for planning the academic resource allocation--a major input--of the University of Ibadan for 1982/83-l986/87. The goal programming model used modifies that of Schroeder (1974) by defining explicitly a student enrolment goal and introducing an academic staff level goal, which is designed to cater for academic staff advancement, at least according to the historical rate in each faculty. Furthermore, it redefines the academic rank distribution goal to incorporate the controversial 30%-40%-30% rank distribution ratios introduced in 1981. The study seeks principally to determine the distribution of academic staff by rank, in each faculty/college, over a five-year period and recommend the planning implications of such a distribution. In addition, it attempts to find the effects of dropping the controversial rank distribution goal on the model solution. The model was solved using the Revised Simplex Goal Programming Algorithm developed by Kang (l980) on an I.B.M. VM 370 computer in the University of Nebraska-Lincoln, U.S.A. The analysis of the model solution: suggests that from a purely theoretical point of view, it is desirable to use a rank distribution goal, for an optimization model of the type used in the study; otherwise, the model will select least cost allocation alternatives only and such a solution cannot be used effectively for planning. However, the distributional ratios to be used should not be rigid like the controversial ones of 1981, but should reflect the historical advancement rates in the respective faculties. The result of solving such a model should be, used for indicative planning only; -confirms the fear that the use of fixed rank distribution ratios might inhibit promotion rate; -indicates that the Faculty of Agriculture and Forestry appears to be operating very much below the minimum level of academic staff requirement to meet the student enrolment goal of that faculty as of now; -suggests that by the beginning of 1986/87, the University of Ibadan will require a minimum of 1,133 academic staff of various ranks to meet its student enrolment goal. This is over 60% above the minimum requirement at the beginning of 1982/83; -recommends that the University should pursue a vigorous Staff Development Programme in which the training of the best of its graduates--through a type of Junior Fellowship Programme--will be the core, as one approach of augmenting the supply of academic staff normally obtained through recruitment; -corroborates the findings of Kang (1980) that CPU time of the Revised Simplex Goal Programming Algorithm, tends to increase with increasing negative deviational variables in the objective function.
Banking and Insurance
(Federal Ministry of Information, Abuja, Nigeria, 2014) Lawanson, A. O.
Banking and Insurance
(Federal Ministry of Information, Abuja, Nigeria, 2014) Lawanson, A. O.
Comparative analysis of non-medical consumption pattern between insured and uninsured people in Ekiti State, Nigeria
(2017) Adeyemi, F. O.; Lawanson, A. O.
Health Insurance (HI) brings about welfare improvement through improved health status and maintenance of non-medical consumption by ensuring that medical expenditures are smoothened over time. Notwithstanding, available data show that less than 4% of the Nigerian households are covered by national health insurance scheme.This implies weak ability to smoothen consumption over time whenever there is ailment. This paper aims at studying and evaluating the spillover effect of health insurance on non-medical consumption in Ekiti state. A propensity score matching estimation model was adopted to 1500 households across Ekiti state. This is the mean effect of an intervention through the mean difference in the outcomes of the treated and the control groups. The mean expenditure on non-medical consumption was N6947.03. In addition to that, the sign of the coefficient of the effect of health insurance on non-medical consumption is positive, showing that health insurance increases expenditure of insured households on non-medical consumption. Having recognized that insured households can be financially protected against unforeseen medical bill, federal government should encourage the expansion of health insurance by encouraging state government, local government and private sector to enroll their employees in health insurance programme. The paper concludes that health insurance is consumption increasing and therefore be expended to more people at local government areas to further redistribute income from the healthy to the sick.
Consumption and income over the lifecycle in Nigeria
(Union for African Population Studies, 2011-04) Olaniyan, O.; Soyibo, A.; Lawanson, A. O.
This paper utilises National Transfer Accounts framework to estimate age profiles of consumption and income over the lifecycle in order to determine actual period of dependency in Nigeria. The paper quantifies inter-age monetary flows of consumption and labour income and subsequent economic lifecycle deficit and the implications this will have for social policy and human capital development. The results indicate that given the profiles of consumption and income over the lifecycle in Nigeria, child dependency is for the first 33 years of life while old-age dependency occurs from 63 years upwards. The period of lifecycle surplus span 30 years from 33-63 years. The structure of consumption and income flows reveals that Nigeria has a lifecycle deficit of N3.5 trillion in 2004. Since the population is highly skewed towards children, inter-generational flows are heavily skewed downwards. The deficits must then be covered through age reallocations of transfers and asset income.
