Economics

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End date: 1999

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    Characteristics and behaviour of African factor markets and market institutions and their consequences for growth
    (Center for International Development, Harvard University, 1999-12) Adenikinju, A. F.; Oyeranti, O.
    This paper provides a detailed characterisation of the structure and behaviour of African factor markets and the institutions that impact on their operations. It shows that the African factor markets are imperfect and inefficient, thus constraining economic growth. The paper posits that for the current reform programmes to succeed, policy that enhances the efficiency and competitiveness of the African factor markets must be put in place.
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    Capitalisation of the Nigerian agricultural sector
    (Faculty of Social and Management Science, Bayero University, Kano, Nigeria, 1996) Dalhatu, D. M.; Oyeranti, O. A.
    Rationalising the dismal performance of the Nigerian agricultural sector on the score of low capital contents, a case is made for capital expansion and improvement in the small scale farming sector. Bearing in mind that there are differences in the demographic structures of the Nigerian rural economy, a diversified capitalisation approach is suggested, whereby land-saving would be reserved for thickly populated areas of the country, and the labour-saving type is for sparsely populated areas. The impact of this approach on the employment situation in the country may not be negative, rather, it may reintroduce an era of agriculture-led growth and development.
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    The impact of exchange rate instability on Nigerian non-oil exports
    (Faculty of Social and Management Science, Bayero University, Kano, Nigeria, 1996) Adenikinju, A. F.; Alabi, G. A.
    The paper attempts to estimate the impact of exchange rate uncertainty on Nigerian non-oil exports to some of her major trading partners. Although the study generates mixed results on the impact of exchange rate instability on volume of exports, in most of the estimates there is evidence to suggest that Nigeria’s non-oil exports may have been adversely affected. The general non-significance of the exchange rate variable in the estimates also shows that the recent depreciation of the naira exchange rate may not be the overriding factor in explaining the demand for her non-oil exports. This further contradicts the claim that adopting the path of macroeconometric adjustments followed by the East Asian countries would produce the same result in all other developing countries like Nigeria.
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    Import competition and Nigeria’s manufacturing sector: analysis of the employment effects of trade
    (African Journals Online, 1999-06) Bankole, A. S.; Lawanson, O. A.; Aminu, A.
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    EXCISE TAXATION IN NIGERIA
    (1970) ADEWUMI, M. O.
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    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.
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    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.
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    EXCHANGE RATE REGIMES AND ECONOMIC PERFORMANCE: A COMPARATIVE ANALYSIS
    (1993) ADEGBITE, E. O.
    In 1973 the industrial countries of the world abandoned the Bretton – Wood adjustable - peg exchange rate system as a means of international payments, and embraced a floating exchange rate system. By the beginning of the 1980's some developing countries of the world joined the league of exchange rate-floaters. It was thought that a floating exchange rate system is intrinsically superior to a fixed one because it not only insulates an economy from the events in other economies but also provides automatic adjustment of the trade balance and the balance of payments. From the mid 1980's however there have been calls in the industrial countries for yet a change in the international payments system from a floating one back to the Bretton-Woods fixed system (Marris, 1984; Dunn, 1983) or to some other variant of a fixed system. The questions then are - is there an ideal exchange rate regime? - is there reason to believe that a given exchange rate regime enhances the performance of an economy better than another? These questions form the focus of this study. There have been several positions in the literature. While Mundell-Fleming (1960, 1962) maintain that a floating exchange system is better than a fixed one if a country tends to depend more on monetary policy, but that a fixed exchange rate regime is ideal when fiscal policy is the major instrument employed in an economy, Sohmen (1965) maintained that a floating regime is superior whatever the more dominant economic policy (fiscal or monetary). Demberg (1970) maintained that the performance of an economy does not depend on the exchange rate regime per-se but rather on the optimal mix of fiscal and monetary policy. In the developing world there is fear that a floating exchange regime would aggravate rather