MARIST COLLEGE, YANGOJI, KWALI,

FCT.

ECONOMICS LESSON NOTE

FOR

SS3

STUDENT’ NAME…
ECONOMICS TEACHER: MR OGUNODE NIYI JACOB
 TERM TWO SCHEME OF WORK FOR SS3 ECONOMICS
WEEK 1:Historical development of these international ³financial organizations,
ECA, IMF², IBRD, OPEC,ADB, WACH, GATT, UNCTAD, WTO etc.
WEEK 2: Current Economic plans; The Millennium Development Goals (MDG’S)
NEEDS, Vision 2020.
WEEK 3: Economic Development challenges; Meaning and effects of poverty,
Methods of poverty alleviation and Eradication, Agencies for poverty alleviation
(NAPEP, NDE etc.)
WEEK 4: Economic reform programmes; Consolidation of ³financial institutions,
E²CC, ICPC, NAFDAC, SON etc. Privatization and Commercialization
programmes.

TEACHER: MR OGUNODE NIYI JACOB [DIP Theo, B.A Theo, B.SC [Ed]
Econs, M.Ed Admi and Planning].
 LESSON ONE
TOPIC: INTERNATIONAL TRADE

By the end of the lesson, the students should be able to;

1.0 Explain the Meaning of foreign trade

2.0 List the Types of foreign trade
- Bilateral
- Multilateral
- List five advantages of foreign trade
- List five disadvantages of foreign trade
- List six Barriers to foreign trade
- Differences between export, import and entrepot
- Discuss the Procedures for foreign trade

1.0 Meaning of International Trade.

Foreign trade is exchange of capital, goods, and services across international borders or
territories. In most countries, it represents a significant share of gross domestic product (GDP).
While international trade has been present throughout much of history, its economic, social, and
political importance has been on the rise in recent centuries.

International trade means trade between the two or more countries. International trade involves
different currencies of different countries and is regulated by laws, rules and regulations of the
concerned countries. Thus, International trade is more complex.

2.0 Types of International Trade.

Bilateral Trade

Bilateral trade agreements are the agreements between two nations for the purpose of exchange
of goods and service each other for mutual benefit of both of the countries. Under Bilateral trade
agreements; the exchange of agreements takes place in commercial relationship, trade
facilitation, finance investment etc. So the trade between both of countries makes simple by
simple procedures of imports and exports, cutting down or minimizing the taxes or duties on
overseas trade etc. The ultimate aim of any bilateral trade agreement between countries is to
improve the economic status of both of the countries. Compared to multilateral agreements,
bilateral agreements are easy to negotiate with terms and conditions of agreements.

Multilateral Trade
Multilateral trade agreements are made between two or more countries to strengthen economy of
member countries by exchanging of goods and services among them. The multilateral trade
agreement builds commercial relationship, trade facilitation and financial investments among
member countries of such multilateral trade agreement. Compared to bilateral trade agreement,
multilateral trade agreements are difficult in negotiation of agreement, as more member countries
are involved in multilateral trade agreements. Up to the level of norms in multilateral trade
agreement, the member countries are treated equally. The multilateral trade agreements can be
formed in regional basis also. There are many multilateral trade agreements between countries
worldwide regionally for the development of economy of each member countries signed in each
multilateral trade agreement.

Advantages:-

1. Maximum Use of Natural Resources

Foreign trade helps each country to specialize in the production of those goods, which best suits
it environments. It, thus leads to maximum use of its natural resources.

2. Availability of Goods

It enables a country to obtain goods by importing which it cannot produce due to higher costs at
home.

3. Specialization

Foreign trade leads to specialize in the production of goods. Specialization leads to lowering of
costs and improving the quality of goods. The countries therefore, benefit from international
trade.

4. Economics of Large Scale

The expansion of foreign trade leads to production of goods on large scale. The economics of
large scale production (both external and internal) are thus availed of by the trading countries of
the world.

5. Stability in Prices

Foreign trade equalizes prices of goods throughout the world.

6. Advance Equipment’s

The developing countries can import latest machinery and know how from the developed world.
They can thus speedily break the vicious circle of poverty.
 7. Benefits to Consumers

The consumers are able to get those goods which are not produced in their own countries.

8. Development of the means of Communication and Transport

Different Countries may dispose of those goods which they have in surplus and obtain goods
which they are short in supply. The trades between the countries lead to development in the
means of communications and transport.

9. Ability to Face Natural Calamities

International trade helps a country to face naturals incidents such as Earthquake, floods etc. The
effected countries are able to import goods which they are short in supply.

10. Discouragement to Monopolies

International trade discourages the formation of monopolies in a country. If there is a

combination of certain business units and they raise the prices of goods higher than the market,
the government imports those goods to reduce the prices in the country.

11. International Co-operation

Foreign trade brings the people of different countries close to each other. It can bring better
understanding and harmony among the various nations.

Disadvantages:-

1. Threat to infant industries

Due to import of goods from abroad, the infant industries of a country are not able to grow and
survive.

2. Economic exploitation

The under developed countries depend upon the developed countries for the import of
machinery, technology etc the developed nations exploit the weaker nations and charge very high
prices from them.

3. Endangers independence

Foreign trade encourages slavery. It impairs economic independence of the poor nations.

4. Misuse of natural resources

If there is an excessive export of natural resources like iron, cool etc of a country, it will be
exhausted in a shorter span of time. The country then suffers economically in the long run.

5. Import of harmful goods

The import of harmful goods adversely effects health, well being and economy of the country.

6. World wars

Foreign trade creates rivalry among the competing nations of the world. It leads to ill-will, hatred
and eventually to wars among them. This disturbs world peace.

7. Trade and tariff agreements

The developed countries motivate the developing nations to give tariff concessions and reduce
restrictions on imports and adopt free trade. If the developing countries are lured and agree to
join such agreements, they economically suffer in the long run.

Barrier to Foreign Trade

For desiring to enter into international trade, we face some obstacles and those are discussed
below:

Barriers to international trade

1. Cultural and social barriers: A nation’s cultural and social forces can restrict
international business. Culture consists of a country’s general concept and values and
tangible items such as food, clothing, building etc. Social forces include family,
education, religion and custom. Selling products from one country to another country is
sometimes difficult when the culture of two countries differ significantly.
2. Political barriers: The political climate of a country plays a major impact on
international trade. Political violence may change the attitudes towards the foreign firms
at any time. And this impact can create an unfavorable atmosphere for international
business.
3. Tariffs and trade restrictions: Tariffs and trade restrictions are also the barriers to
international trade. They are discussed below:
o Tariffs: A duty or tax, levied on goods brought into a country. Tariffs can be used
to discourage foreign competitors from entering a digestive market. Import tariffs
are two types-protective tariffs and revenue Tariffs.
o Quotas : A limit on the amount of a product that can leave or enter a
country.
o Embargoes : A total ban on certain imports or exports.
4. Boycotts: A government boycott is an absolute prohibition on the purchase and
importation of certain goods from other countries. For example, Nestle products were
boycotted y a certain group that considered the way nestle promoted baby milk formula
to be misleading to mothers and harmful to their babies in fewer development countries.
 5. Standards: Non-tariff barriers of this category include standards to protect health, safety
and product quality. The standards are sometimes used in an unduly stringent or
discriminating way to restrict trade.
6. Anti-dumping Penalties: It is one kind of practice whereby a producer intentionally sells
its products for less than the cost of the product in order to undermine the competition
and take control of the market.
7. Monetary Barriers: There are three such barriers to consider:
o Blocked currency: Blocked currency is used as a political weapon is response to
difficult balance payments situation. The blockage is accomplished by refusing to
allow importers to exchange their national currency for the seller’s currency.
o Differential exchange rate: The differential exchange rate is a particularly
ingenious method of controlling imports. It encourages the importance of goods
the government deems desirable and discourage importation of goods the
government does not want. The essential mechanism requires the importer to pay
the varying amount of domestic currency for foreign currency with which to
purchase products in different categories. Such as desirable and less desirable
products.
o Government approval for securing foreign exchange:Countries experiencing
severe shortages of foreign exchange often use it. At one time or another, most
Latin American and East European countries have required all foreign exchange
transactions to be approved by the central bank. Thus importers who want to buy
foreign goods must apply of ran exchange permit that is permission to exchange
an amount of local currency for foreign currency.

Differences between Import, Export and Entrepot

EXPORT: This is the act of taking out finished product to other countries.

IMPORT: This is the act of bringing into the country finished product from other
countries.

ENTREPOT

Re-exports consist of foreign goods exported in the same state as previously imported, from the
free circulation area, premises for inward processing or industrial free zones, directly to the rest
of the world and from premises for customs warehousing or commercial free zones, to the rest of
the world.