CORPORATE GOVERNANCE AND DIVIDEND PAYOUTS IN NIGERIA
(2015-01) ODELEYE, A. T.
Corporate governance (CG) safeguards shareholders’ portfolios and ensures optimal returns in terms of dividend payouts (DPs) on investment. The association between CG and DPs could be significant in relation to risk exposure, operational and financing activities across firms and sectors. Also, the differential dividend payment between large and small firms might be due to economies of scale enjoyed by large firms. The relationship between CG and DPs has been well researched, however; the role of firm size and sectoral classification on these two has not been given adequate consideration in the literature. This study, therefore, examined the moderating effects of firm size and sectoral classification of CG on DPs in Nigeria. Agency theory provided the basis for the articulation of the model which captured the effects of CG on DPs. Governance indicators (number of independent directors, institutional investors, board size and managerial shareholding) and dividend per share of 101 non-financial listed companies in Nigeria from 1995-2012 were compiled from annual reports and statements of accounts of the firms; as well as various issues of the Nigerian Stock Exchange Factbook. The analysis was conducted at aggregate, size and sectoral levels. The firms were categorised into small (38) and large (63) based on their total assets. A sample was taken from agriculture (6), automobile (6), building (8), brewery (6), chemical/paints (9), conglomerates (9), construction (6), food and beverages, (17), healthcare (11), industrial/domestic products (10), petroleum (9) and printing/publishing (4) sub-sectors. The system generalised method of moments estimation technique that included both level and difference equations was employed. It accommodates firm level characteristics and addresses autocorrelation bias. Diagnostic tests were carried out to ascertain the robustness of the parameter estimates. All the estimates were validated at p = 0.05. A one percent increase in the number of independent directors and shareholding of institutional investors generated 68.0% and 0.9% increase in DPs respectively. The DPs rose by 10.7%, 8.0% and 0.05% given a percentage increase in profits after tax, gross earnings and previous dividend, respectively. Conversely, DPs declined by a 23.0% with a one percent increase in managerial shareholding. The relationship between CG and DPs was positive in large firms and negative in small firms. This relationship was positive in only conglomerate (18.3%), building materials (5.01%), petroleum and marketing (3.8%), brewery (2.9%), food and beverages (1.09%) and automobile and tyre (0.22%) sub-sectors respectively, while it is negative in healthcare (-0.04%), industrial and domestic products (-0.11%), chemical and paints (-0.11%), printing and publishing (-0.5%), construction (-2.8%) and agriculture (-7.01%) sub-sectors respectively. Corporate governance influence on dividend payouts differed by size of firm and sectors of operation. More independent directors should be on the boards of corporate firms and the proportion of institutional shareholding should also be increased to improve monitoring.
Cost burden of malaria: evidence from Nigeria
(2016-08) Osakede, U. A.; Lawanson, A. O.
This paper provides findings on cost burden of malaria in Nigeria. Cost computations were extrapolated to monthly income fraction and GDP lost to the illness. Results of the study are shown across different employment groups. Computations for indirect and direct costs were conducted using the Human capital and Bottom up approach respectively. The results show that one in two persons employed in the labour force will experience loss in labour contribution as a result of malaria with indirect cost of about N5,532.59($37.16) and N4,828.73 ($32.43) per person per day for the patient and care giver, respectively. Individuals spend approximately N2,730.46($18.34) on the average for treatment of one bout of the illness which translates to approximately 3% of monthly income. Overall, indirect and direct costs related to one episode of malaria in Nigeria sum up to approximately N1, 906.08 billion ($12,801.07 million) implying about 8% of GDP. GDP fraction lost to malaria is higher for the informal sector particularly self-employment in agriculture. Strategies to enhance welfare, labour contributions and economic output in Nigeria should focus on adequate measures to reduce malaria prevalence or complete eradication.
Cost-effectiveness analysis of mectizan treatment programme for onchocerciasis control: operational experiences in two district of Southern Nigeria
(Dept. of Physiology, College of Medicine of the University of Lagos, Lagos, 2009) Osungbade, K. O.; Olumide, E. A. A.; Lawanson, A. O.; Asuzu, M. C.
