ECONOMIC REFORM AND NATIONAL DEVELOPMENT: A COMPARATIVE ANALYSIS OF NIGERIA AND , 1999 - 2010

BY

ONWUCHEKWE JOSEPH NDUBUISI PG/MSC/09/51164

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF SCIENCE (M.SC) DEGREE IN POLITICAL SCIENCE (INTERNATIONAL RELATIONS)

DEPARTMENT OF POLITICAL SCIENCE UNIVERSITY OF NIGERIA, NSUKKA

SUPERVISOR: PROF. JONAH ONUOHA

MARCH, 2011 i

ABSTRACT

Economic reforms are the different macroeconomic and microeconomic policies designed by the government to redress the distortion in the of any nation. It is important to mention that Economic reform is not peculiar to Nigeria alone. Almost all countries the world over have undertaken different forms of economic reforms at one time of the other. The contents and strategy of reforms have varied from country to country depending on the circumstance of each country. One of the countries that have consistently implemented economic reform policies in recent time is China. The rapid rise of China as a major economic power within a time span of about 30 years is often described by analysts as one of the greatest economic success stories in modern times. The Nigerian government over the years has embarked on several economic reforms aimed at bettering the lives of its citizenry but these policies have always failed to live up to their projections. This study attempts to answer the following questions; has the economic reforms impacted on National Development in Nigeria and China? Policy inconsistencies and policy consistency is implicated in the economic reforms failure in Nigeria and success in China? The approach as propounded by Karl Marx was employed as our theoretical framework. The Marxian political economy approach also known as dialectical materialism places emphasis/primacy on material or economic conditions of society. It is premised on the belief that man is dominantly motivated by economic needs. Using this approach, this study attempt to look at the factors which made the economic reforms in China to be successful and has led to national development, while the same attempt by Nigeria to carry out economic reforms have always met with failure. Methodologically, the study adopted Ex-post-facto research design, field observation technique which invariably led to the sourcing of data through primary and secondary sources and our data was analyzed using content analysis. Findings revealed that due to policy consistency and strong leadership, China economic reform led to economic growth that impacted on national development. Chinese elites adopted an inward looking, ‘trial and error’ method or what can be called gradualism. The reform process in Nigeria was marred by policy inconsistencies. Aside this, the reform process has also been dodged with problems and controversies. We recommend that the government of Nigeria should be consistent with making and implementing economic policies that will impact on national development. The Government of China has to make sure that huge amount of revenue pouring into the country is not restricted to few individuals as it is obtainable in Nigeria, rather the Chinese leadership should make sure that these revenues get down to the masses through a trickledown effect in the form and incentives to boost private initiatives. ii

LIST OF ABBREVIATIONS

Communist Party of China (CPC)

National People's Congress (NPC)

Chinese People's Political Consultative Conference (CPPCC)

Kuomintang (KMT)

Republic of China (ROC)

People's Republic of China (PRC)

Purchasing power parity (PPP)

Severe Acute Respiratory Syndrome (SARS)

National Development and Reform Commission (NDRC)

Regionally Decentralized Authoritarian (RDA)

iii

TABLE OF CONTENTS

Title Page ….. ….. …… ….. ….. i Approval Page….. ….. …… ….. ….. ii Dedication ….. ….. …… ….. ….. iii Acknowledgement ….. …… ….. ….. iv Abstract ….. ….. …… ….. ….. v List of Tables ….. ….. …… ….. ….. vi List Figures ….. ….. …… ….. ….. vii List of Abbreviations ….. …… ….. ….. viii Table of Contents….. ….. …… ….. ….. xi

CHAPTER ONE 1.0 Introduction ….. ….. …… ….. ….. 1 1.1 Background to the Study ….. …… ….. ….. 1 1.2 Statement of Problem ….. …… ….. ….. 6 1.3 Objectives of Study ….. …… ….. ….. 9 1.4 Significance of Study ….. …… ….. ….. 9 1.5 Literature Review ….. …… ….. ….. 10 1.6 Theoretical Framework ….. …… ….. ….. 35 1.7 Hypothesis ….. …… ….. ….. 39 1.8 Methods of Data Collection and Analysis …… ….. ….. 39 1.9 Data Analysis ….. …… ….. ….. 40 1.10 Research Design ….. …… ….. ….. 40

CHAPTER TWO 2.0 HISTORY AND DEVELOPMENT OF ECONOMIC REFORMS IN NIGERIA AND CHINA ….. ….. ….. 43 2.1 History of Economic Reforms in Nigeria ….. ….. 43 2.2 History of Economic Reforms in China ….. ….. 50

CHAPTER THREE 3.0 ECONOMIC REFORMS POLICIES IN NIGERIA AND CHINA ….. 55 3.1 Economic Reforms Policies in Nigeria ….. ….. 55 3.2 Economic Reform Policies in China ….. ….. 61

CHAPTER FOUR 4.0 THE IMPACT OF ECONOMIC REFORMS IN NIGERIA AND CHINA… 70 4.1 The Impact of Economic Reforms in Nigeria ….. ….. 70 4.1.1 Political Elite and Economic Reforms in Nigeria ….. ….. 71 4.1.2 Reform Process under the Obasanjo Presidency (1999-2007) ….. 73 4.2 The Impact of Economic Reforms in China ….. ….. 76 4.2.1 Political Elite and Economic Reforms in China ….. ….. 77

CHAPTER FIVE: 5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS ….. 80 5.1 Summary ….. …… ….. ….. 80 5.2 Conclusion ….. …… ….. ….. 81 5.3 Recommendations ….. …… ….. ….. 84 Bibliography ….. …… ….. ….. 87 1

CHAPTER ONE

1.0 INTRODUCTION 1.1 Background to the Study Economic reforms are the different macroeconomic and microeconomic policies designed by the government to redress the distortion in the economy of any nation. It is important to mention that Economic reform is not peculiar to Nigeria alone. Almost all countries world over have undertaken different forms of economic reforms at one time of the other. The contents and strategy of reforms have varied from country to country dependency on the circumstance of each country (Kwaneshie, 2005). According to Essien (2005), economic reform can be classified into first generation and second-generation reforms. The first –generation reforms are geared towards opening the economy to foreign competition, giving market forces the leading role in a locally resources and reducing the public sector’s role in productive activities. The second generation reform, on the other hand, aimed at a complete transformation of the role of the state and the setting up of government institutions that will guarantee the rule of law, while supporting private sector initiatives and activities. The cry or demand for political and especially economic reform by the western or capitalist countries through their agents and some international agencies like the international Financial Institutions and Organizations is not new. The question that begs for answer is that have these reforms has being able to lead to or drive national development which the protagonists has been advocating? In some countries, especially the western nations where these reforms have been carried out, it seemed to have aided the development of their ; while the developing and underdeveloped nations instead of improving, are rather losing the little progress they have made despite their following the instructions of the agents of these reform to the later. It is worthy to mention that the international political economy, which took a great turn in the early eighties commonly referred to as the “End of History” in Fukuyama’s parlance, made bold steps in trying to integrate the whole world. It is against this background that the regime of President Ronald Reagan and Prime Minister Margaret Thatcher of both United States of America (USA) and Great Britain (UK) respectively endeavored to pull down the frontiers and “open up” domestic economies for easier trans- national monetary and trade exchange (Milner, 1998:11). This was term ‘globalization’ which involved free trade, opening up of national economies and borders, a cashless society where business can be transacted in a twinkle of an eye without bothering about the worrisome rules and . 2