For example, the United Arab Emirates may have engaged in re-exportation of goods to Iran as a
way for Iran to avoid U.S. trade sanctions against it.[1] Thus re-exportation involves export
without further processing or transformation of a good that has been imported. In
contrast, Finland imported crude oil from the Soviet Union as part of bilateral trade between
these two countries and refined the oil for export to other Western European countries, while the
Soviet Union did not intend to sell oil to these capitalist countries, but this was not re-exportation
because the crude oil was refined before selling. Dubai has emerged as the major re-export center
for the entire Middle East region.
 LESSON TWO

TOPIC: BALANCE OFTRADE AND BALANCE OF PAYMENT

By the end of the lesson, the Students should be able to

1. Distinguish between balance of trade and balance of payment

2. State six reasons for imposing tariffs on foreign trade

Definition of Balance of Trade

Trade refers to buying and selling of goods, but when it comes to buying and selling of goods
globally, and then it is known as import and export. The Balance of Trade is the balance of the
imports and exports of commodities made to/by a country during a particular year. It is the most
important part of the current account of the country’s Balance of Payment. It keeps records of
tangible items only.

The Balance of Trade shows the variability in the imports and exports of merchandise made by a
country with the rest of the world over a period. If the imports and exports made to/by the
country tallies, then this situation is known as Trade Equilibrium, but if imports exceed exports,
then the condition is unfavorable as it states that the economic status of the country is not good,
and so this situation is termed as Trade Deficit. Now, if the value of exports is greater than the
value of imports, this is a favourable situation because it indicates the good economic position of
the country, thus known as trade surplus.

Definition of Balance of Payments

The Balance of Payments is a set of accounts that recognises all the commercial transactions
performed by the country in a particular period with the remaining countries of the world. It
keeps the record of all the monetary transactions done globally by the country on commodities,
services and income during the year.

It combines all the public-private investments to know the inflow and outflow of money in the
economy over a period. If the BOP is equal to zero, then it means that both the debits and credits
are equal, but if the debit is more than credit, then it is a sign of deficit while if the credit exceeds
debit, then it shows a surplus. The Balance of Payment has been divided into the following sets
of accounts:

 Current Account: The account that keeps the record of both tangible and intangible
items. Tangible items include goods while the intangible items are services and income.
 Capital Account: The account keeps a record of all the capital expenditure made and
income generated collectively by the public and private sector. Foreign Direct
Investment, External Commercial Borrowing, Government loan to Foreign Government,
etc. are included in Capital Account.
  Errors and Omissions: If in case the receipts and payments do not match with each
other then balance amount will be shown as errors and omissions.

Key Differences between Balance of Trade and Balance of Payments

The following are the major differences between the balance of trade and balance of payments:

1. A statement recording the imports and exports done in goods by/from the country with
the other countries, during a particular period is known as the Balance of Trade. The
Balance of Payment captures all the monetary transaction performed internationally by
the country during a course of time.
2. The Balance of Trade accounts for, only physical items, whereas Balance of Payment
keeps track of physical as well as non-physical items.
3. The Balance of Payments records capital receipts or payments, but Balance of Trade does
not include it.
4. The Balance of Trade can show a surplus, deficit or it can be balanced too. On the other
hand, Balance of Payments is always balanced.
5. The Balance of Trade is a major segment of Balance of Payment.
6. The Balance of Trade provides the only half picture of the country’s economic position.
Conversely, Balance of Payment gives a complete view of the country’s economic
position.
What Is a Tariff?

In simplest terms, a tariff is a tax. It adds to the cost of imported goods and is one of several
trade policies that a country can enact.

Reasons for Imposing Tariffs and Trade Barriers Used

Tariffs are often created to protect infant industries and developing economies but are also used
by more advanced economies with developed industries. Here are five of the top reasons tariffs
are used:

1. Protecting Domestic Employment

The levying of tariffs is often highly politicized. The possibility of increased competition
from imported goods can threaten domestic industries. These domestic companies may
fire workers or shift production abroad to cut costs, which means
higher unemployment and a less happy electorate. The unemployment argument often
shifts to domestic industries complaining about cheap foreign labor, and how poor
working conditions and lack of regulation allow foreign companies to produce goods
more cheaply. In economics, however, countries will continue to produce goods until
they no longer have a comparative advantage (not to be confused with an absolute
advantage).
 2. Protecting Consumers

A government may levy a tariff on products that it feels could endanger its population.
For example, South Korea may place a tariff on imported beef from the United States if it
thinks that the goods could be tainted with a disease.

3. Infant Industries

The use of tariffs to protect infant industries can be seen by the Import Substitution
Industrialization (ISI) strategy employed by many developing nations. The government
of a developing economy will levy tariffs on imported goods in industries in which it
wants to foster growth. This increases the prices of imported goods and creates a
domestic market for domestically produced goods while protecting those industries from
being forced out by more competitive pricing. It decreases unemployment and allows
developing countries to shift from agricultural products to finished goods.

Criticisms of this sort of protectionist strategy revolve around the cost of subsidizing the
development of infant industries. If an industry develops without competition, it could
wind up producing lower quality goods, and the subsidies required to keep the state-
backed industry afloat could sap economic growth.

4. National Security

Barriers are also employed by developed countries to protect certain industries that are
deemed strategically important, such as those supporting national security. Defense industries
are often viewed as vital to state interests, and often enjoy significant levels of protection. For
example, while both Western Europe and the United States are industrialized, both are very
protective of defense-oriented companies.

5. Retaliation

Countries may also set tariffs as a retaliation technique, if they think that a trading partner
has not played by the rules. For example, if France believes that the United States has allowed its
wine producers to call its domestically produced sparkling wines "Champagne" (a name specific
to the Champagne region of France) for too long, it may levy a tariff on imported meat from the
United States. If the U.S. agrees to crack down on the improper labeling, France is likely to stop
its retaliation. Retaliation can also be employed if a trading partner goes against the government's
foreign policy objectives.

Types of Tariffs and Trade Barriers

There are several types of tariffs and barriers that a government can employ:

 Specific tariffs
 Ad valorem tariffs
 Licenses
  Import quotas
 Voluntary export restraints
 Local content requirements

Specific Tariffs

A fixed fee levied on one unit of an imported good is referred to as a specific tariff. This tariff
can vary according to the type of good imported. For example, a country could levy a $15 tariff
on each pair of shoes imported, but levy a $300 tariff on each computer imported.

Ad Valorem Tariffs

The phrase ad valorem is Latin for "according to value," and this type of tariff is levied on a
good based on a percentage of that good's value. An example of an ad valorem tariff would be a
15% tariff levied by Japan on U.S. automobiles. The 15% is a price increase on the value of the
automobile, so a $10,000 vehicle now costs $11,500 to Japanese consumers. This price increase
protects domestic producers from being undercut but also keeps prices artificially high for
Japanese car shoppers.

Non-tariff barriers to trade include:

Licenses

A license is granted to a business by the government and allows the business to import a certain
type of good into the country. For example, there could be a restriction on imported cheese, and
licenses would be granted to certain companies allowing them to act as importers. This creates a
restriction on competition and increases prices faced by consumers.

Import Quotas

An import quota is a restriction placed on the amount of a particular good that can be imported.
This sort of barrier is often associated with the issuance of licenses. For example, a country may
place a quota on the volume of imported citrus fruit that is allowed.

Voluntary Export Restraints (VER)

This type of trade barrier is "voluntary" in that it is created by the exporting country rather than
the importing one. A voluntary export restraint is usually levied at the behest of the importing
country and could be accompanied by a reciprocal VER. For example, Brazil could place a VER
on the exportation of sugar to Canada, based on a request by Canada. Canada could then place a
VER on the exportation of coal to Brazil. This increases the price of both coal and sugar but
protects the domestic industries.
"By commercial policy or trade policy is meant all measures regulating the external economic relations
of a country, that is measures taken by a territorial government which has the power of assisting or
hindering the exports or imports of goods and services".

In modern times, the commercial policy of every country is generally based on the encouragement of
exports and discouragement of imports. The exports are encouraged by giving preferential freight rates
on exports, consular establishments subsidized merchant marines etc., etc. The imports are hindered by
erecting the tariff wails, exchange controls, quota system, buy at home campaign etc.
Objectives of Modern Commercial Policy:
The main objectives of the modern commercial policy are:

First, to increase the quantity of trade with foreign nations.

Second, to preserve, the essential raw material for encouraging the development of domestic industries.

Third, to stimulate the export of particular products with a view to increasing their scale of production at
home.

Fourth, to prevent the imports of particular goods for giving protection to infant industries or developing
key industry or saving foreign exchange, etc., etc.

Fifth, to restrict imports for securing diversification of industries.

Sixth, to encourage the imports of capital goods for speeding up the economic development of the
country.

Seventh, to restrict the imports of goods with a view to correct the unfavorable balance of payments.

