Advanced Topics in International Business - Case Study Example

Advanced topics in international business Table of Contents Introduction 4 Poverty in Nigeria 4 Large population 4 Homogenous 5 Concentration of Population 5 Availability of IT and communication technology 6 Technical Ability 7 Active and trusted NGOs 7 Non-authoritarian government 8 Reasonably stable socio-economic and political environment 8 Conclusion 8 References 9 Introduction An economy characterised by widespread poverty is highly susceptible to a number of external factors which other financially robust economies could easily shove away. In most of the cases, it is the developing economies which are featured by such destitution that renders them helpless in dealing with an impending crisis. It is their inefficiency or rather insufficiency that often hinders and lags their growth process. It has frequently been pointed out that the development of financial services could be a possible remedy to abolish high end poverty existing in under developed or poverty stricken nations. However, for the financial services to develop, it is primarily important for the concerned economy to develop as a market economy. The present paper attempts to evaluate the poverty laden features in the economy of Nigeria which precludes the nation’s evolution as a strong market economy. Poverty in Nigeria Nigeria is one of the most poverty stricken economies in the world. The nation that largely depends upon agricultural as their mode of living is characterised by widespread poverty with 70 percent of its population classified as poor. The absolute poverty figure in the economy is 35 percent of its aggregate population. Furthermore, the nation’s rural region is found to be dotted with poor population where the proportion of poverty is 80 percent of rural population (IFAD, 2010). There are some factors which could be held responsible for domestic poverty and inability to recuperate from the same. Contributions of these factors, to the poverty in Nigeria, have been dealt with in the following sections. Large population One of the most populated nations in Africa, Nigeria accounts for more than a half of the entire population of West Africa. Even though only 25% of the Nigerians dwell in the urban regions, the cities account for a high population exceeding 100,000 (US Department of State, 2011). Although the country’s GDP per capita has been showing rise through the course of time the Nigerians continue to live in acute poverty and poor conditions. Even though data collected on the subject are controversial, data provided by the United States Central Intelligence Agency states that 70% of the population of Nigeria in 2007 was below the poverty line. On the other hand based on the reports presented by the World Bank says that 10% of the Nigerian population remain undernourished as against the prevalence of an undernourished population of 30% in Sub-Saharan Africa (Ucha, 2010, p.3). Homogenous Due to the prevalence of the majority of the population below the line of poverty the Nigerian society is homogenous in nature. In spite of the existence of a large number of tribes and widely differing people, the fact remains that the almost the entire society is poor and high poverty thrives in the population. This is the major cause behind low demand creation in the economy which has consequently hindered the development of the nation. However, recently the nation has demonstrated growth of nationalism in the society and the subsequent emergence of the political parties which are based more tribal interest instead of national interest. This has been creating barriers among people which is consequently breaking the unified nature of the society. Concentration of Population Nigeria is characterised by a high population being the seventh most populous economy in the world and its density which has been noted as moving with a steeply positive trend over time, as the following diagram shows. The latest records for the year 2008 found the economy to be characterised by a population density of 162.2 people per square kilometres (Trading Economics, 2009). High population density is a very important feature contributing to the poverty of an economy. When population density is high, it implies a diminished availability of resources across each unit of the population meaning that each unit has access to very limited amount of resources which could possibly help in its development. Lack of ample resource to support a huge population per unit area of the economy in question, is responsible for a lag in the process of development and hence end up in poverty (Kaul & Tomaselli-Moschovitis, 1999). Availability of IT and communication technology Like most of the underdeveloped nations Nigeria is also considered to be an ‘information-poor’ nation. Information and technology services have not yet found widespread acceptance in the economy. Consequently there has been very little investment in the sector too. The services of public data communications have not yet arrived at the nation as the information and technology sector in the nation is still in the stage of infancy. The category of consumer electronics has made very little progress and there are no electronics industries in the nation. In spite of the existence of a large oil sector in the country, lack of technological advancement and communication technology has slowed down the progress and expansion of the sector which has consequently reflected through its slow economic growth. The growth of the education sector has also suffered a setback because of the above reason. Institutions remain ill equipped in terms of their physical facilities and information systems to serve their educational purpose. In other words, lack of information and technology has slowed down the progress of other sectors which is the consequent cause of slow growth and poverty of the nation (Nwachuku, n.d.). Technical Ability Lack