One of the countries that have successfully carry out the outward oriented and market friendly policies in recent time is China which seems to be the new bride in the international political economy through her emergence as a super power who can compete comfortably and even surpass other countries which has been major players in the global political economy for decades. Chinese economic reforms, which have been in flux for three decades, have more than doubled China’s economic growth, from an average of 4.4 percent annually before 1978 to an average of 9.5 percent after 1978. Even more impressively, the contribution of TFP to the growth has increased from 11 percent before 1978 to more than 40 percent afterwards (Perkins and Rawski, 2008). This process has transformed the world’s largest developing country from a centrally- into a mixed market economy, while simultaneously reducing poverty at a scale unparalleled in world history (World Bank, 2002). During the reform period the Chinese per capita GDP increased by almost eight-fold, and China has transformed from one of the poorest countries in the world into a major economic power. Today’s China is the world’s largest producer and largest consumer of many conventional industrial staples and high-tech products, such as steel, cars, TV sets, personal computers, cell phones and internet usage, etc. (NSB, 2005) and has the world’s largest foreign reserves. The current size of the Chinese economy, in terms of GDP, is larger than the sum of 83 countries in Eastern Europe, the CIS and all of Africa. The rapid rise of China as a major economic power within a time span of about 30 years is often described by analysts as one of the greatest economic success stories in modern times. From 1979 (when economic reforms began) to 2007, China’s real gross domestic product (GDP) grew at an average annual rate of over 9.8%; in 2007, it rose by 11.4%. The Chinese economy in 2007 (in real terms) was nearly 14 times larger than it was in 1979, and real per capita GDP was more than 10 times larger (Morrison, 2008). By some measurements, China is now the world’s second largest economy and some analysts predict it could become the largest within a decade or two. China’s economic rise has led to a substantial increase in U.S.-China economic relations. Total trade between the two countries surged from $5 billion in 1980 to an estimated $389 billion in 2007. For the United States, it is estimated that in 2007, China was its 2nd largest trading partner, its 3rd largest export market, and its largest source of imports. Many U.S. companies have extensive manufacturing operations in China in order to sell their products in the booming Chinese market and to take advantage of low cost labor for manufacturing products for export. These 3 operations have helped U.S. firms remain internationally competitive and have supplied U.S. and other nations’ consumers with a variety of low cost goods. China now ranks 29th in the Global Competitiveness Index and ranked 135th among the 179 countries measured in the Index of Economic Freedom. 46 Chinese companies made the list in the 2010 Fortune Global 500 (Beijing alone with 30).Measured using market capitalization, four of the world's top ten most valuable companies are Chinese. Some of these include first-ranked PetroChina (world's most valuable oil company), third-ranked Industrial and Commercial Bank of China (world's most valuable bank), fifth-ranked China Mobile (world's most valuable telecommunications company) and seventh-ranked China Construction Bank. Although a middle income country by the world's standard, the PRC's rapid growth managed to pull hundreds of millions of its people out of poverty since 1978. Today, about 10% of the Chinese population (down from 64% in 1978) live below the poverty line of US$1 per day (PPP) while life expectancy has dramatically increased to 73 years. More than 93% of the population is literate, compared to 20% in 1950. Urban unemployment declined to 4 percent in China by the end of 2007 (true overall unemployment might be higher at around 10%). The PRC's growth has been uneven when comparing different geographic regions and rural and urban areas. The urban-rural income gap is getting wider in the PRC with a Gini coefficient of 46.9%. Development has also been mainly concentrated in the eastern coastal regions while the remainders of the country are left behind. To counter this, the government has promoted development in the western, northeastern, and central regions of China (Wikipedia, 2011). The economy is also highly energy-intensive and inefficient – it uses 20%–100% more energy than OECD countries for many industrial processes. It has now become the world's largest energy consumer but relies on coal to supply about 70% of its energy needs. Coupled with a lax environmental , this has led to a massive water and air pollution (China has 20 of the world's 30 most polluted cities). Consequently, the government has promised to use more renewable energy with a target of 10% of total energy use by 2010 and 30% by 2050. In 2010, China became the largest wind energy provider worldwide, with the installed wind power capacity reaching 41.8 GW. On January 1, 2011, Russia said it had begun scheduled oil shipments to China, with the plan to increase the rate up to 300,000 barrels per day before the end of 2011 (Wikipedia, 2011) . Nigeria on the other hand, is a vibrant country with a lot of economic opportunities for whoever takes time to explore the vast resources inherent in her. Despite the presence of 4 these natural endowments both in human and material forms, the Nigerian State remains one that is in constant quest for development as it has always enjoyed the unenviable status of one of the least developed states in the world. Nigeria, like most developing economies of Africa and elsewhere, has for long been under the state command. By 1960, when the country achieved political independence from erstwhile colonial master Britain, owing to the imperialistic economic interest, which did little to encourage the building of viable indigenous private sector, it was quite clear that the extant economic infrastructure could not act as a catalyst for a private-sector driven economy. Specifically, the private sector at the time lacked the necessary financial capital to make respectable impact on the country’s economy. After over four decades of active state capitalism, the necessary infrastructure for meaningful take-off of a private-sector-led economy remained largely underdeveloped and dysfunctional where they existed. State run public enterprises, PEs, fell into profound deficits, as they became veritable avenues of unbridled primitive accumulation characterized by corruption, nepotism, mediocrity and other miscellaneous vices. As in 1999, the Chief Olusegun Obasanjo Government estimated that over $100 billion dollars had been invested in such badly run PEs (Mallam Nasir El- Rufai, 2003, p. 49). Against this backdrop, the Obasanjo administration soon after coming to power heightened the momentum towards state divestment in areas of the economy where the state hitherto maintained strong holdings. In other words, although the Obasanjo Government injected vigour into the drive towards private-sector-led economy more than the previous administrations in the country, the shift towards that paradigm has however been the initiative of those previous administrations, dating as far back as Alhaji Shehu Shagari’s administration in the 1980s (Olukoshi, 1993, p. 5). Following elections in 1999, the first administration of President Olusegun Obasanjo (1999-2003) focused on ensuring political stability, strengthening democratic practices, and tackling corruption. The second Obasanjo administration (2003 – present) embarked on a comprehensive economic reform program based on a homegrown strategy, the National Economic Empowerment and Development Strategy (NEEDS). The development of NEEDS at the federal level was complemented by individual State Economic Empowerment and Development Strategies (SEEDS), which were prepared by all 36 Nigerian states and the Federal Capital Territory (FCT). The NEEDS program emphasized the importance of private sector development to support wealth creation and poverty reduction in the country. The objectives of NEEDS were addressed in four main areas: macroeconomic reform, structural reform, public sector reform and institutional and governance reform. The central objective of 5 the macroeconomic reform was to stabilize the Nigerian economy, to improve budgetary planning and execution, and to provide a platform for sustained economic diversification and non-oil growth (Barnett and Ossowski, 2006; IMF 2005a; Okonjo-Iweala and Osafo-Kwaako, 2007). However, the Nigerian government over the years has embarked on several economic reforms aimed at bettering the lives of its citizenry but these policies have always failed to live up to their projections. The inability of the government to turn around the economy is not in these policies, but rather in the government inability to find one right way out of the wrong ways it had followed. On the other hand China’s experiment with market reform has propelled her into the top ten trading nations in the world. Over the past two decades, China has achieved the fastest economic growth of any national economy and could become the world largest economy during the first half of the 21st century. One area of similarity in the reform processes of Nigeria and China is the strong presence of the state in the running of the economy. However, the difference here is that the reform policies being implemented is different in the sense that, that of the Chinese is homegrown while that of Nigeria is foreign-imposed on the Nigerian bourgeois-capitalists who control the Nigerian state.The thrust of this study is to examine the factors responsible for the success of the over the past three decades and also the factors that is equally responsible for the failure of Nigerian economic reform despite the huge amount of human and material resources that has been expended in the process of trying to carry out these reform over the past two decades in comparative terms. 1.2 STATEMENT OF PROBLEM Gunde (2007) quoting Professor Lin said the economic reforms as dictated by World Bank and IMF may be suitable for market economies but it may not be for developing and transition economies and indeed African countries. Many developing countries actively implemented market-oriented economic reform programmes espoused by the World Bank and IMF. Evidence in these countries has revealed that the reforms have not recorded significant successes. Baden, (1997) and Obadan (2003) observed that the countries witnessed worsening income distribution, increased poverty and conditions of living deteriorated to intolerable levels. Similarly, the economic reforms created the viability problem and the failure of State Owned Enterprises (SOE) reforms in some countries in Sub- Saharan Africa, Latin America, former and the countries in Eastern Europe. There were also the problems of social burden, retrenchment, inequalities in income and outbreak of the international debt crisis thereby hindering the progress of national development. 6