Eighth, to assist or prevent the export or import of goods and services for achieving the desired rate of
exchange.

Ninth, to enter into trade agreements with foreign nations for stabilizing the foreign trade.
Instruments/Tools of Commercial Policy:
The main instruments or toots which are now a days used for achieving the objectives of commercial
policy are as follows:

(1) Tariffs or Custom Duties:

Tariff's or custom duties may be defined as a schedule of duties authorized by territorial government to
be imposed upon a list of commodities that are exported. Tariffs are generally classified into three
classes. (a) Transit duties, (b) Import duties, (c) Export duties.

(a) Transit duties are those which are levied upon merchandize passing through the country and
consigned for another country. Transit duties are levied for raising money for the government.

(b) Import duties are those which are levied on the goods brought . into the country. Import duties are
chiefly levied for revenue or for protection purpose or for both.

(c) Export duties are those which are imposed on the merchandize sent out of the country are called
export duties. Export duties, like import duties, are also imposed for raising revenue and to restrict the
export of certain raw material with the view to encourage the development of domestic industries.
Custom duties may be discriminatory with respect to commodities of countries or it may be non-
discriminatory. When a country is pursuing a discriminatory tariff policy, it may give:

(a) Preferential treatment by levying lesser custom duties upon the merchandize of some of the countries.
(or);

(b) Enter into an agreement with other countries for ensuring fair and equal treatment to the imports or
exports of each member country. (or);

(c) Join a common market where the merchandize of member countries are allowed free entry but the
goods of other countries are subjected to tariffs.

(2) Bounties on Exports:

In order to promote the export of particular industry or the export of specified commodities, a government
some times gives bounties on exports. The bounties or subsidies may be director, indirect. When subsidy
is paid in cash from the public treasury, the bounty is said to be direct and when low freight rates are
charged on the goods to be exported or they are exempted from taxes, etc, the bounty or subsidy is said
to be indirect.

(3) Direct Restrictions on Imports:

The government may totally prohibit the import of certain commodities into the country with the intent of
increasing foreign exchange or for protection of domestic industries or for discouraging the use of
particular commodities because they are injurious to health. The government may regulate the imports by
means of quotas. Under quota system, the maximum amount of a commodity which can be imported
during a particular period is fixed by the government. In recent years, the governments of most of the
countries are employing the import quota system because:

(i) It is very flexible and can be adjusted by the administrative authorities without resorting to legal action.

(ii) The home producers know in advance the total quantity of goods to be imported during a particular
period, so they can regulate their output accordingly.

(iii) It arouses less resentment than the custom duties from the consumers.

(4) Trade Agreements:

The government of a country may enter into trade agreements with other countries for the exchange of
goods. The trade agreements may be bilateral or multilateral.

When two countries make a trade agreement for the exchange of goods, the agreement is said to be
bilateral.

When more than two countries enter into, trade agreement for ensuring fair and equal treatment to the
imports and exports of the member countries, the agreement is called multilateral.

Efforts are being made by different countries of the world to secure a general reduction of tariffs. A
General Agreement on Trade and Tariff (GATT) of 117 countries of the world was reached at.

The main objectives of the GATT were:

(i) To develop the resources of the world.

(ii) To expand production and exchange of goods.

(iii) To promote economic development.

(iv) To help in raising standard of living.

(v) To achieve full employment without inflation.

In 1995, the GATT was replaced by World Trade Organization. The WTO is established to oversee the
trade agreements among nations and settle trade disputes. The globalization of economy, liberalization of
trade among all the nations of the world is now taking the shape of new world economic order.

Globalization is the free movement of capital, goods and services based on market based economy.
Definition and Explanation:

"A policy of unrestricted international exchange of goods is known as the policy of Free Trade".

Adam Smith like the Physocratics of France, was a staunch advocate of free trade. He was of the view
that state should not interfere in the internal economic life of the citizens of a country as it hampers
economic progress. He was against putting any kind of restrictions on the imports and exports of
commodities. In the words of Adam Smith:

"After all why the protection in needed just to save the gold from going into the other country. I do not give
much importance to it. It is a kind of commodity which is less important than other commodities because
goods can serve many other purposes besides purchasing money but money can serve many other
purposes besides purchasing goods. If protection is levied, it will divert industries from more
advantageous trade to less advantageous trade".

The other English classical economists also believed in the doctrine of laissez-faire.

The policy of free trade has not been carried out completely by any country of the world. Some degree of
state regulations has always been there on the international exchange of goods. England was the only
country in the world which had maintained free trade for a long period. It was mainly due to the fact that it
was more industrially advanced than the other countries and so it suited her interest.

In the late nineteenth century, there was a reaction in favor of protection from U.S.A. and Germany and
they set up the industries by erecting, tariff walls. England abandoned her free trade policy during the
Great Depression of 1930's. In recent years, some attempts have been made to establish free trade
areas on regional basis.

In 1957, six countries of Europe comprising France, Germany, Italy, Netherlands, Belgium, Luxembourg
formed a European Common Market. A second area of regional free trade is established by Great Britain.
Norway, Sweden, Denmark, Portugal, Australia and Switzerland and is known as E.F.T.A.

Advantages of Free Trade:

The main advantages which are claimed for free trade are as follows:

(1) If the policy of free trade is adopted by all the countries of the world, it promotes a mutually profitable
international division of labor which leads lo specialization in the production of those commodities in which
they have the greatest relative advantage. The diversification of human and material resources of the
country into remunerative channels results in increasing the real national product of all the countries. The
standard of living of the people all over the world goes up.
(2) Free trade is undoubtedly the best from the point of view of the consumers, because they can get
wider range of goods and commodities at lower prices. When protection is levied, the choice is reduced
and the prices of commodities go up. The consumers then stand at a disadvantage.

(3) Free trade has the merit that it prevents the establishment of injurious monopolies.

(4) Under free trade, the home producers try to put forth their best because they are faced with foreign
competition They quickly adopt the changes which are made in the designs of the commodities or in
methods of production.

(5) The factors of production are freely able to move from one place to another or from one occupation to
another occupation and thus are able to secure high rewards for their services.

Disadvantages of Free Trade:

Disadvantages. The main arguments which are advanced against free trade are as Under:

(1) One of the most captivating arguments put forth against free trade is that it leads to over-dependence
upon other countries. In time of war or any other emergency, the over-specialized countries may not be
able to supply the required goods to the non-specialized ones.

(2) It is pointed out that under system of free trade, the economically backward country remains always at
a disadvantage with the economically advanced country. So in order to build up industries, the backward
nations must erect tariff walls USA. and Germany in the late 19th century abandoned free trade, because
they were late in entering the industrial field. They developed the industries behind tariff barriers. So is
also the case with India.

(3) When trade is unrestricted, the import of injurious and harmful goods cannot be hindered.

(4) Under free trade, if a country resorts to dumping with a view to capturing foreign markets, the home
industries cannot be protected.

(5) Another argument advanced against free trade is that international specialization leads to an
unbalanced economy of the country.

In the past, all the countries of the world have abandoned free trade and have turned protectionist In the
last few years, there is again, a reaction in favor of free trade on regional basis. It has been experienced
by the member of the ECM that the reduction of tariffs has greatly increased their trade with one another
and the consumers have been able to get goods at cheaper prices.

Protectionism:
Definition and Explanation:

"A policy of encouraging domestic industries by the imposition of tariffs on foreign products and payment
of bounties to home industries is known as protectionism".

An import duty aims at discouraging imports by making them dearer to the domestic consumers. The
payment of bounty to home Industry artificially stimulates exports and thus enables it to stand on its own
feet in due course of time. After the end of Napoleon war i.e., in the19th
century, protectionism appeared in U S A. Later on Germany, imposed custom duties on foreign
products and developed her industries behind tariff walls. Great Britain which had taken an early start
over ether countries in most branches of manufacture was the last to favor protectionism.

Advantages and Examples:

The main arguments which are advanced to support the policy of protection are as follows:

(i) National Defense: Protectionism has been advocated on the ground that in times of war or any other
emergency an entire dependence on foreign goods which are very essential for defense or consumption
purposes is very dangerous. It is stated, therefore, that a country must build up her own iron and steel
Industry and develop farming industry even if these involve an economic loss to the country.

(ii) Preservation of Certain Class of Population or Certain Occupation: The government of a country
on political or social grounds may favor protectionism for preserving certain classes of people or certain
occupations. For instance, the agrarian population is generally more submissive and loyal to the
government than the industrial population If government wishes to preserve this class of people, then it
will levy heavy import duties on foreign agricultural raw material and thus encourage them to take interest
in their farming industry.

