Big-Push Theory Impact on Nigerian Economy

Summary:

The paper “Big-Push Theory Impact on Nigerian Economy” by Erhunse Confidence explores the implications of the Big-Push theory on the economic development of Nigeria. The Big Push theory, originated by Paul Rosenstein-Rodan in 1943, argues that underdeveloped countries require large-scale investments to overcome the problems of backwardness and stimulate economic development. The theory points out three main indivisibilities that necessitate a big push: indivisibility in the production function, demand, and supply of savings. These indivisibilities increase returns or economies of scale and require substantial investments in various industries and social overhead capital, such as power, transport, or communications, to achieve industrialization.

The paper highlights the importance of a comprehensive approach to investment, as partial or piecemeal efforts will not yield significant growth and may result in resource dissipation. The theory suggests that a country like Nigeria should simultaneously establish multiple industries to expand markets for industrial goods. This approach would encourage workers in different industries to become consumers of each other’s goods, leading to increased demand and economic development.

However, the paper also points out potential challenges in implementing the big-push strategy in Nigeria. Difficulties may arise in executing various projects according to a planned timetable and coordinating different implementing agencies.

Excerpt:

Big-Push Theory Impact on Nigerian Economy

INTRODUCTION

If the need for a Big Push to survive in an economy that is open to international trade and capital movements, or if openness to trade and capital movements is sufficient to overcome all poverty traps, these questions have daunted development economics since its inception (Jones, 2002). The theory of the big push asserts that underdeveloped countries require large amounts of investments to come out of the problem of backwardness and launch policies for economic development. The logic behind this theory is that a programme of “bit-by-bit” investment will not have much impact on the process of growth and will only lead to a dissipation of resources. Policies designed to encourage the development of the Nigerian economy will need to be guided by the big-push theory.