Nigeria is a member and signatory to many multilateral and regional trade agreements, hence she is fully integrated into the global economic system. The policy response to such economic partnership agreements on trade policy has been to remove trade barriers, reduce and embarked on outward oriented trade policies. Trade and financial liberalization as advocated by the West brought along with it promises of economic boom, increased commercial activities and proliferation in distributive finance and trade. Nigeria, like every other African nation is a developing country and very much in search of whatever way out of the pervasive underdevelopment that has made her to continuously go cap in hand before the Western countries begging for assistance in her effort towards development. For a country like Nigeria that is in need for economic development and self-reliance, there is need for her to pursue an economic course that would be beneficial to its national economic objectives rather than cosmopolitan interests. Nigeria like other less developed countries heartily embraced these trends of trade and financial liberalizations in the belief that it would not only open up commercial activities in the domestic economy but would also launch it out into gaining access to international markets without much constraints. In order not to be left behind in the liberalization train, the Nigerian state, just like the Chinese did embarked on aggressive reforms in their economic and political sectors through the implementations of the policies of , and commercialization, thereby leaving the economies for market forces to determine who gets what, when and how. Ever since the adoption of the trade liberalization policy or market oriented reform, economic development in Nigeria seems to have been dragged many kilometres back. Thus the economy has become ever weaker and ever dependent on the advanced countries’ economies. In the face of the deepening poverty, the Nigerian state appeared to be plunged deeper in debt crisis, civil strife, hunger and starvation which threatened her peace and development. China on the other hand is singing a different song, because her own economic reform which was carried out through an incremental process happened to be very successful in comparison to that of Nigeria. At the milestone third plenum of the Chinese Party Congress 11th Central Committee in December 1978, the party leaders decided to undertake a program of gradual but fundamental reform of the economic system that would reduce government planning and direct control while increasing the role of the market mechanisms in the economic system. Given the dissatisfaction with the performance of the economy under the centrally planned system and the extent to which the Chinese economy fell below the neighboring economies of Japan, the Republic of Korea and Singapore, which were market friendly even at that time, the Chinese 7 leaders decided to embark on economic adjustment that is compatible with structures of the domestic economy and that would ensure economic prosperity. Basically, the reform agenda was home conceived, home grown and home implemented. This is fundamentally different from the economic adjustment program that commenced in Nigeria in 1986. Rather than being home initiated, it was the brainchild of the International Monetary Fund, later designated in Nigeria as the International Ministry of Finance and of course the World Bank. The reform package was externally designed and imposed on the Nigerian system whose peculiarities and existing economic structures were not taken into consideration (Bello, 2005). The Chinese economic reform was designed to be gradually implemented through experimentation which is exactly what the government has done overtime. The government started with the economy s grass root sector of agriculture; tested, assessed and monitored every stage of the adjustment to ensure efficiency and prevent a possible crash of the experiment. The industrial reform was planned to be implemented in phases, with the success of one stage carefully leading to another and this meticulous implementation approach applies to all aspects of the economic reform. The implementation strategies in Nigeria show ever significantly different. There was a rush and haphazardness in the implementation of the reform package mainly because the agenda was externally designed and the implementers had to be in the rush to hit the goal post set by the Bretton Woods institutions in order to qualify for the so called development assistance. For instance, at the beginning of the structural adjustment programing 1986, Nigeria was persuaded to instantly embark on currency devaluation so as to promote aggressive exports. Nigeria, being an import dependent economy had little to offer to take advantage of the massive devaluation. Consequently, a large number of the Nigerian industries run aground because of the high operation costs arising from the sudden upsurge in the cost of imported raw materials and the capital goods following the devaluation of the domestic currency. The economic mismanagement and the wrong methodology of the reform implementation created untold hardships for the Nigerian people and worsened the poverty situation. The most crucial stage in the economic reform process is the privatization of the State Owned Enterprises (SOEs) or the transfer of ownership through the sale of equity. At this stage, a lot of care must be taken, and therefore, a gradual and transparent approach (gradualism) rather than do it now (shock therapy) technique should be adopted. In China, the leaders designed a gradual approach package for the State enterprises reform. Some clear 8 stages of the reform process were outlined. With this gradual but steady progress, the Chinese leaders have been able to put the reform process on a sound path. Under a relatively stable political environment, the Chinese leaders were determined and visionary about the transformation of the economy. The reform got the nod of the people and much sacrifice was paid and is being paid to ensure its realization. The leaders were and are pragmatic and meticulous in the adoption of the policies. In fact, the policies were adopted through experimentation, a kind of learning by doing process, a strategy that circumvents any large-scale economic shock. The political stability and policy consistency are the major catalysts of the reform success. On the part of Nigeria, the economic adjustment that started in 1986 has been characterized by political instability, lack of transparency and blurred vision. Although the Nigerian people have always been ready and have made tangible sacrifice for a better future of the country, the generations of the Nigerian governments have consistently failed the nation. The situation is such bad that after about twenty years of reform, apart from the Nigerian telecommunication industry, of which the Nigerian people were heavily exploited, there is clearly no other case of successful reform in the country. The end result of the economic mess tagged adjustment or reform has been the liquidation of the domestic industries of different scales, increased incidence of unemployment, poor economic growth and poverty aggravation. It is true that effective economic reforms seem to be the fulcrum of modern global development strategies meant to achieve productive efficiency and international competitiveness as it did in the case of China. However, the market oriented reform policy in Nigeria has not been able to engender rapid growth and industrialization. It is within the ambit of the above assertion that this study seeks to answer the following questions: 1. Has the economic reforms impacted on National Development in Nigeria and China? 2. Is policy inconsistencies and policy consistency implicated in economic reforms failure in Nigeria and success in China?