Objectives: This study analyze the operational costs of two Mectizan treatment strategies in relation to their effectiveness. Methods: The study was conducted in 24 communities located in Irewole and Egbeda districts of Osun and Oyo State, Nigeria respectively. Cost-effectiveness analysis included retrospective analysis of cost of treatment, review of records of distributors, estimation of overall cost-effectiveness ratio of treatment and distribution, calculation of mean cost-effectiveness ratios and statistical comparison of the mean cost-effectiveness ratios. Results: Overall cost of treatment per person through mobile distribution was N27.39 (USD1.16) while the corresponding overall cost through community-directed distribution was N14.35 (USD0.61). Overall cost of distribution per tablet through mobile distribution was N20.97 (USD0.89) while the corresponding overall cost through community-directed distribution was N8.39 (USD0.36). The difference between the mean cost-effectiveness ratios for treatments through mobile distribution, 56.79, and community directed distribution, 32,53, was not statistically significant (p=0.120265). Similarly, the difference between the mean cost-effectiveness ratios for distribution of tablets through mobile distribution, 40.83, and community-directed distribution, 19.17, was not statistically significant (p=0.167249). Treatment coverages were 59% and 80%, and 2,376 and 4,148 tablets were respectlveIy distributed, Conclusion: Distribution of Mectizan tablets by community-directed distributors was more cost-effective than by mobile health staff, but the differences in cost ere not statistically significant. However, this could ensure self-reIiance and sustainability of treatment programmes, which are prerequisites for decision making on treatment strategies.
A DEMAND ANALYSIS FOR CEMENT IN NIGERIA
(1970) ADEJUGBE, M. O. A.
This study was motivated by the fact that although there are several works on the supply of cement in Nigeria, the demand aspect has not been examined in detail and quantitatively. This study attempts to estimate the price and income elasticities of demand for both imported cement and for aggregate demand for cement in Nigeria. It also attempts to assess the impact of custom tariff on imported cement and appraise the import substitution effects of the domestic manufacturing of cement in Nigeria. And finally, the thesis attempts to show the trend of cement consumption in Nigeria between 1948 - 66, the annual rate of growth of consumption during this period as well as the future time path of this rate of growth. The market analysis in chapter two deals with the supply and demand determinants and the pricing policies of the firms. The market structure is also analyzed and the results of the carefully managed government foreign policy in respect of importation of cement. An appropriate model is postulated in chapter three to grapple with the problem of the demand equations. The theoretical framework is also discussed in this chapter. Chapter four is devoted to the discussion of the results of the estimated demand equations. The least squares method is used to estimate the parameters of the equations. Prom the results it is concluded that cement is price inelastic; both aggregate and imported cement exhibit low and shifting price elasticity. Aggregate demand for cement is "income" elastic. The income elasticity for imported cement is however low, this is a sign of increasing import substitution. The impact of tariff on imported cement is somewhat low when measured in terms of elasticity. The trend of cement consumption during the reference period shows that cement consumption has been growing at a decreasing rate. The rate of growth tends to about 2% with time though the level of consumption grows infinitely large with time.
A DEMAND ANALYSIS FOR CEMENT IN NIGERIA
(1970) ADEJUGBE, M. O. A.
This study was motivated by the fact that although there are several works on the supply of cement in Nigeria, the demand aspect has not been examined in detail and quantitatively. This study attempts to estimate the price and income elasticities of demand for both imported cement and for aggregate demand for cement in Nigeria. It also attempts to assess the impact of custom tariff on imported cement and appraise the import substitution effects of the domestic manufacturing of cement in Nigeria. And finally, the thesis attempts to show the trend of cement consumption in Nigeria between 1948 - 66, the annual rate of growth of consumption during this period as well as the future time path of this rate of growth. The market analysis in chapter two deals with the supply and demand determinants and the pricing policies of the firms. The market structure is also analyzed and the results of the carefully managed government foreign policy in respect of importation of cement. An appropriate model is postulated in chapter three to grapple with the problem of the demand equations. The theoretical framework is also discussed in this chapter. Chapter four is devoted to the discussion of the results of the estimated demand equations. The least squares method is used to estimate the parameters of the equations. Prom the results it is concluded that cement is price inelastic; both aggregate and imported cement exhibit low and shifting price elasticity. Aggregate demand for cement is "income" elastic. The income elasticity for imported cement is however low, this is a sign of increasing import substitution. The impact of tariff on imported cement is somewhat low when measured in terms of elasticity. The trend of cement consumption during the reference period shows that cement consumption has been growing at a decreasing rate. The rate of growth tends to about 2% with time though the level of consumption grows infinitely large with time.