(iii) Diversification of Industries: Frederic List, a German economist, favors protection with a view to
diversifying industries in a country. Under free trade, a country will specialize in the production of those
commodities in which it has a relative price advantage over other countries. A country can specialize
completely in one or few goods at the most. This means the country will put all her eggs m one basket, if
war breaks out or the export prices of the goods go down, then it will face severe hardship. It is. therefore,
advocated that for bringing about a balanced economy in the country, protection should be given even to
those industries which do not posses natural superiority.

(iv) To Assist New Industries: Alexander Hamilton, Frederic List, J.S. Mill. Alfed Marshall, Taussing and
other orthodox economists have clearly advocated protection for the industries which are still in their
infancy. A newly established industry, says List, is just like a newly born baby. As the baby cannot grow
up unless it is nursed and well protected, similarly, an infant industry cannot face the blast of foreign
competition unless it is given full protection till it grows to its full structure.

Protectionism to the new home industries is necessary because the industries in other countries have
taken an early start and they are enjoying the economies of mass production, while the home infant
industries are still in their early stages and are producing small output.

The economists have justified protection for infant industries only. Once the industries grow up and reach
maturity, protective tariffs should be removed. But in actual practice, it has been observed that infant
industries never feel themselves grown up; if they grow up at all, they devote their strength in fighting for
bigger and longer protectionism.

Secondly, if protection is given to those industries which cannot stand on their own feet when left
unprotected, then the resources of the country are diverted from more advantageous uses to less
advantageous ones.

(v) Protection to Guard Against Dumping: If a foreign firm enjoying monopolistic or other advantages
resorts to dumping with a view to capturing foreign markets, then the other countries must protect their
industries by levying high protective duties on foreign goods. As selling of goods under cost (dumping) in
other countries is temporary and spasmodic in nature. The anti-dumping duties should also be temporary.
If dumping is permanent, then higher tariffs should be imposed permanently on foreign products.

(vi) Keeping Money at Home. Protectionism is also advocated on the grossly fallacious argument of
"Keeping money at home". In the words of Robert Ingerson:
"When we buy manufactured goods abroad, we get the goods and the foreigners get the money. When
we buy the manufactured goods at home, we get both the goods and the money".

The criticism on this protection argument is that the foreign goods are purchased because these are
cheaper and better than the home protects. If we buy from the home market, this means we are buying in
the dearer market. As consumers, we suffer a financial loss. We may buy the home products and suffer a
loss for the sake of other considerations but not for simply keeping money at home.

(vii) Protection of Revenue: Protectionism is also advocated on the ground that it raises revenue for the
state. To this it is pointed out that if prohibitive high tariffs are imposed on the import of foreign goods,
then they may not be imported at all and the government would not able to collect the revenue at all. On
the other hand, if a moderate protection duty is levied, then it may serve both the purposes of collecting
revenue and protecting industries.

(viii) Protection for Retaliation: Some economists recommend that if a country uses high protection
tariffs, the other countries which have trade relations with it should also impose custom duties on her
products in retaliation. From the study of the tariff history, it has been observed that the retaliatory tariffs
have usually resulted in raising the tariffs still higher. It has been suggested, therefore, that commodity
tariffs should be imposed as a bluff but if the bluff does not make the other country to reduce the tariffs,
then the countries should given them up because they can gain more by lowering tariff rather than by
raising it.

(ix) Protection for Conserving National Resources: Carey, Pattern, and Jevons have argued that
production is essential for preserving the natural resources of a country. The unchecked trade often leads
to exhaustion of mineral resources which are very vital for the development of the country.

(x) Production for Maintaining High Standard of Living: It has been argued that a country with a high
standard of living cannot successfully compete with a country having low standard of living. Because the
country enjoying high standard of living has to pay high wages to its workers; which means high cost of
production.

On the other hand, the country with low standard of living has to pay low wages to its employees which
means low cost of production. The results of this disparity in money wages is that a country with high
money wages is undersold by a country with low money wages. Hence, the former country must protect
its industries by raising high tariff walls from the latter.

The validity of this argument is questioned on the ground that if in a country, the money wages are high, it
is not necessary that the cost of production will also be high.

(xi) Protection for Reducing Unemployment: It has been claimed that the use of tariffs discourages
imports and raises their prices to the domestic consumers. This leads to diversion of demand for goods
produced at home. The home industry is encouraged and thus more employment is provided for the
home population.

This argument is contradicted on the ground that when tariffs are imposed on imports, the other countries
may retaliate by levying import duties on her exports. So, the increase which has taken place in the
employment in the protected industries will be offset by a decrease in the employment of export
industries. The result is that there may not be any net increase in the total employment of the country.
 LESSON ONE

TOPIC: INTERNATIONAL ORGANIZATION

By the end of the lesson, the students should be able to;

1. Define international organization

2. List the economic grouping of West Africa
3. State their objectives and achievement

ECONOMIC GROUPINGS OF WEST AFRICA

Economic grouping may be defined as the coming together of different countries with a
common economic interest and goals with a view of promoting economic co-operation and
development among member countries. Examples are ECOWAS,NBC,LCBC,WACH,MRBC,
etc.

Economic Community of West Africa (ECOWAS)

ECOWAS may be defined as a sub-regional organization formed by West African Countries

mainly to promote co-operation and development in all economic fields and of contributing to
the progress and development of African continent.

History of ECOWAS

On 28th May, 1975, Heads of states and governments of 15 independent states of West
Africa, converged in Lagos, where they signed the Treaty, formally establishing
ECOWAS.ECOWAS has its headquarters in Lagos where the main administrative and executive
functions of the community and other services are performed. The seat of operations of fund for
co-operation, compensation and development is in Lome, Togo.Later, the economic community
admitted Cape Verde as the 16th member country. Meanwhile, Mauritania opted out of
ECOWAS in the year 2000 but recently returned to renew her membership.

ECOWAS Member Countries

ANGLOPHONE

1. Nigeria
2. Ghana
3. Sierra Leone
4. Gambia
5. Liberia.

FRANCOPHONE

6. Togo
7. Guinea
8. Mali
9. Senegal
10. Niger Republic
11. Cape Verde
12. Burkina Faso
13. Benin Republic
14. Cote d` Ivoire
15. Guinea Bissau
16. Mauritania

AIMS AND OBJECTIVES OF ECOWAS

1. Promotion of co-operation and development.

2. Elimination of custom duties.
3. Abolition of Trade Restrictions.
4. Establishment of common tariffs.
5. Abolition of obstacles to free movement.
6. Harmonization of Agricultural policies.
7. Implementation of infrastructural schemes.
8. Harmonization of Economic and Industrial policies.
9. Harmonization of monetary policies.
10. Establishment of common fund.
11. To settle disputes among member countries.
12. To set up military body that will maintain peace in the sub –region e.g.ECOMOG.
13. To promote sporting activities in the sub-region.
ADVANTAGES /GAINS DERIVABLE FROM ECOWAS
1. Expansion of markets.
2. Availability of more goods.
3. Increased standard of living.
4. Free Trade.
5. Availability of cheap labour.
6. Reduction of tariffs.
7. Easy movement of raw materials.
8. Sub-Regional self-reliance.
9. Execution of joint projects.
10. Unity.
SUCCESSES/ACHIEVEMENTS OF ECOWAS
1. Trade Liberalization.
2. Expansion of market.
3. Increase in competition.
 4. Exchange of raw materials.
5. Availability of cheap labour.
6. High standard of living.
7. Fostering unity.
8. Economic growth.
PROBLEMS / FAILURES/DISADVANTAGES OF ECOWAS
1. Problems posed by immigrants.
2. Increase in social vices.
3. Language barrier.
4. Differences in currencies.
5. Lack of enough infrastructures.
6. Non-policy/poor policy implementation.
7. Affinity to former colonial master.
8. Political Instability.
9. Fear of Domination.
10. Irregular financial contribution of member countries.

NIGER BASIN COMMISSION (NBC)

The Niger Basin Commission (NBC) was formed in October 1963 by nine (9) countries in
West Africa that benefit in one or the other from the River Nigeria.The headquarter of the
commission is in Niamey in the Republic of Nigeria.

MEMBER COUNTRIES OF NBC

1. Nigeria
2. Guinea
3. Mali
4. Niger Republic
5. Burkina Faso
6. Cote d’Ivoire
7. Benin Republic
8. Chad
9. Cameroon

AIMS AND OBJECTIVES OF NBC

1. To maintain effective co-ordination among member countries.

2. To map out regulations that will guide all forms of navigations on the River Niger.
3. To streamline the building of dams across the River Niger.
4. To handle complaints and settle disputes arising from the use of the River Niger by
member nations.
5. To foster closer co-operation among members in the use of the river.
 6. To guarantee the freedom of navigation for all member nations on the river.
7. To ensure equal treatment of member nations of the commission who use the river.
PROBLEMS OF THE NBC
1. Inadequate finance.
2. Obsolesce of equipment.
3. Manpower problems
4. Rural\Urban drift.
5. Lack of spare parts to maintain the equipment in use.
LAKE CHAD BASIN COMMISSION (LCBC)

The Lake Chad Basin Commission was formed in 1964 and it has similar aims and
objectives with the Niger Basin Commission. It was formed by countries bordering the Lake
Chad.