1.3 OBJECTIVES OF STUDY The broad objective of this study is to conduct a comparative analysis of economic reforms and national development between Nigeria and China. However, the specific objectives of the study are: 1. To ascertain whether the economic reforms in Nigeria and China has led to the countries’ development. 9

2. To examine if the economic reforms failure in Nigeria is as a result of policy inconsistency. 3. To examine if the economic reforms success in China is as a result of policy consistency. 4. To find out if the Chinese economic miracle (development) is as a result of its implementation of market oriented reform.

1.4 SIGNIFICANCE OF STUDY This research work is of both theoretical and practical significance to students and scholars of politics and society as well as public administrators and policy makers. At the theoretical level, it attempt to fill a lacuna in existing literatures on the subject matter as well as provide information for further academic research students and scholars who specializes or want to specialize on China and Nigeria relations. This research work is further undertaken in the light that its findings will be of practical relevance to administrators and policy makers charged with the responsibility of formulating and executing policies on achieving efficient and practical economic reforms in the country as well as to those charged with the responsibility of prudently managing the nation’s resources in order to achieve national development objectives.

1.5 LITERATURE REVIEW

Our literature reviewwill centre on the two broad concepts in the study; economic reforms and national development. We will alsoreview studies that dwelled on policy decision making in Nigeria and China and also studies that discussed economic reforms in Nigeria and China, especially the ones which tries to explain the success and failure of these reforms in both countries.

Economic Reform The term microeconomic reform (or often just economic reform) refers to policies directed to achieve improvements in , either by eliminating or reducing distortions in individual sectors of the economy or by reforming economy-wide policies such as and competition policy with an emphasis on economic efficiency, rather than other goals such as equity or growth. Economic reform" usually refers to deregulation, or at times to reduction in the size of government, to remove distortions caused by regulations or the presence of government, rather than new or increased regulations or government programs to reduce distortions caused 10 by . As such, these reform policies are in the tradition of laissez faire, emphasizing the distortions caused by government, rather than in ordo-liberalism, which emphasizes the need for state regulation to maximize efficiency (www.wikipedia.com). Economic reforms are the different macroeconomic and microeconomic policies designed by the government to redress the distortion in the economy of any nation. It is important to mention that Economic reform is not peculiar to Nigeria alone. Almost all countries world over have undertaken different forms of economic reforms at one time of the other. The contents and strategy of reforms have varied from country to country dependency on the circumstance of each country (Kwaneshie, 2005). Economic reforms entails the different macro and micro-economic policies and programmes designed and implemented by national government to redress distortions in the national economy. The formulation and implementation of these policies measures are often spurred by combinations of factors that are both internal and external to the system (Olukoshi, 1998). Economic reforms has been classified into first generation and second generation reforms (Essien, 2005). The first generation reforms are aimed at opening the economy to foreign competition, promoting the leading role of market forces and reducing the role of the public sector in economic and other productive activities. Building on the successes of the earlier stage, second generation reforms are often directed at achieving a complete transformation of the role of the state and promote the setting up and strengthening of government regulatory institutions that will guarantee the rule of law, while supporting private sector initiatives and activities that will stimulate and promote economic growth (Adeyemo, Salami and Olu- Adeyemi, 2008). In sum, economic reform is a process whereby measures (policies) are taken by the leadership of a country to put the economy in better footing. As this would enable the economy of the country to be able to compete with other economies on equal or almost on equal level, while also creating a more conducive environment for people within the economy to exhibit their potential and realize their dreams. This is done by providing the necessary infrastructural facilities and making sure that the institutions put in place are allowed to function the way they ought to. There must also be in existence rules and regulations must guide the reform process and which must be a respecter of no body, as this will lead to proper implementation of the economic reform policies, which will then lead to the overall development of the national economy.