of technical ability in an economy creates a high possibility of impending unemployment in a concerned economy. Higher the unemployment in a nation is, greater is the incidence of poverty in the same. In order to prevent poverty thus, it is important to infuse technical abilities among the youth of the nation; such a measure could make them practiced to the modern day job demands driving the companies to recruit from among them. The economy of Nigeria suffers from the chronic absence of technical skills which hinder the progress of investment projects in the nation. While people skilled in jobs such as carpentry and brick-laying could be found in abundance in the economy, there is a dearth of people trained in engineering which is necessary for modern day industrial activities. Lack of technical skills among the population is discouraging for foreign investors to set up their branches in the economy; in addition, the economy cannot suffice to its own domestic needs as well which definitely nurtures poverty in the nation (Francis, et al., 1996). Active and trusted NGOs The presence of active and trusted NGOs could be highly beneficial for the economic upliftment of a nation suffering from the clutches of poverty. Recent researches conducted on the comparative benefits drawn from aids by NGOs and income generated through foreign sources show the former to be more effective in their task of boosting a poverty stricken economy (Masud & Yontcheva, 2005). The rationale behind such an association is quite evident given that aids accepted foreign sources such as banks are generally treated as liabilities that the recipient nation has to repay at some point of time. On the other hand, financial aids from active NGOs are often treated as assets that the national governments could use more freely and according to their needs. Nigeria, for this very reason, is found to be highly dependent on government finding compared to aids from foreign organisations such as banks, which are normally treated as loans rather than aids (Atehnkeng, Cecilia, Eugene, Andrews, Jude, & Ivo, 2008). However, the national government needs to be highly committed in improving the social state of the economy, for the nation to actually benefit out of such aids. Non-authoritarian government The government of Nigeria is often criticised as an unpatriotic one, lacking enough vision and commitment towards the nation (Atehnkeng, Cecilia, Eugene, Andrews, Jude, & Ivo, 2008). This is one of the biggest hindrances towards the development of a poverty-stricken economy such as Nigeria. On the other hand, the presence of a highly dedicated and self-less government body is regarded as a necessity for the proper growth of a nation. Reasonably stable socio-economic and political environment Political and economic instability are few of the major features characterizing the Nigerian economy. Moreover this has acted as a major deterrent to domestic investment. Researchers have put forth the fact that reduction of the widespread poverty in the economy can only be possible through sustained increase in the nation’s domestic investment. However, a close look at the economy’s pattern of domestic investment the years would reveal that periods of political and economic instability have been major barriers for domestic investment in Nigeria. This is in accordance to the fact that a nation’s economic performance over a period of time is determined greatly by its governance performance such institutional, political and legal environment. Thus it can be said social, political and economic unrest in the nation had been the cause of low domestic investment which has consequently kept the level of poverty in Nigeria high (Akanbi, 2010, p.2). Conclusion The economy of Nigeria is highly dotted with poverty and needs immense support from exogenous sources to boost it up. The nation suffers from a large number of drawbacks such as lack of sufficient technical skills, which needs to be attended to immediately in order to ensure its progress along a proper path of development and growth. References Akanbi, O. A. (2010). Role of Governance in Explaining Domestic Investment in Nigeria. Retrieved August 10, 2011 from http://www.econrsa.org/papers/w_papers/wp168.pdf. Atehnkeng, J., Cecilia, N., Eugene, A., Andrews, O., Jude, O., & Ivo, A. (2008). Sustainable Agriculture In sub-Saharan Africa: A Critical Look Into The Constraints and Prospects. Ibandan, Nigeria: International Institute of Tropical Agriculture. Francis, P. A., Akinwumi, J. A., Ngwu, P., Nkom, .. A., Odihi, J., Olomajaye, J. A., et al. (1996). State, community, and local development in Nigeria, Volumes 23-336. Washington, D.C., USA: World Bank Publications. IFAD. (2010). Rural Poverty in Nigeria. Retrieved August 10, 2011, from Rural Poverty Portal: http://www.ruralpovertyportal.org/web/guest/country/home/tags/nigeria Kaul, C., & Tomaselli-Moschovitis, V. (1999). Statistical handbook on poverty in the developing world. London, UK: Greenwood Publishing. Mssud, N., & Yontcheva, B. (2005). Does Foreign Aid Reduce Poverty? Empirical Evidence from Nongovernmental and Bilateral Aid. New York: IMF Institute. Nwachuku, M. A. (No Date). Development of information technology in Nigeria. Retrieved August 10, 2011 from http://archive.unu.edu/unupress/unupbooks/uu19ie/uu19ie0d.htm. Trading Economics. (2009). Population Density (People per Sq. Km) in Nigeria . Retrieved August 10, 2011, from Trading Economics: http://www.tradingeconomics.com/nigeria/population-density-people-per-sq-km-wb-data.html. Ucha, C. (2010). Poverty in Nigeria: Some Dimensions and Contributing Factors. Global Majority E-Journal, Vol. 1, No. 1 (June 2010), pp. 46-56. Retrieved August 10, 2011 from http://www.american.edu/cas/economics/ejournal/upload/Global_Majority_e_Journal_1-1_Ucha.pdf. US Department of State. (2011). Background Note: Nigeria. Retrieved August 10, 2011 from http://www.state.gov/r/pa/ei/bgn/2836.htm. Read More