than reduce the problems of inflation. debt-service burden and balance of payments disequilibrium (Olofin, Akinkugbe, Ajayi 1986). This study therefore attempted to find out which of the positions in the literature really holds in the case of developing African economies. To find answers to the issues raised we chose three African economies who had experienced both fixed and floating exchange rate systems, Namely, Ghana. Nigeria and Uganda. We built a model of each economy in the manner of Rhomberg (1964) and Tullio 1981. Each model has two versions. The shorter version has seven stochastic equations and tries to capture the economy under a fixed system, while the longer version added two additional stochastic equations to the first set and endogenizes exchange rates and interest rates as obtains under a floating exchange system. Utilizing quarterly data for 1977 to 1990 for Nigeria and Ghana, and for 1981 to 1990 for Uganda and employing the Ordinary Least Squares technique we estimated the shorter version of the model for the period 1977:1- 1990:4 and the longer version for the period 1986:4-1990:4 for Ghana and Nigeria. In the case of Uganda we estimated the longer version for the period 1981:1 to 1990:4 and the shorter version for 1987:2 to 1990:4. Beyond the statistical tests of the individual equations and parameters, we attempted to carry out rigorous tests of the validity of our model(s) through dynamic simulation. Thus we solved our model(s) using the Time Series Processor (TSP) econometric Software (Version 4.0) developed by Hall in 1983. When we solved each model using the Gauss -Seidel iterative technique, each converged for each endogenous variable and for each year demonstrating that each model is internally consistent. Utilizing different policy scenarios we tried to find out the effects of monetary, fiscal and exchange rate policy changes on internal sectors' macroaggregates of prices, real demand for money and money supply, as well as on external sector's macroaggregates of exports, imports and the trade balance. The results of our estimation exercises reveal that in Ghana a floating exchange rate system does not fuel inflation as is suggested by casual empiricism; rather it is the money supply that is the major propeller of domestic prices, given an exchange rate elasticity of domestic prices of 2% which is statistically insignificant at the 5% level and a money supply elasticity of domestic prices of 19% that is statistically significant at the 5% level. In Uganda there is a remarkable pass through from nominal exchange rates onto prices which contradicts Elbadawi's (1990) position, that it is not nominal exchange rates that fuel inflation in Uganda but fiscal deficits. The exchange rate elasticity of domestic prices in Uganda is 11% and this is statistically significant at the 5% level. However even in Uganda, nominal money supply and nominal rates of interest proved to be greater propellers of prices hence they have more dominant impact on inflation than the nominal exchange rate. In Nigeria there is some degree of pass through from nominal exchange rates onto prices given an exchange rate elasticity of domestic prices of 5%, which is statistically significant at the 5% level. However as in Ghana and Uganda money supply was the greater propeller of prices in Nigeria. What is more- the estimation results also showed that nominal exchange rates in the three countries follow the money supply. This goes to show that the behavior of the money supply and hence monetary policy influences the direction and degree of variability in nominal exchange rates under a floating system. Hence it shows that monetary policy is crucial to the success of the floating exchange rate system. Further the money supply was shown to vary in response to government fiscal deficits which makes fiscal prudence or otherwise the major determinant of exchange rate movements. For the simulation experiments we tried to find in what ways our endogenous variables change if a given macroeconomic policy varies while the others are kept constant. Thus we increased the rate of growth of government expenditure while keeping monetary policy and exchange rate policy constant. Similarly when we increased the rate of growth of the money supply we assumed fiscal and exchange rate policies to be constant. Our results show that in the long-run (over a period of at least ten years) a floating exchange rate performs better than a fixed one in terms of ensuring expanded output which ensures declining prices which in turn results in rising real demand for money and hence in rising rates of interests. A floating exchange rate regime also expanded exports and higher positive trade balance. Overall however the success of the floating system depends on coordinated and prudent macroeconomic policies; in the words of Goldstein (1984) "the capacity of the exchange rate system per-se to do good or harm should not be overestimated... the importance of discipline and coordinated macroeconomic policies for the successful operation of floating exchange rate regime should not be underestimated".
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    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.