THE DEMAND FOR CIGARETTES IN NIGERIA, 1950 - 1971; AN ECONOMETRIC STUDY
(1973) ADIKIBI, O. T.
Cigarette, besides being an important source of Excise tax revenue to many countries, has interesting theoretical implications mainly because of the very peculiar consumer needs it satisfies and because it has no exact direct substitute, except substitution among the different brands that exist. Over the years, the consumption of cigarettes in Nigeria has increased remarkably despite all the medical, social and religious campaigns against smoking. This study attempts at explaining the observed variations in the National consumption of cigarettes within the period 1950-71 as influenced by some variables, the strength of which the study tries to measure by applying econometric methods. The variables considered are economic and demographic factors; the economic factors include income and prices while the demographic variable is changes in the proportion of smokers in the population. The study therefore estimates the elasticities of demand for cigarette with respect to income, average price of cigarettes, price index of all other commodities and the demographic factor. The single equation model is adopted to analyse idle annual time- series used in the study. National aggregates as well as per capita data formulations were tested. For the dependent variable (i.e. quantity of cigarettes consumed) aggregation logically means the assumption that cigarettes are homogeneous. The function adopted is non-linear in the original data but linearized in logarithms, the parameters of which were derived by least squares. Besides these other variables, a war-year dummy was introduced in the function to take care of "erractic factors" which affected the consumption of cigarettes during the Nigerian civil-war period, 1967-70. The analysis was carried out on two levels; the static and the dynamic approaches. While in the former the current value of the independent variables influenced the current value of the dependent variable, in the latter, a lagged variable (the quantity variable was lagged) was introduced into the function explicitly. The latter analysis - i.e. the dynamic approach - was applied to test the habit- persistence hypothesis. The results obtained in the study are: (a) the elasticities of demand with respect to income and an average of cigarette prices are low though the income elasticity is comparatively higher. In both cases none was up to 0.7. The price elasticity was particularly low, it was under 0.4. (b) the cross elasticity of demand 'with respect to the price of all other commodities v/as positive and nearer 2 than 1. In other words, it was far greater than unity and thus tends to indicate that consumers were more sensitive to changes in the prices of other commodities than to cigarette prices. (c) 'population', perhaps the changes in the proportion of smokers to non-smokers or the extension of the smoking habit to -the women and members of the lower age group, is a significant factor accounting partly for variations in the National consumption of cigarettes. (d) the habit-persistence hypothesis was supported by the results of this study, that is, the more a person ha3 consumed cigarettes in the past, the more he will consume currently. The estimated "coefficient of adjustment' was about 0.86 which indicates a speedy adjustment of consumption to changes in prices and income. (e) the dummy variable shows positive sign which shows that the National consumption of cigarettes increased during the civil-war despite the temporary loss of the Eastern market. It was suggested from the above result that during major political upheavals the consumption of cigarettes will increase ceteris-paribus. This increase might have been due partly, to the high tension and depressive mood that engulfed the country and, of course, the military consumption. In conclusion, the economic and policy implications of the results were discussed. To the Government, cigarette is one of the products to tax to raise revenue. To the firms engaged in the Tobacco Industry, it might be profitable to pursue a relatively stable retail price policy in view of the high sensitivity of consumers to changes in the prices of other commodities.
Demographic transition, demographic dividend and economic growth in Nigeria
(Union for African Population Studies, 2012-11) Olaniyan, O.; Soyibo, A.; Lawanson, A. O.
Changes in age structure that results from demographic transition have economic consequences. This paper identifies the period of potential window of opportunity or demographic dividends created by Nigeria’s demographic transition. This is done by simulating the period of the demographic window of opportunity in Nigeria. In a simulation covering 1950 – 2050 our results reveal that Nigeria entered the window of opportunity in 2003 and will last beyond year 2050. The highest benefit will accrue in years 2032 and 2033 when the dividend can account for more than 10% of the growth of GDP per capita even if the current performance scenario continues to exist. However, the paper notes that the demographic dividend is not automatically realized and Nigeria needs to embark on strategies that will develop her human capital and position her towards not only capturing the first dividend but the second dividend as well.
DETERMINANTS OF INTERNATIONAL DEMAND FOR TOURISM IN NIGERIA
(2014-11) ISIAKA, M. A.