Economic / National Development 11

Development, however, though a multi-dimensional concept has to do with a rate of change in a particular direction “change in technology, social, economic and political aspect of life resulting in happy human life’. Development as a concept has attracted many definitions and interpretations among scholars and writers; nonetheless, it addresses the process of transforming a society positively. Different scholars have different perspectives on development, most students and practitioners of development accept that it must mean progress of some kind (Kambhampati, 2004). It is seen as a multi-dimensional process, one that changes the economy, polity and society of the countries in which it occurs. Economic development is a broad term that generally refers to the sustained, concerted effort of policymakers and community to promote the standard of living and economic health in a specific area. Such effort can involve multiple areas including development of human capital, critical infrastructure, regional competitiveness, environmental sustainability, social inclusion, health, safety, literacy, and other initiatives. Economic development differs from economic growth. Whereas economic development is a policy intervention endeavor with aims of economic and social well-being of people, economic growth is a phenomenon of marketproductivity and rise in GDP. Consequently, as economist AmartyaSensees development as a process of expanding the real freedoms that people enjoy. According to her, development requires the removal of major sources of unfreedom: poverty as well as tyranny, poor economic opportunities as well as systematic social deprivation, neglect of public facilities as well as intolerance or over activity of repressive states (Sen, 2008). The University of Iowa's Center for International Finance and Development states that: 'Economic development' is a term that economists, politicians, and others have used frequently in the 20th century. The concept, however, has been in existence in the West for centuries. Modernization, Westernization, and especially Industrialization are other terms people have used when discussing economic development. Although no one is sure when the concept originated, most people agree that development is closely bound up with the evolution of capitalism and the demise of feudalism. Mansell and Wehn also state that economic development has been understood since the World War II to involve economic growth, namely the increases in per capita income, and attainment of a standard of living equivalent to that of industrialized countries. Economy development can also be considered as a static theory that documents the state of economy at a certain time. According to Schumpeter (2003), the changes in this equilibrium state to 12 document in economic theory can only be caused by intervening factors coming from the outside. According to Pat Utomi, development simply put is discipline. It is about how discipline drives the human spirit to triumph over odds of poverty trap, physical geography, fiscal trap, governance, cultural barriers, geopolitics, lack of innovation and demographic trap (Utomi, 2006). Kambhampati argues that development requires growth and structural change, some measure of distributive equity, modernization in social and cultural attitudes, a degree of political transformation and stability, an improvement in health and education so that population growth stabilizes, and an increase in urban living and employment (Kambhampati, 2004). From the above, it is clear to us that even though there are different perspectives to development, there is a general consensus that development will lead to good change manifested in increased capacity of people to have control over material assets, intellectual resources and ideology; and obtain physical necessities of life (food, clothing and shelter), employment, equality, participation in government, political and economic independence, adequate education, gender equality, sustainable development and peace (Igbuzor, 2011). Seers (1977) go further to identify certain requirements that are pertinent in the process of understanding what development is all about. These, he presents to include adequate educational level (literary) participation in government and belonging to a nation that is truly independent both economically and politically in that the views of the other government do not largely predetermine one’s own government decision. Whatever way we may have looked at development, it is necessary to state that development whether in terms of the economy, polities or social, implies both improve and increase output and changes in the technical and institutional arrangement by which it is produced. Development is essentially used in an exclusive economic sense, this is basically because economy is in itself an index of other social features. Hence development is used as a synonymy for economic development. To this end, therefore all societies have experienced development at some points but the level of development differ from continent to continent and within each continent different pads/units increase their command over nature at different rates. It is however pertinent to perceive that development is a multi-dimensional concept and that in spite of the various views, the ten-n is referred to as a process of change in relation to the social, economic, political and cultural spheres of societal life which is purposefully directed towards making life better for all citizens of a social and political community. Considering economic development therefore, it is clearly and widely perceived by many scholars to describe wide ranging and often times dramatic changes (improvements) in 13 the economic state of a country. As said above it is an index of other social features of any society. According to Gallner (1970), economic development is defined as a radical transformation in the basic institutions of a country and the basic attitudes of its population. It thus refers to the process by which a state reaches the stage of growth when and where it can provide [hr its own growth without depending on other states for the transfer of resources for its growth. Economic development involves proper and adequate utilization of a nation’s resources in order to; efficiently increase the productivity for the betterment of the people, with the use of application of modern technology and science, which involves mass education, reasonable political order, efficient management of human and material resources etc. But within the realm of world economic developments (globalization) Levitt (1985:66) used the expression to “characterize the vast changes that have taken place over the past two decades in the international economy - the rapid and pervasive diffusion around the world of production, consumption and investment of good, services, capital and technology”. The state of the world economic development has so much grown to the extent of acquiring a wide variety of uses. “The emergence of a new asymmetric international division of labour along with greater dispersion of economic activities directed by corporate strategic planning that has replaced governmental or state efforts in various countries. It is also used in terms of the erosion of the Post-war US dominance of the world economy by the rising competitiveness of Western Europe and Japan and the rise of regional spheres of influence”. There is also increasing moving away from the command economy particularly within the context of the collapse of centrally planned economies towards market economy, hence experiencing a worldwide spread of capitalism. Unfortunately, Nigeria and indeed Africa lack the economic credentials required for stimulating meaningful economic competition of a globalised economy. As a matter of fact, it is historically and generally observed that economic development i.e. wealth accumulation and prosperity of any nation-state in the world has significant relationship with the level of industrialisation within the state, such that the scientific and technological skills of the people are highly mobilized and directed to provide the necessary panacea to solving local problems and effectively exporting the excesses. To this extent, Anya again sees globalisation as “the latest stage in the development of the economic system of the industrialized nations in the postindustrial phase of their development (Lawal, 2006:67). Development has been conceived generally as a value word used to describe the process of economic, social and political transformation, concepts about how to realise development have seen a progressive shift over the past five decades. It has therefore been 14 observed that so many debate and perhaps controversial interpretations have evolved in the process of providing acceptable definitions of the term. Development explains the act of developing or process of being developed; it connotes “an increase, propagation, expansion, improvement or change for the better”. This places emphases on the discontinuous and spontaneous change in stationary state, which forever alters and displaces equilibrium state previously existing. Because of the emphasis on change, development has often been perceived synonymous with growth, economic growth “with emphasis on increases in labour productivity and in total output, with technological progress and industrialization”. Emphasis here is not only placed on economic growth through increase in labour productivity or capital accumulation but also on the condition in which “people in a country have adequate food and job and the income inequality among them is greatly reduced”. In other words, emphasis is placed “on the service of the well-being of people by concentrating on indices of standards of living such as poverty, income distribution, life expectancy, infant mortality, nutrition, literacy, education and access to social services and amenities”. In the final analysis development is defined as a process of economic and social advancement which enables people to realise their potential, build self-confidence and lead lives of dignity and fulfillment, it is a process aimed at freeing people from the evils of want, ignorance, social injustice and economic exploitation (Lawal, 2006:69). Garuba, (2006) noted that, from the SAP era up to contemporary times, the reform agenda in Nigeria has been about: adoption of a realistic currency exchange rate policy; adoption of policy measures to stimulate domestic production and broaden the supply base of the economy required for reducing the dependence on oil; strengthening of demand management policies and restructuring of the tariff system to boost industrial growth and diversification of the economy; removal of complex administrative controls (e.g. import licensing) and adoption of appropriate pricing policies of goods and services (including subsidies from petroleum products and social services such as education, health, communication and transportation) to allow market forces of demand and supply to regulate the allocation of resources; rationalization of public enterprises through divestment, commercialization and privatization; and drastic reduction of the external debt burden through debt rescheduling and strategies of debt equity swapping and promotion of capital inflow through foreign direct investment (FDI). Garuba (2010) further contend that the situation created by the economic reform, apart from failing to stem Nigeria’s declining fortune and restore her economy back to the path of growth, has exacerbated the very crisis the reforms were billed to address 15