MEMBER COUNTRIES OF LCBC

1. Nigeria
2. Chad
3. Niger
4. Cameroon
AIMS AND OBJECTIVES OF LCBC
1. To draw up navigation guide among member nations.
2. To survey ways of making the lake viable economically.
3. To plan for joint projects to be executed by all member nations.
4. Passing of vital information pertaining to the Lake to all member nations.
5. To settle disputes among member countries.
THE WEST AFRICA CLEARING HOUSE (WACH)
The WACH articles of agreement was signed in 1975, but launched in 1976.It has
its headquarters in Freetown-Sierra-Leone and has English and French as the official
working languages. It serves as a Central Bank Clearing House of West African c
countries.
MEMBER COUNTRIES OF WACH
1. Republic of Benin
2. Cote d’Ivoire
3. Niger
4. Senegal
5. Burkina Faso
6. Guinea
7. Gambia
8. Ghana
9. Guinea Bissau
10. Liberia
 11. Mali
12. Mauritania
13. Nigeria
14. Sierra Leone
15. Togo
AIMS AND OBJECTIVES OF WACH
1. To promote the use of members’ national currencies for intra- sub-regional transactions.
2. To bring about economies (savings) in the use of foreign reserves.
3. To promote monetary co-operation and consultation among members.
4. To encourage trade liberalization.

ASSIGNMENT

Write three ways in which the objectives of NBC and LCBC are similar.

LESSON TWO

TOPIC: International Organization

International organization: are organization established for the purpose of aiding economic
development of developing countries. The organization includes

ECONOMIC COMMISION FOR AFRICA [E.C.A]

E.C.A is an arm of the United Nations Economic and social council. It was established on 29th
April 1958.

AIMS AND OBJECTIVES OF E.C.A

The objectives of the subject “Economic Commission for Africa of the United Nations (ECA)”
are the following:

1. To understand the aims (regional integration, the African development), structure and
functions of the Economic Commission for Africa (ECA)
2. To analyze the Committee of Macroeconomics Policy of the Economic Commission for
Africa
3. To know the Economic Report on Africa
4. To collect data’s pertaining to socio-economic condition of African countries.
5. To supervise the United Nation’s project in Africa
6. To offer economic advice to government of African countries

7. To analyze the role and areas of cooperation of the Division of Trade and Regional
Integration
 8. To examine the social development, natural resources, innovation and technology, gender
and management programs of the Economic Commission of the United Nations for
Africa (ECA)
9. To analyze the role of the Commission in relation to the regional economic communities
(RECs)
10. To understand the functioning of the Procurement Services Unit of the Economic
Commission for Africa

International Monetary Fund IMF

The International Monetary Fund [IMF] is an organization of 189 member countries. It

stabilizes the global economy in three ways. First, it monitors global conditions and identifies
risks. Second, it advises its members on how to improve their economies. Third, it provides
technical assistance and short-term loans to prevent financial crises. The IMF's goal is to prevent
these disasters by guiding its members.

IMF Chief

The IMF chief has been Managing Director Christine Lagarde since July 5, 2011. She is
Chairman of the 24-member Executive Board. It appointed her to a second renewable five-year
term in February 2016. That's effective July 5, 2016.

Functions or objectives of IMF

1. To promote monetary cooperation among members

2. Stabilize exchange rate among different currencies of the world.
3. Prevent competitive devaluation by members.
4. Facilitate the expansion and balanced growth of international trade
5. Provide loans to members to temporarily restore their balance of payment
6. Ensure the full convertibility of currencies.
7. Survey Global Conditions. The IMF has the rare ability to look into and review the
economies of all its member countries. As a result, it has its finger on the pulse of the
global economy better than any other organization.

The IMF produces a wealth of analytical reports thanks to that role.

8. Advise Member Countries. Since the Mexican peso crisis of 1994–95 and the Asian
crisis of 1997–98, the IMF has taken a more active role to help countries prevent
financial crises. It develops standards that its members should follow.
9. Provide Technical Assistance and Short-term Loans. The IMF provides loans to help
its members tackle balance of payments problems, stabilize their economies, and
restore sustainable growth.

Members
Rather than listing all 189 members, it's easier to list the countries that are not members.

ACHIEVEMENTS/Role of IMF

The role of the IMF has increased since the onset of the 2008 global financial crisis. In fact, an
IMF surveillance report warned about the economic crisis but was ignored. As a result, the IMF
has been called upon more and more to provide global economic surveillance. It's in the best
position to do so because its requires members to subject their economic policies to IMF
scrutiny. Member countries also committed to pursuing policies that are conducive to reasonable
price stability. They agree to avoid manipulating exchange rates for unfair competitive
advantage.

The IMF was created at the 1944 Bretton Woods conference. It sought to rebuild Europe after
World War II. The Conference also set up a modified gold standard to help countries maintain
the value of their currencies. The planners wanted to avoid the trade barriers and high-
interest rates that helped cause the Great Depression.

International Bank for Reconstruction and Development [IBRD]

International Bank for Reconstruction and Development [IBRD] is equally known as the World
Bank, the IBRD was formed at the Bretton Woods Conference of 1944. Coming into operation in
1946, the IBRD obtains funds from three main sources, namely members’ contributions, loads
from developed countries and sales of bonds in the capital markets.

The World Bank operates, for the most part, through its two affiliates-the International Finance
Corporation [IFC] and [IDA]. Loans to the private sector, which must be guaranteed by the home
government of the borrower, are channeled through the IFC, while public sector loans are made
from the IDA.

Objectives/ Functions of IDA

1. The aims of IBRD are to aid in the advancement of less developed countries by making
long-term soft loans available to them
2. To rebuild the European economies devastated by the Second World War.

Organization of petroleum Exporting Countries [OPEC]

OPEC was formed in 1960 with the sole motive of promoting a good and stable price in the oil
market. The organization is made up of thirteen member countries including Nigeria who joined
the organization in 1971.

OBJECTIVES OF OPEC

1. To secure a high stability of oil prices

 2. To secure a complete regulation and control of the supply of petroleum to the world
market
3. To secure a common petroleum policy among member stables
4. To raise funds for the development of the economy of member states
5. To control production level of member states in order to ensure that oil is not excessively
produced.
6. To secure suitable markets for oil produced by member states
7. To fight for the interest of its members

ACHIEVEMENTS OF OPEC

1. Raising the price of oil among members states

2. Ensuring that oil is not excessively produced by member states
3. Stabilizing the oil prices in the market
4. Ensuring that a uniform oil royalty is paid to the oil producing countries

PROBLEMS OF OPEC

Despite the remarkeable achievements recorded by OPEC, the organization is still beseeched
with the following problems:

1. Violation of the organization’s regulation by member countries producing above the

stipulated quota.
2. Disagreement among member countries on price to be charged per barrel of oil.
3. The problem of granting production quotas per country
4. The problem of cultural differences among member countries in policy implementation.
5. Political instability that affects the volume of output and sales among most of the member
countries.
6. The existence of rival organization and other powerful oil producing countries that are
not of OPEC also creates a big challenge to the activities of OPEC.

Africa Development Bank [ADB]

One of the most important international organizations in Africa, the Africa, the ADB, was set up
in 1964, with the help of the United Nations Economic Commission for Africa and the
organization of African Unity. The body obtains finances from the contributions of the more than
50 African countries that member whose contributions vary according to their GNP or
Population. With the headquarters in Abidjan in Cote d’Ivoire.

OBJECTIVES OF ADB
1. To promote private and public investment in members countries
2. Promote economic cooperation between members
3. Provision of fund for the agricultural development of member nations
 4. Provision of loans to aid social and economic development of member nations.
5. Provide technical assistance to members in project, especially in the areas of water,
electricity, transport and agriculture.

WACH: West African Clearing House

The West African Clearing House is an international economic organization that was established
in 1975. Its headquarters was located in Freetown, Sierra Leone. It adopted English and French
as its official working languages.

WACH is a multilateral Clearing house which comprises fifteen members central banks of West
African states. These are Senegal, Gambia, Nigeria, Burkina Faso, Liberia, Mali, Sierra Leone,
Mauritania, Guinea Bissau, Togo, Ghana. Cote d’Ivoire, Republic of Benin, Niger and Guinea.

Objectives/ Aims of WACH

1. To encourage trade liberalization in the West African sub-region.

2. To enhance monetary and financial cooperation among member nations.
3. To promote the use of members’ national currencies for intra sub-regional business
transactions.
4. To encourage saving among member nations through the use and consolidation of foreign
reserves.
5. To solicit general mutual economic relationships among member nations.