The average international tourists arrival per thousand populations for the period 2000 to 2009 was 7 in Nigeria compared to 22 in Ghana. The major sources of these receipts were business tourists from France, United Kingdom and United State of America. Government efforts at increasing international tourism demand as an alternative source of non-oil revenue is yet to boost the country’s tourist arrivals. Previous studies have investigated the economic potential of Nigeria’s tourism, but paid little or no attention to explaining the factors responsible for the low demand. This study, therefore, examined the determinants of international demand for business and holiday tourism in Nigeria. The Gorman-Lancaster demand framework was used to derive the international business and holiday tourism demand models. The independent variables were prices, risks and infrastructure, in Nigeria and competitor countries, as well as tourists’ income. The competitor countries were Ghana, Benin, the Gambia and Togo with competitive weight of 27.7%, 25.0%. 25.0% and 22.2% respectively. The dependent variable was international tourist arrivals, which encompasses foreigners that visit Nigeria for a period between 1 day and 12 months, excluding transit passengers and foreigners in paid employment. Using quarterly data set for the period 2000Q1 to 2009Q4, panel fixed and random effects estimation techniques were utilised to estimate the parameters of the business and holiday tourism demand models from major origin countries considered; France, UK and US. The Hausman and Breuch-Pagan diagnostic tests were carried out to ascertain the efficacy of the model and the reliability of the results. The results were based on panel random effects model as supported by the diagnostic tests. All the variables were significant, for business and holiday tourism, at 1.0% p-value except prices which were not significant in the business tourism model. A 10.0% increase in income of tourist from UK was associated with 3.3% increase in the business tourism model and 0.5% increase in holiday tourism. An increase of 10.0% in risk level in Nigeria induced a 20.7% decrease in holiday tourism from US while a 10.0% increase in competitor countries’ risks led to an increase of 36.0% in business tourism from France. In the case of holiday tourism from the three origin countries, a 10.0% increase in prices in Nigeria was associated with a decrease of 0.4% in demand while a 10.0% increase in competitor countries’ prices was associated with a 0.7% increase. Irrespective of tourism types, a 10.0% increase in the Nigeria’s tourism infrastructure was associated with a 0.1% increase in demand from the three origin countries while a 10.0% increase in competitor countries’ infrastructure induced a decrease of 0.4%, 0.6% and 0.2% in tourism demand from UK, US and France, respectively. Improvements in tourism infrastructures and decrease in price level relative to competitor countries’ infrastructure and price levels significantly enhanced tourist inflow to Nigeria. Thus, the effectiveness of tourism policy in Nigeria is conditional on actions of other competitors’ countries. Nigeria should adopt segmented tourism marketing strategy in which high income groups in UK are targeted for business tourism.
DETERMINANTS OF INTRA-INDUSTRY TRADE BETWEEN ECOWAS AND EUROPEAN UNION
(2014-11) ARAWOMO, D. F.
Economic Community of West African States‘ (ECOWAS) total trade has reflected deficit in the last two decades. It was $1.42 billion in 1990, increased to $3.32 billion in 2000 and $6.24 billion in 2009. This trade imbalance in the ECOWAS region can be traced to the dominance of primary over manufactured products in the region‘s exports. However, the imbalance can be reversed with trade in similar products that is Intra-Industry Trade (IIT) between the region and her highest trade partner, (European Union (EU)). Empirical studies have examined IIT among developed countries (horizontal-IIT), while adequate attention has not been paid to it between developing and developed countries (vertical-IIT). This study, therefore, examined the extent and determinants of IIT in both final and intermediate products between ECOWAS and EU. The Augmented Gravity Model, based on Flam-Helpman‘s North-South trade framework, was estimated to determine the factors affecting vertical-IIT between ECOWAS and EU. The model considered income distribution in partner countries, factor endowment, product differentiation, Foreign Direct Investment (FDI), relative country size, weighted distance, capital-labour ratio, exchange rate and tariff as determinants of vertical-IIT. The Grubel-Lloyd index, bounded by 0 and 1, was used to compute the dependent variable (extent of vertical-IIT). A closer to one Grubel-Lloyd index implied higher level of IIT. Data were collected from the World Integrated Trade Solution and World Development Indicators from 2001 to 2011. Fractional Logit Regression technique that took note of the nature of the dependent variable was estimated while controlling for heteroscedasticity. The estimations were done for both final and intermediate products. Hausman-test and LM-test were used to confirm the robustness of the model and statistical significance at P≤0.05. Vertical-IIT