Alozieuwa and Golwa (2010) in their paper examine whether the Obasanjo administration’s economy policies were indigenous or home grown, and was actually generated by it. They also consider the view that the drive towards free-marketism in Nigeria and Africa generally in reality has external origins. These writers also contends that the impetus, which the shift was accorded, was no less dictated by metropolitan capitalism to which the Nigerian economy and its counterparts in Africa are mere outposts; hence the Obasanjo administration like its other African counterparts have no control over the relationship. The private-sector-economy drive in Nigeria was externally influenced, and, therefore, was never internally originated. The frenzy about private-sector-led economy in Nigeria remains, therefore, but a fad of the international political economy. They contend that the external origin of these reforms has serious implications for the anticipated dividends accruable to the generality of Nigerians. The paper particularly contend, therefore, that Nigeria or most of African countries are in fact not yet ready for the fad, which is being forced on them by metropolitan capitalist interests. They equally note that as any other externally-formulated concept, the economic reform as advocated by the World Bank and the IMF will merely serve the interests of imperial capitalism and their collaborating local political-economic elites Alozieuwa and Golwa (2010:37). Olaopa et al (2006) are of the view that, in so far as the goal of reform of government and its institutions are concerned, the only area where partial success has been recorded is in the setting up of a due process outfit to minimize waste accompanying indiscreet award of contracts. But even here, while the due process requirement has compelled conformity with necessary procedures, it cannot be said that it has stopped the of contracts and receipt of kickbacks. Olaopa et al (2006) further observed that the privatization programme has lacked transparency and seems to have run out of steam. It is common knowledge that some highly placed public officials have used their positions to acquire good number of the privatized public companies for themselves, using stolen public funds. Deregulation has succeeded in the telecommunications sector, possibly because all it required of government was to sell licenses to private operators. In the downstream sector of the petroleum industry, it has brought misery to the people. Olaopa et al (2006) concludes that the objectives of NEEDS is white elephant in nature, its strategies seems amusing, its implementation is sick and epileptic while its formulation is hurriedly done without much patriotism. NEEDS rather than alleviating the Nigerian masses economic suffering only plasters their wounds thus seem to be a policy imitative formulated and implemented to satisfy the wicked tools of imperialism and globalization (that is, the IMF and World Bank). This is so as arqued by Garuba (2004) that 16 an analysis of contemporary economic reforms would reveal that nothing entirely makes them different from those of SAP. This view is supported by Umar (2004) when he argued that “there is nothing original about the present government’s economic reforms’. Luqman and Lawal (2011) noted that several regimes (military and civilian) have sought to implement economic and social reforms, the story of Nigeria economy and development aspirations continues to be that of unfulfilled potentials. Most of the reforms that have been initiated so far have lacked depth in their conception while the regimes have also faltered in their implementations. These among other problems have work to diminish the positive impacts of the reforms processes in Nigeria. As Nigeria returns to democratic rule at the turn of the century, Nigerians are full of optimism and hope for the reversal of the trends of economic and social woes that have dogged the nation for decades. After more than a decade of democratic rule, much of the people optimism and hope have faded as the ruling political elite have failed to implement programmes and policies that will ensure that the growth in the nation economy consequent on the economic reform implemented so far trickle down to ordinary Nigerians. While the reform processes have recorded some gains yet there remain many challenges. The most notable of these challenges relate to the privatization of public enterprises to the hand of ruling elite and their associates, the lack of coordination in the basic indexes of the national economy arising from haphazard reform implementation, the growing inequality gap, continue deterioration of public infrastructures despite massive injection of funds and most importantly the lack of political will to tame the monster of official and unofficial corruption among other problems. They contend that, for Nigeria to realize its potential there is the need to tailor the formulation and implementation of socio-economic reforms in manner that it will address the socio-economic challenges facing Nigerians. The reform process in Nigeria will continue to be meaningless so long as it failed to unleash the potential of Nigerians and address the challenges facing the nation’s teeming population. The reform processes in Nigeria according to Luqman and Lawal (2011) exhibit what has been described as ‘partial-reform syndrome’. Aside this, the reform process has also been dodged with problems and controversies. At the centre of the crisis that confront the reform process was the marked dominance of the policy process by the donor communities and the Bretton Woods Institutions. This dominance was vividly illustrated by the fact that the leading lights of the regime’s economic management team; NgoziOkonjo-Iweala, Finance Minister, ObiageliEzekwesili, and Charles Chukwuma Soludo all have Bretton Woods Institutions background and approaches the theoretical and practical aspects of the reform process and general economic management from the purview of these institutions. Given the 17 social crisis that emanates from the adoption and implementation of the Institutions SAP policies and programmes in Sub-Saharan Africa in the 1990s many Nigerian are skeptical and unsure of what the outcome of the reform agenda will entails for their social wellbeing. Omoleke (2010) argued that it is evident that the privatization policy which one of the major trust of the government reform efforts is of little benefit to the grassroots as they are not financially empowered to purchase the products of the privatized companies hitherto subsidized by the government because of their escalating prices. He also stated that report from focus group discussion conducted with people at the grassroots points to the fact that privatization policy may worsen the standard of living of the grassroots. The study concludes that there might be policy failure if the implementation further enhances the economic buoyancy and perpetuates economic hegemony of the elite while leaving the grassroots wallowing in poverty (Omoleke, 2010). Nigerians have expressed such fears about the effects of the reform programme earlier. Carpeting the government social and economic policies failure, Kura (2008) asserts that Obasanjo regime policies of poverty reduction, privatization and other economic restructuring have work to aggravate the economic situation of the poor in Nigeria. He asserts that since the inception of the regime poverty has continued to grow without serious intervention to promote development. Where intervention were introduced, the benefits were siphoned to the private pocket of regime loyalists and stalwarts of the ruling PDP. Thus the regime economic policies only work to widen the inequality gap and further the pauperization of many Nigerians. The observation by the UNDP (2006) that in Nigeria, ‘poverty has become a way of life’ only corroboration earlier assessments of the efficacy of the regime reform process at improving the living condition of Nigerians. The few macroeconomic advances that Nigeria have made in the first decade of democratic rule which can be attributed to the regime of Obasanjo failed to materialize in improve social services nor generate sufficient employment to meaningfully address the crisis of poverty that characterizes the lives of most Nigerians in the word of Joseph and Kew (2008). Iyoha (2007) in looking at the economic reform process in Nigeria