General AGREEMENT ON Tariffs and Trade [GATT]

The General Agreement on tariffs and Trade established in 1947 to oversee world trade issues. It
is an international treaty that committed signatories to lowering barriers to the free flow of goods
across national borders. In nearly half a century, GATT had handled a total of 196 dispute cases
before it was replaced by World Trade Organization [WTO] in 1995. It membership is about 135
countries across the world.

OBJECTIVES OF GATT

1. WTO is a multinational institution that monitors the global trading system, and resolves
trade disputes between member nations.
2. WTO coordinates efforts to further reduce barriers to cross-borders trade and investment.
3. WTO promote global free trade
4. WTO helps to settle dispute among countries that relate to trade issues

United Nations Conference on Trade and Development [UNCTAD].

The UNCTAD is an association of developed and developing nations. It was convened in
Geneva, Switzerland, in 1964, in response to the anxiety of the developing countries over the gap
between their standard of living and of the developed countries of the world.

OBJECTIVES UNCTAD

1. To improve trade relations among developing countries and between the developing and
developed countries.
2. To increase the growth rate of the developing countries
3. To also aid the increase in the pace of economic development of underdeveloped nations,
in order to reduce the gap between them and the rich countries in the world.

EUROPEAN ECONOMIC COMMUNITY [E.E.C]

E.E.C was formed in Roman on 25th March 1957. It has the following countries as members.
Belgium, Britain, France, ITALY, Ireland, Luxembourg, Demark, Netherlands, and Germany.

OBJECTIVES OF E.E.C

1. To eliminate all forms of trade barriers among the member Nation

2. To establish a common commercial policy towards non-member countries.
3. To eliminate all forms of barriers to mobility of labour
4. To establish a common transport system and agricultural policy
5. To harmonize socio-economic and political policies
6. To establish a common fund for the enhancement of economic development among
member countries
7. Removal of internal tariff of member countries
8. Implementation of a common agricultural policy

ECONOMIC COMMUNITY OF WEST AFRICAN STATES [ECOWAS]

The Economic Community of West African States was established in 1975 by 15 member
nations, who signed a treaty in Lagos, Nigeria, on 28th May, of the same year. The Community
was later joined by a 16th member, Cape Verde in 1976. In 2002, Mauritania left the community,
so membership is back to the original 15 membership.

Currently, the member states include Benin, Cote d’Ivoire, Guinea, Togo, Burkina Fasso,
Senegal, Mali, Niger, Cape Verde, Guinea-Bissau, Ghana, Liberia, Nigeria, Sierra Leone and
The Gambia. The headquarters of the Community is now at Abuja, having been previously
headquartered in Lagos. Nigeria.
INSTITUTIONAL ORGANS OF ECOWAS

- The Authority of the Heads of States and government

 - The council of Ministers
- The general secretariat situated in Abuja
- The fund for co-operation, compensation and development

AIMS AND OBJECTIVES OF ECOWAS

1. To promote co-operation and integration among member nations
2. To harmonize economic policies for development of the members nations.
3. To create a Common market for member nations
4. Joint venture
5. Regional Fund for co-operation, compensation and development
6. To ensure balanced development among member countries .
7.

ACHIEVEMENT OFECOWAS

The major achievements of ECOWAS through the years cut across all sectors and include:

• The adoption of the Macroeconomic Convergence Report by the ECOWAS Convergence

Council
• Establishment of the ECOWAS Monetary Institute (EMI)
• Adoption of methodological guides for the harmonization of Public Finance Statistics,
Government Financial Operations Tables (TOFE), External Trade Statistics, Balance of Payment
(BOP) and International Investment Position (IIP).
• Conclusion of the review of the Sahel Strategy document and its action plan to boost regional
security.
• Formulation of an ECOWAS Common Trade Policy (CTP) and ECOWAS Trade Development
Strategy
• Completion of the Economic Partnership Agreement (EPA) with the signing by 13 Member
States.
• Custom Union in the offing with the implementation of the CET by Eight Member-States
• Free Movement of goods and persons boosted with the adoption of the ECOWAS Biometric
Identity Card to facilitate mobility and promote security in the region.
• Drafting of a Regional Border Management Manual for use in immigration/security training
institutions.
• Launching of the Ecolink project, which aims to transform and improve key operations within

PROBLEMS THE ECONOMIC COMMUNITY OF WEST AFRICAN STATES

1 .Language barrier
There are three languages that are used for communication within the ECOWAS bloc, that is
English, French and Portuguese. For easy communication among members there is the need for
individuals in the region to be able to speak these languages but this is proving too difficult. This
has necessitated the use of interpreters to make people understand each other at summit
meetings.

2.Widespread Poverty
Many of the member states of ECOWAS are among the poorest of the poor nations in the world.
Many of their citizens earn less than a dollar a day. This, in a certain sense is preventing real
economic integration of the sub-region while many continue to live in squalor and deprivation.

3.Human Rights Abuses

Another problem of the ECOWAS group is the penchant of the member states to abuse the
human rights of their citizens. The human rights record of some member states is nothing to
write home about. Champions of human rights abuse have cited member states on many
occasions over their human rights abuse.Togo was ever cited, Nigeria under Sanni Abacha has
ever been cited. This is a problem for ECOWAS.
4.Financial problems
The aims and objectives of the ECOWAS can only be achieved when the financial base of the
community is solid. However, some member states are not able to honour their financial
obligations to the community.This is one problem that has bedeviled the community over the
years, especially when it comes to the running of the affairs of the community.
5.Strong External Influence
Many of the member states of ECOWAS were former colonies of some former colonial powers.
Countries such as Britain, France and Portugal ever had a colony or two that now belong to the
ECOWAS group. These member states are still controlled, to a certain extent, by their former
colonial masters.
6. Single currency problem
One of the aims of the community is to establish a monetary union for the entire region. This was
aimed at culminating into a single currency for ECOWAS member states. However, the member
states have not been able to meet the convergence criteria, all at the same time for the single
currency be issued. This has made the attainment of that goal a mirage though efforts continue to
be made towards its achievement.
7.Political instability

WEEK THREE TOPIC

Current Economic plans; The Millennium Development Goals (MDG’S) NEEDS, Vision 2020.

INTRODUCTION

By the end of the lesson, the students should be able to;

1. Define Current economic plans

2. Explain the types of current economic plans and their achievement

Introduction

Recently, the Federal government introduces some current economic planning instrument into the
economy of the nation. These current economic plans were aimed towards the economic growth and
development of Nigeria.
 1. The Millennium Development Goals [MGD’S]
2. The National Economic Empowerment Development Strategy [NEEDS]
3. The Vision 20:20:20

Millennium Development Goals (MDG’S)

Meaning: [MDG’S]: The Millennium Development Goals [MDG’s] are eight international development
goals that were officially established following the millennium summit of the United Nations in 2000. All
the 193 united Nations member states and at least 23 international organizations have agreed to
achieve these goals by the year 2015. The goals are:

Goal 1. Eradicate extreme poverty and hunger

Goal 2. Achieve universal primary education

Goal 3. Promote gender equality and empower women

Goal 4. Reduce child mortality rate

Goal 5. Improve maternal health

Goal 6. Combat HIV/AIDS Malaria and other diseases

Goal 7. Ensure environmental sustainability

Goal 8. Develop a global partnership for development.

ACHIEVEMENT OF MDG’s

1. The building of Schools in rural areas to promote child education

2. The building of Hospital in rural areas to reduce child mortality rate among the children and
pregnant women
3. The building of bore-hold water in rural areas to provide drinking water for the rural dwellers
4. The provision of soft grant and social incentive for the poor in rural areas to reduce poverty
5. Providing technical support for capacity building in primary schools
6. Reduction the spread of HIV AIDS among the citizens

MEANING, OBJECTIVES AND ACHIEVEMENT OF NEEDS

NEEDS means National Economic Development Strategies [NEEDS], the programme started from 2003-
2007when Nigeria attempted to implement an economic reform programme called National Economic
Empowerment and Development Strategies [NEEDS]. NEEDS was formally launched in 2004. The
purpose was to raise the country’s standard of living through a variety of reforms, including macro-
economic stability, deregulation, liberalization, privatization, transparency and accountability.
NEEDS is a home grown poverty reduction strategy with a state version known as State Economic
Empowerment and Development Strategy [SEEDS], which is to help in the implementation of rural-
urban migration.

OBJECTIVES OF NEEDS

1. Reformation of government and public institutions to be more effective and to deliver effective
service to the people.
2. Accelerated economic development with emphasis on the private sector.
3. Poverty eradication through job creation and reduction of unemployment
4. Wealth creation, value orientation, diversification of the economy and boosting of non oil
export.
5. Improvement of agricultural productivity by offering farmers improved seeds, machinery and
crop varieties.
6. Provision of social capital and development of modern infrastructural facilities
7. Reduction of inflation to single digits.