in both final and intermediate products between ECOWAS and EU were low. Average vertical-IIT in final products between the two regions increased from 0.1 in 2001 to 0.3 in 2011, while that of vertical-IIT in intermediate products increased from 0.1 in 2001 to 0.2 in 2011. Income distribution, factor endowment, products differentiation and FDI improved vertical-IIT in final products. Specifically, if these factors were increased by UNIVERSITY OF IBADAN iii 1.0%, vertical-IIT in final products would improve by 10.0% 4.0%, 4.0% and 11.1%, respectively. However, the coefficients of the weighted distance (-0.02) and tariff (-0.006) were indicative of inverse change in vertical-IIT in final products by 2.0% and 0.06% in response to 1.0% change in the two factors respectively. For the vertical-IIT in intermediate products, 1.0% change in factor endowment, product differentiation, income distribution and relative country size improved vertical-IIT by 5.9%, 2.2%, 4.1%, and 3.7%, respectively. The coefficients of FDI (0.19) implied that vertical-IIT in intermediate products increased by 19.0% in response to 1.0% change in FDI. Product differentiation and foreign direct investment have positive and significant impact on intra-industry trade in final and intermediate products between Economic Community of West African States and European Union. It is important, therefore, to attract more multinational firms into the region. Efforts should also be made to improve on the level of products differentiation in the region.
DETERMINANTS OF INTRA-INDUSTRY TRADE BETWEEN ECOWAS AND EUROPEAN UNION
(2014-11) ARAWOMO, DAMILOLA FELIX
Economic Community of West African States‘ (ECOWAS) total trade has reflected deficit in the last two decades. It was $1.42 billion in 1990, increased to $3.32 billion in 2000 and $6.24 billion in 2009. This trade imbalance in the ECOWAS region can be traced to the dominance of primary over manufactured products in the region‘s exports. However, the imbalance can be reversed with trade in similar products that is Intra-Industry Trade (IIT) between the region and her highest trade partner, (European Union (EU)). Empirical studies have examined IIT among developed countries (horizontal-IIT), while adequate attention has not been paid to it between developing and developed countries (vertical-IIT). This study, therefore, examined the extent and determinants of IIT in both final and intermediate products between ECOWAS and EU. The Augmented Gravity Model, based on Flam-Helpman‘s North-South trade framework, was estimated to determine the factors affecting vertical-IIT between ECOWAS and EU. The model considered income distribution in partner countries, factor endowment, product differentiation, Foreign Direct Investment (FDI), relative country size, weighted distance, capital-labour ratio, exchange rate and tariff as determinants of vertical-IIT. The Grubel-Lloyd index, bounded by 0 and 1, was used to compute the dependent variable (extent of vertical-IIT). A closer to one Grubel-Lloyd index implied higher level of IIT. Data were collected from the World Integrated Trade Solution and World Development Indicators from 2001 to 2011. Fractional Logit Regression technique that took note of the nature of the dependent variable was estimated while controlling for heteroscedasticity. The estimations were done for both final and intermediate products. Hausman-test and LM-test were used to confirm the robustness of the model and statistical significance at P≤0.05. Vertical-IIT in both final and intermediate products between ECOWAS and EU were low. Average vertical-IIT in final products between the two regions increased from 0.1 in 2001 to 0.3 in 2011, while that of vertical-IIT in intermediate products increased from 0.1 in 2001 to 0.2 in 2011. Income distribution, factor endowment, products differentiation and FDI improved vertical-IIT in final products. Specifically, if these factors were increased by UNIVERSITY OF IBADAN LIBRARY iii 1.0%, vertical-IIT in final products would improve by 10.0% 4.0%, 4.0% and 11.1%, respectively. However, the coefficients of the weighted distance (-0.02) and tariff (-0.006) were indicative of inverse change in vertical-IIT in final products by 2.0% and 0.06% in response to 1.0% change in the two factors respectively. For the vertical-IIT in intermediate products, 1.0% change in factor endowment, product differentiation, income distribution and relative country size improved vertical-IIT by 5.9%, 2.2%, 4.1%, and 3.7%, respectively. The coefficients of FDI (0.19) implied that vertical-IIT in intermediate products increased by 19.0% in response to 1.0% change in FDI. Product differentiation and foreign direct investment have positive and significant impact on intra-industry trade in final and intermediate products between Economic Community of West African States and European Union. It is important, therefore, to attract more multinational firms into the region. Efforts should also be made to improve on the level of products differentiation in the region. Keywords: Intra-industry trade, Fractional logit model, Intermediate products, products differentiation. Word count: 495
DETERMINANTS OF RESIDENTIAL HOUSING CHOICE IN LAGOS STATE, NIGERIA
(2011-09) AJIDE, K. B.