noted that, the comprehensive reform programme have been implemented in four main areas: Macroeconomic Reform; Structural Reform; Governance and Institutional Reform; and Public Sector Reform. Under the Macroeconomic Reform Program, government adopted prudent oil price-based fiscal rule; introduced Medium Term Expenditure Framework (MTEF) and Medium Term Sector Strategies (MTSS); improved implementation of monetary policy by Central Bank; undertook a bank consolidation exercise to strengthen financial sector; adopted trade liberalization policies; and undertook the privatization of some 18 government enterprises. Under the Structural Reform Program, there has been a bank consolidation exercise to strengthen financial sector; Trade liberalization reform; and privatization of some government enterprises. Under Institutional and Governance Reforms, government introduced the Due Process mechanism in public procurement; adopted the Extractive Industries Transparency Initiative (EITI) in Nigeria; and established the Economic and Financial Crimes Commission (EFCC) and Independent Corrupt Practices Commission (ICPC) to address corruption in public offices. Under the Public Sector Reforms, there has been a restructuring of some government agencies and an increased focus on service delivery. Iyoha (2007) questioned the fact why there have not been remarkable improvements of the economic despite the huge amount of petrodollars the country has received starting from the early 1970. Iyoha (2007) contend that Nigeria’s petrodollars were misused, misspent and mislaid. As proximate causes for these outcomes, he stressed in particular poor leadership and governance on the one hand, and ineffective macroeconomic policies on the other during the 1960-2000 period. The issue of poor leadership and governance should not be underplayed because during most of the first forty years of Independence, Nigeria was governed by leaders excessively motivated by narrow ethnic and sectional loyalties and lacking the intellect required to develop viable strategies for sustained growth and development in a pluralistic and multi-ethnic country like Nigeria. In short Nigeria did not have a pro-development leadership in its first 40 years of existence. As has been argued, the situation has changed for the better since 2000. If this goes on, Nigeria has a chance finally to take its place among the rapidly growing countries of the world. Iyoha (2007) argued further that by and large, between 1960 and 2000, Nigeria’s policy choices were poor, and the reforms that sought to correct them starting in the mid- 1980s were plagued by inconsistencies, reversals, and a general lack of policy coherence. In contrast, the reforms adopted in 2003 were consistent and an attempt has been made to implement them in a coherent manner. During the past few decades of the 20th century, uncertainty in the Nigerian economy has been brought about as much by social and political instability as by macroeconomic policy errors. A case in point is the early 1990s, when the nullification of presidential election results brought about an acute political crisis and proved a harbinger of major policy reversals. Deeper institutional problems of governance also remain acute, including a lack of grassroots participation in politics, malfunctioning formal political institutions, and inadequacy of democratic structures. Resolution of these stubborn social and political problems will go a long way to reducing perceived uncertainty and increasing confidence in the stability of the Nigerian economy. In turn, this will clear the way for a return of flight 19 capital and an increase in both domestic and foreign investment, and the sustenance of rapid economic growth in Nigeria, Iyoha (2007) further noted. Adeyemi, (2006) in his paper, examines the reform programmes embarked upon by different Administrations in Nigeria, starting from the Structural Adjustment Programme (SAP), which was launched in 1986 to the privatization and liberalization policy of the present regime. The paper observes that economic reforms were instituted in Nigeria to address the economic decline resulting from years of excessive regulation, noting that while the reforms have restored macroeconomic stability and resulted in moderate growth, unemployment and poverty remain high and widespread. Adeyemi contend that in addressing the challenges confronting the reform programmes, a number of recommendations were put forward. Prominent among these are the introduction of a national social security system to take care of the unemployed, the ploughingback of extra revenues from the removal of oil subsidy into developing social and economic infrastructure and the need to pay adequate attention to the provision of quality education at all levels to facilitate the production of skilled manpower. Adeyemi, K.S. (2006) further observed that on his second coming in 2003, President Obasanjo embarked on a comprehensive programme of reforms in the economic, political and administrative sectors of the Nigerian polity. The reform agenda of the Obasanjo administration was well articulated in the National Economic Empowerment and Development Strategy (NEEDS). NEEDS is often touted as Nigeria’s own alternative to the Structural Adjustment Programme of the World Bank/IMF and focuses on Medium Term Economic Development and Poverty Reduction Strategy. Ogunkola et al (2008) are of the view that China’s growth and development is not accidental; it is a product of careful and well thought-out planning and dogged implementation and commitments to the development of the country. Most analysts pointed to the 1978 reform as a watershed in the history of Chinese economy (Dollar, 2007; Ravallion, 2008; Juma, 2007). The success of the reform was aided by: The supportive Chinese culture especially strong emphasis on education; which predated the modern day China. This clearly suggests that while education is an important factor, it is only necessary but not sufficient condition for development. More importantly, China’s economic growth was inclusive as it came with significant reduction in poverty. China has been able to reduce poverty at the rate of about 1.9% per year over 1981 to 2004, compared with 0.1% in the Sub-Sahara Africa. Ogunkola et al (2008) contend further that the elements of the reform clearly show that there are lessons for Nigeria and other developing countries in their quest for 20 development. Dollar (2007) identified the following four elements: Change the system i.e. altering the incentive and ownership structure by embracing private enterprise. This is a radical departure from near total state ownership; Creation of good climate conducive for foreign investment. “China welcomed direct investment that brought technology, management skills, and global production networks, and managed regime for direct investment in order to get the most capacity building for Chinese workers and firms”; Cost recovery as a basis of infrastructure development and expansion. China’s borrowing to finance rapid development and expansion of its infrastructural network was at the commercial interest rates and servicing the debt through appropriate prices for power, roads and telecommunications; and Support to the agricultural sector and rural development. Indeed it was claimed that private enterprise was first introduced into the sector before being embraced in other sectors. The reform and support to the sector include liberalisation of the agricultural markets, and strong agricultural research and extension services. Ogunkola et al (2008) further observed that the reform was comprehensive as it covered almost all the facets of the economy. The process reflected a deep understanding of the workings of the Chinese economy as demonstrated in the sequencing of the various elements, programmes and activities. More importantly, it was based on a principle of “comparative-advantage-following” strategy. While it is recommended that development strategy in Nigeria should take a cue from the Chinese reform it is important to avoid some of the challenges facing the Chinese economy including environmental pollution and degradation, and widening inequality. While making a comparative analysis of Chinese and Nigerian economic reform, Bello (2005) noted that the reform of the Chinese economy was premised on four cardinal reasons. First, the Cultural Revolution was very unpopular, and the party