ACHIEVEMENT OF NEEDS PROGRAMME

1. Reduction of poverty in rural areas and urban centers

2. Job creation through agricultural development
3. Effective service deliver in public institution
4. Value re-orientation
5. Reduction in inflation
6. Creation of new agencies to fight corruption and production of fake drugs.

VISION 20.20.20

The vision 20.20.20 is a vision statement that by the year 2020, Nigeria would be among the 20 largest
economies of the World, able to consolidate its leadership role in Africa, and establish itself as a
significant player in the global economic and political arena.

NEEDS objectives, among other things, are to stimulate economic growth and launch the country on the
path of sustained and rapid social and economic development. Its envisaged that the success of the
programme should be measured by the extent to which it realizes the following key parameters set by
the government.

1. Macro economy: To achieve a sound, stable and globally competitive economy with a GDP of
not less than 900 billion dollars and a per capital income of not less than 4000 dollars per
annum.
2. Political Stability: To achieve a peaceful, harmonious and stable democracy
3. Education: A modern and vibrant education system which provides the opportunity for
maximum potential, adequate and competent manpower.
 4. Infrastructure: To ensure provision of adequate infrastructure services that supports the full
mobilization of all economic sectors.
5. Manufacturing: A vibrant and globally competitive manufacturing sector that contributes
significantly to the GDP with a manufacturing value added of not less than 40%.
6. Health: A health sector that supports and sustains life expectancy of not less than 70 years.
7. Agriculture: A modern, technologically enabled agricultural sector that fully exploits the vast
agricultural resources of the country and ensures national food security and contributes to
foreign exchange earnings.

WEEK FOUR TOPIC

INTRODUCTION

1.0 By the end of the lesson, the students should be able to;
2.0 Identify the various economic plan of Nigeria from inception
3.0 Discuss the various economic plans of Nigeria
4.0 State their objectives and achievement

SECOND LESSON NOTE

CURRENT ECONOMIC PLANS;MDG,NEEDS,VISION 2020,and SURE P

MILLENIUM DEVELOPMENT GOALS(MDGS)

The overall programme is rooted in the millennium declaration adopted 189 nations including Nigeria
and signed by 149 heads of states and government during the United Nations millennium summit in
September 2000

The MDG is a set of eight points agenda on how to stem the problems of poverty and its attendants
horrors in the less developed countries of the world.

OBJECTIVES OF MDG
1.To eradicate extreme poverty and hunger
2.To achieve universal basic education
3.To promote gender equality and empower women
4.To reduce child mortality
5.improve maternal health
6.To combat HIV/AIDS,malaria and other diseases
7.To ensure environmental sustainability
8.To develop global partnership for development

ECONOMIC EMPOWERMENT AND DEVELOPMENTAL STRATEGY , NEEDS NATIONAL

NEEDS is Nigeria’ home grown poverty reduction strategy paper.It is the medium-term strategy
paper(2003-2007)which was derived from the country’s long –term goal of poverty reduction ,wealth
creation ,employment generation and value re-orientation .It is a nationally coordinated framework of
action in close collaboration with the state and local government (with SEEDS)and other stakeholders,in
order to makeNigeria the Millennium Developmental Goals (MDGs)

SPECIFIC REFORM PROGRAMS IN NEEDS

1. Public sector reforms

2. Privitization and liberalization

3. Good governance

4. Transparency and anti –corruption

5. Service deliveries by government agencies

OBJECTIVE ROLES OF NEEDS

1. Poverty reduction

2. Employment generation

3. Wealth creation.

VISION 2020

Vision 2020 is an articulation of the long-term intent to launch Nigeria back to the path of sustained
social and economic progress and accelerate the emergence of a truely prosperous and united Nigeria.
The vision 2020 aims at making Nigeria one of the top twenty economies in the world by the year
2020.By 2020 ,the federal government is targeting a GDP of not less than 900 billion and a per capital
income of not less than 4,000

OBJECTIVES OF VISION 2020

The bond objectives of vision 2020 are;

1.The social dimension envision an equal society that can sustain a life expectancy of least 70 years

2. The economic dimension envisages a vibrant economy whose manufacturing sector can contribute at
least 25 percent to Cross Domestic Product. [GDP].

2. Optimizing human and natural resources to achieve rapid growth economic growth

2.Translating the growth into equitable social development for all citizens

SUBSIDY REINVESTMENT PROGRAMME(SURE-P)

This is the programme designed by the federal government of Nigeria to cushion(absorb)the adverse
effects on the citizens as a result of the removed fuel subsidy. The total projected subsidy reinvestment
fund per annun is 1.134trillion to be shared as follows.

#478.49 billion to the federal government

#411.03 billion to the state government

#203.23 billion to the local government

#9.86 billion to the federal capital territory(FCT)and

#31.37 billion as transfers to derivation and ecology development of natural resources and stabilization
fund.

OBJECTIVE

1.To mitigate the immediate impact of the petroleum subsidy removed on the population ,particularly
the poor and vulnerable the poor and vulnerable in the country.

2.To accelerate economic transformation through investment in critical infrastructural projects

3.to lay a foundation for the successful development of a national safety net program

WEEK FIVE

TOPIC : Economic Development challenges

By the end of the lesson, the students should be able to;

1.0 Explain the meaning of economic development challenge

2.0 Identify and discuss the economic challenges facing Nigeria

Economic Development challenges

Economic development challenges can be described as various impediments, natural man-made or even
infrastructural, that militate against rapid economic progress and development of a nation. Such
challenges are multiple and multifaceted. The following are the economic challenges facing Nigeria and
other Africa countries.

1.High debt burden

2.Poverty

3.Corruption
4.HIV/AIDS

5.Power or unstable energy supply

6.Resource control

7.Terrorism

8.Political instability

Meaning of Debt Burden

Debt could be defined as a financial obligation meant to be fulfilled to a creditor

within a stipulated period of time. A debtor could individual, an organization or a country. A debt
becomes a burden to an individual or a nation when the accrued interest on such a debt has overridden
the initial amount borrowed to a great extent and of which the repayment period has also been
exceeded.

Poverty

Poverty is defined as the inability of an individual to acquire the basic needs of life, which are food,
clothing and shelter.By international standards a poor person is some one who is earning or living below
one dollar per day.

Symptoms of a poor person

1.Inadequate hygiene

2.Poor standard of living

3.Lack of security

4.Loss of self-actualization

5.Lack of shelter

6.The degrees of Poverty are:

Absolute poverty or destitution

This refers to the deprivation of basic human needs which commonly includes food, water, sanitation,
clothing, shelter, health, care and education. Absolute poverty depends not only on income but also on
access to services.

Relative poverty

This is the economic inequality in the location or society in which people live. Relative poverty views
poverty as a socially defined and dependent on social context; hence, poverty is a measure of income
inequality. It is usually measured as the percentage of population with income less than some fixed
proportion of median income. Relative poverty is the most useful measure for ascertaining poverty rates
in developed nations.

METHODS OF POVERTY ALLEVIATION/ERADICATION

1.Basic health facilities and social infrastructure should be provided through government and private
partnership

2.Small scale businessmen should have access to soft loans and other financial services and benefits

There should be creation of low-income housing estates that would be affordable to the average income
earner.

3.Increase in agricultural production to provide food for the poor

4.Youth empowerment programmes that can eradicate redundancy and idleness should be organized.
This would allow for basic skill acquision and thus guarantee employment and self-reliance.

What is poverty alleviation programme?

Are programmes designed and put in place to reduce the poverty rate and also to create meaningful
employment for the people. It is also a series of efforts geared towards eradicating poverty in society,
thereby raising the people’s standard of living.

SOME POVERTY ALLEVIATION AGENCIES

1.National Agency on Poverty Eradication Programme [NAPEP]

and Eradication, Agencies for poverty alleviation (NAPEP, NDE etc.)

SECOND LESSON NOTE

Meaning and effects of poverty, methods of poverty eradication and alleviation

POVERTY

It is a condition where basic needs for food, clothing and shelter are not been met .it can also be seen as
a state or condition in which a person or community lacks the financial resources and essentials to enjoy
a minimum standard of life and well being that is considered acceptable in the society .Poverty is
generally of two types
Absolute/extreme poverty: This is a condition characterized by severe deprivation of basic human needs
including food, safe drinking water, sanitation facilities, health, shelter, education and information.

Relative poverty: This refers to a standard which is defined in terms of the society in which an individual
lives.