The developing world is changing from one of rural villages to that of urban dwellings. The population of Lagos, which stood at 270,000 in 1952/53, rose to 5.69 million in 1991 and was estimated to be 18 million in 2010. This has created excessive demand for housing. Available statistics on housing production showed that between 1974 and 1989, 11422 units of houses were produced. This number fell precipitously to 8162 units between 1994 and 2004. The estimated housing deficit for Lagos in 2010 was 5 million representing 28% of the estimated national housing deficit. The gap between housing delivery and housing demand, engendered by population growth, has necessitated competition and choice making from the available housing alternatives. The literature hardly takes adequate account of the economic and related factors influencing residential housing choice decisions in Third World cities. This study, therefore, investigated the socio-economic determinants of residential housing choice in Lagos, Nigeria. A multinomial logit model, based on the neoclassical consumption framework augmented by hedonic pricing approach, was used to determine the socio-economic determinants of residential housing choice. The specific variables considered were household income, housing price, household size, marital status, ethnicity, gender, and age. The model allowed for the classification of housing units as single-household, multi-household houses, a flat in a block of flats, duplexes, a room in the main building and squatters’ settlements, across high, medium and low density areas. It also has the advantage of comparing the various residential housing choices with the base category (multi-household houses). Cross-sectional data from 4,433 randomly selected rented dwellings across the 20 local government areas in Lagos were used. Diagnostic tests, the variance inflation factor and Box-Cox transformation were used to correct for multicollinearity and functional specification problems. Household income, housing price, household size, marital status and age were the main determinants of the residential housing choice of households. The effects of gender and ethnic variables were not statistically significant. Household income would increase preferences and probabilities for flats, duplexes and single household houses by 7.24, 4.87 and 3.23 times respectively over multi-household houses. The probabilities, however, decreased by 0.02 and 0.85 times for squatters’ settlements and a room in the main building relative to multi-household houses. Households preferences would increase for flats and duplexes by 4.58 and 3.50 times relative to multi-household houses when there is an increase in housing price. The probabilities for squatters’ settlements and a room in the main building are likely to fall by 0.33 and 0.47 times respectively relative to the base category. All these results were statistically significant at the 5.00% level. Other factors such as household size, marital status and age were also statistically significant at the 10.00% level across different residential density areas. Household income and housing price stood out prominently as the major determinants of residential housing choice in Lagos. Economic factors were more important than demographic variables across different residential density areas. Meeting residential needs would require policies aimed at improving incomes and setting appropriate housing prices.
AN ECONOMETRIC STUDY OF EXPENDITURE PATTERNS OF CONSUMERS IN SELECTED URBAN AREAS OF NIGERIA
(1972-02) ADAMU, S. O.
Optimum utilization of available statistical data is an objective which a country, particularly a developing one, should pursue. Adequate information about the structure of an economy is necessary for purposeful and meaningful planning, but a developing country lacks long statistical series that can make such information available. The objective of this study is to construct a simultaneous equation model of expenditure patterns of consumers based on the theory of consumer’s behavior; estimate parameters of the model; examine statistically various other factors, in addition to income, which affect consumption; and subsequently, with the help of certain assumptions on consumer preference orderings, derive income and price elasticities using Nigerian family budget data. The achievement of this objective depends on sound theoretical basis and appropriate data. These are covered in chapters 2, 3 and 4. The findings are discussed in chapters 5 and 6. These findings show: that different levels of factors like area and occupation affect average group expenditures (test between means) but the slopes of group expenditures with respect to total expenditures (the B’s) are not significantly affected by these factors; that areas effects are reasonably explained by occupational composition of areas; that the way estimates of B vary with family size confirms common indication of economics of scale particularly for commodities like food and transport: that because of broad classification of commodities, family composition cannot be meaningfully incorporated into the analysis: that two-way classification by income and family size is superior to one-way classification by income alone and; that with the aid of the leser-Frisch approach to assumptions concerning substitutability or complementarity between broadly classified commoditites, some kind of estimates of price elasticities is possible in addition to the usual income elasticities from family budget data.