EFFECTS OF POVERTY ON;

1. HEALTH: This includes things from diseases to life expectancy to medicine. Diseases are very common
in people living in poverty because they lack the resources to maintain a healthy living
environment .they are almost always lacking nutritious food which decreases their bodies ability to fight
of diseases. Sanitation conditions are usually very low, increasing the chances of contracting diseases. In
general, people living in poverty cannot afford appropriate medicine to treat diseases.

2. EDUCATION: Many people living in poverty are unable to attend school from very early stage. Families
may not be able to afford the necessary clothing or food supply.

3. ECONOMY: Mainly the number of people living in poverty influences employment rates heavily.
Without an education, people are unlikely to find a paying job. Unemployment hinders country from
developing into a strong economic system. A high unemployment rate can impede a country from
progressing in all aspects.

4. Society: Many people living in poverty are homeless, which put them in the street. There also seem to
be a connection between poverty and crime. When people are unemployed and homeless, social unrest
may take over and lead to an increase in crime.

METHODS USED AT REDUCING POVERTY

Poverty cannot be completely eradicated as it is largely caused by human factors. But it can be
alleviated.

Poverty alleviation involves the strategic use of tools such as education, economic development,
health and income redistribution to improve the livelihood of the world poorest groups by government
and internationally approved organizations. They also aim at removing social and legal barriers to
income growth among the poor. The following can help alleviate poverty:

1. Quality education

2. Adequate health facility

3. Adequate food and water supply

4. Provision of skills and training

5. Income redistribution.
 AGENCIES FOR POVERTY ALLEVIATION

National Poverty Eradication Programme (NAPEP) is a 2001 program by the Nigerian government aiming
at poverty reduction, in particular reduction of absolute poverty. It was designed to replace the poverty
alleviation program.NAPEP and NAPEC coordinate and oversee various other institutions, including
ministries and developed plans and guide lines for them to follow with regards to poverty reduction.

GOALS OF NAPEP

NAPEP goals include training youths in vocational trades, to support internship, to support micro-
credit ,to create employment I n the automobile industry and help VVF patients .

NATIONAL DIRECTORATE OF EMPLOYMENT (NDE)

NDE was approved on 26th march, 1986 but its programs were launched nationwide in January 1987.

GOALS OF NDE

1.To design and implement programmes to combat mass unemployment.

2.To articulate polices aimed at developing work programmes with labour intensive potentials

3.To obtain and maintain a data bank on employment and vacancies in the country with a view to acting
as a clearing house to link job seekers with vacancies in collaboration with other government agencies.

4.To implement any other policies as may be laid down from time to time by the board established
under sections of the enabling act.

WEEK SIX TOPIC

What is Economic Reform Programme?

This can be defined as those government programmes aimed at strengthening the performance of the
various sectors of the economy. Examples of such economic reform programme are the consolidation of
financial institutions, privatization and commercialization, indigenization, nationalization and
deregulation. Other programmes include the roles performed by government agencies or commission
towards the operation and performance of the economy. Such agencies are EFCC, ICPC,NAFDAC and
SON.

What is Bank consolidation?

These are policies of the government through the central bank to strengthen the financial institutions in
the country in order to for them to support the real sector of the economy.

Objectives of Bank consolidation policy

 1. To eject fresh capital into the banking sector
2. To create better platform for more effective banking regulation and policy realization.
3. To make Nigerian banks to become more internationally competitive
4. To create room for mergers and acquision of smaller banks
5. To enables banks to fund big projects.

What is indigenization?

This is the transfer of ownership and control of business enterprises from foreigners to the
indigenes. It is a policy designed to ensure greater participation of indigenes in the ownership,
control and management of business enterprises.

Objectives of indigenization policy

1. To reduce foreign domination of the economy and ensure indigenization participation.

2. To ensure that the means of production and distribution are controlled by Nigerians.
3. To ensure that the country is self reliant
4. For industrial development of the country
5. To enable the indigenes to control their resources

What is Nationalization?

This is a government deliberate policy to take over the control and ownership of private
enterprises due to political and economical reasons. It is the process by which the government
takes over the control and ownership of industries from the private individuals.

Reason for Nationalization

1. To prevent exploitation of the citizens

2. To reduce foreign dominance of the economy
3. To expand production and distribution
4. To prevent wasteful competition among private individuals
5. To provide uninterrupted services to the citizens
6. To enable the government redistribute wealth among the citizens

What is commercialization?

This is a policy geared towards making state-owned enterprises to become more efficient and
profit oriented. The policy makes it possible for public enterprises to become more visible
and effective.

What is privatization? This is a government policy designed to enables individuals and

private or corporate organization to take over the ownership and control of government
business such as public companies and corporation.

Reasons for Commercialization and Privatization

 1. Privatization and commercialization help to develop and used resources in an effective
way.
2. Privatization allows private sector to contribute to economic development
3. Commercialization and Privatization help to generate more revenue
4. Commercialization and Privatization help to reduce waste in the economy
5. Commercialization and Privatization help to redirect the used of resources in a better way
6. Commercialization and Privatization help to boost economic development
7. Commercialization and Privatization help to create employment opportunities
8. Commercialization and Privatization help to attract foreign investors into the country.

What is deregulation?

Deregulation is the act of removing government control from the operation, production,
storage and distribution of goods and services handling them to the private sector.
Deregulation is the process that allows the forces of demand and supply to regulate the prices
of goods and services.

Advantages of deregulation

1. Deregulation helps to create competition in the economy

2. Deregulation helps to reduce cost and leads to more savings
3. Deregulation helps to develop the economy
4. Deregulation helps to create more job opportunities
5. Deregulation helps to attract more investors into the economy
6. Deregulation helps to generate more revenue in the economy

ROLES OF ECONOMIC AND FINANCIAL CRIME COMMISSION [EFCC]

EFCC: Means Economic and financial crime commission. It was established in 2003 with the
following objectives:

1. To sanitize the banking sector of financial crimes

2. To investigate financial misappropriation in the public and private sector
3. To arrest the criminals and prosecute cases of tax evasion
4. Fight cybercrime and the scourage of Advance Fee Fraud using smart technology
5. the public

Achievement of EFCC

1. The creation of six zonal offices and thirty six states offices for providing services on
drugs related issues
2. The organization of workshop to enlighten the public and stakeholders in the fight against
fake drugs
3. Arresting and successful prosecution of some cases leading to recovering of confiscating
of fake products from dealers
 4. Establishing students school clubs to fight against fake drug products in the educational
institutions.

ROLES OF INDEPENDENT CORRUPT PRACTICE COMMISSION

ICPC: Means independent corrupt practice commission. It was established in year 2000 with
the following mandates or objectives;

1. To receive and investigate complaints from members of the public on the allegations of
corrupt practices and in appropriate cases
2. To prosecute the offenders of financial crimes
3. To instruct, advise and assist any officer, agency on how to eliminated corruption in the
public institution
4. To educate the public against bribery, corruption and others offences
5. To enlist and foster public support in combating corruption.

Achievement

The Roles of National Agency for Food and Drug Administration and Control [NAFDAC]

NAFDAC: Means National Agency for Food and Drug Administration and Control. It was
established on 1994 with the head office in Abuja.

NAFDAC is saddled with the following responsibilities;

1. Regulate and control the importation, exportation, manufacturing, advertisement,

distribution, sale and use of drugs, cosmetics, medical devices, bottled water and
chemicals.
2. Conduct appropriate test and ensure compliance with standard specifications, designated
and approved by the council for the effective control of quality of food, drugs and
cosmetics
3. Undertake investigation into the production premises and raw materials for food and
drugs.
4. Undertake inspection of imported food and drugs
5. Compile standard specifications, regulation and guidelines for production of foods and
drugs
6. Under the registration of food, drugs and other related products
7. Control the exportation and issue quality certification of food and drugs.
8. Establish and maintain relevant laboratories in the country for testing purposes.

ACHIEVEMENT OF NAFDAC

1. The creation of six zonal offices and thirty six states offices for providind services on
corruption issues
 2. The organization of workshop to enlighten the public and stakeholders in thd fight
against corruption
3. Arresting and successful prosecution of some cases leading to recovering of looted of
monies
4. Establishing students school clubs to fight against corruption in the educational
institutions

ROLES OF STANDARD ORGANIZATION OF NIGERIA [SON]

SON: Means the standard organization of Nigeria. It was established on and the head office is in
Abuja. The standard organization of Nigeria is saddled with the following responsibilities:

1. To investigate the quality of facilities, materials and products in Nigeria

2. To ensure reference standard for calibration and verification of measures and measuring
instruments.
3. To complete an inventory of products requiring standardization.
4. To register and regulate standard marks and specifications.
5. To establish and maintain laboratories across the country
6. To undertake preparation and distribution of standard samples
7. To sponsor national and international conferences
8. To undertake research as maybe necessary for the performance of its functions
9. To develop methods for testing products, materials and imported goods.

THE END

References: Comprehensive, certificate and Essential Economics.