and the government had to distance themselves from the old regime and make changes to get the support of the people. Second, after years of experience in economic planning, government officials understood the shortcomings of the planning system and the need for change. Third, successful economic development in other parts of Asia including economies like Taiwan, Hong Kong, Singapore, and South Korea, known as the Four-Tigers demonstrated to Chinese government officials and the Chinese people that a market economy works better than a planned economy. This lesson according to Bello () was reinforced by the different rates of economic development between countries in Eastern and Western Europe. Fourth, for the reasons started above, the Chinese people were ready for and would support economic reform (Chow, 2002). The reform was designed to overhaul the entire economic system but on 21 gradual basis. Specifically the reform has the following aspects: agriculture, state enterprise, the banking system, price reforms, non-state sectors foreign trade and investment and institutional infrastructure (see Lin, 1988; Lin, et al., 1996; Reynolds, 1988 and Perkins, 1988). Tongxun, W. (2000) looked the role administrative reform played in reform process in China. Tongxun noted that the driving force behind China’s administrative reform can find its sources in the needs of economic reform that transited the planned economy to the market economy and in excessive financial burdens in the course of administration. In the meantime, as China implemented its market-oriented economic reform, the social management affairs became ever more complicated, the demand for high quality public service became ever stronger, and the demands for administrative reform became ever more pressing. Under such circumstances, China’s administrative reforms, particularly since 1987, have been centered around transforming the government functions, streamlining the structure, and increasing administrative efficiency Tongxun (2000:1-2). Hu (2005) looked at the economic reform of China from a historical perspective. She contends that in the recent past, the Chinese economy was based on long-term centrally- planned system. From 1978 onwards, China began an economic reform, whose goal was to generate sufficient to finance the modernization of the Chinese economy. The first reform in the late 1970s and early 1980s consisted of opening trade to the outside world, instituting the contract responsibilities system in agriculture, by which farmers could sell their surplus crops and place them on the market. She notes that, by the end of the 1980s China had almost solved its food shortage problems. At the same time, China established special economic zones, which included, as we all know, the Shanghai Pudong zone, which has become the dragonhead of the Chinese economy. The reforms of the late 1980s and early 1990s focused on creating a pricing system. This was finally achieved using a dual track pricing system and increasing the role of the state in resource allocations. The diversified enterprise ownership system emerged, followed by more and more areas of the monopoly being open to private business and foreign capital. By the end of the 1980s China had almost solved its food shortage problems. At the same time, China established special economic zones. Based on a large body of literature, Xu (2010), argued that China’s fundamental institution that deeply affects executives’ incentives and behaviors, which in turn impact society and leads to sustainable economic reform, is what He calls the regionally decentralized authoritarian (RDA) regime. The RDA regime is characterized as a combination of political centralization and economic regional decentralization. On the one 22 hand, the national government’s control is substantial in that the Chinese political and personnel governance structure has been highly centralized. Sub-national government officials are appointed from above, and the appointment and promotion of sub-national government officials serve as powerful instruments for the national government to induce regional officials to follow the central government’s policies. This feature fundamentally distinguishes the Chinese RDA regime from federalism, where governors or mayors are elected, and they are supposed to represent and be accountable to their constituents. On the other hand, the governance of the national economy is delegated to sub-national governments. Regional economies (provinces, municipalities, and counties) are relatively self-contained, and sub-national governments have overall responsibility for initiating and coordinating reforms, providing public services, and making and enforcing laws within their jurisdictions. This feature qualitatively differentiates the Chinese economy from a typical centrally-planned economy. Narayanan (2006) noted that the pragmatic approach adopted by the Chinese leadership in introducing a process of incremental reforms in the late 1970s required maintaining momentum of the reform programme and to constantly meet challenges, failures, and setbacks. Major changes inevitably provoked dissonant views within the political system resulting in the emergence of strains that developed between those who would not benefit or could not adjust to the new conditions and those who saw the new opportunities.The resulting pressures on the system required constant attention of and mediation by top party leaders who strove for consensus on the contents of the reform programme and its agenda and participated in a process of bargaining to reconcile different policy orientations and institutional interests. The competing interests that emerged when a new wave of reform was introduced appeared to have spokesmen or advocates who represented opposing factions within the Communist Party of China (CPC) that were of the opinion that the reform programme represented a dilution of ideology, so intrinsic to the relationship the Party had with the people Narayanan (2006:329). Golley and Song (2010) were of the view that the economic transformation that has taken place in China since the late 1970s is now regarded as one of the most significant social changes in human history. Within just three decades, China has succeeded in transforming itself from a centrally-planned closed economy into one of the world’s most dynamic and globally-integrated market economies. The dynamics unleashed by ’s reforms, open-door policies and institutional changes have unleashed enormous entrepreneurial energy and propelled continuous capital accumulation, productivity gains and trade and income growth on a scale the world has never seen before. They contend that the Market-oriented 23 reforms centred on changes in the price system led to improved resource allocation and allowed the most dynamic private sector to flourish, thereby increasing the overall level of efficiency in the economy. Liberalisation programs allowed trade and foreign direct investment (FDI) to flourish according to China’s underlying comparative advantage, resulting in enormous gains from trade. Decentralisation and ownership transformation helped to solve incentive problems and enhance the performance of firms and local governments. And institutional reforms that abandoned the decades-long restraints on the mobility of labour unleashed an unprecedented scale of urbanisation, with the ratio of the urban in the total population rising from less than 20 per cent in the late 1970s to 46 per cent in 2009. This gradual process of ‘reform and opening up’ coincided with a surge in the proportion of the working-age population, generating in a ‘demographic dividend’, which, according to Cai and Wang (2005), accounted for about one-quarter of the growth rate in per capita GDP between 1982 and 2000. The sustained high rates of economic growth that resulted have fundamentally transformed the Chinese economy and its position in the world Golley and Song (2010:1-2). Gerhard et al (2005) writing on the impact of the economic reform of China in poverty alleviation noted that Deng Xiaoping’s economic reforms in the late 1970s China started its spectacular transition from a state-run economy, based on centralized command and control, to a modern economic system based on market principles and international cooperation. The first phase in these reforms was the introduction of the “household responsibility system” in the early 1980s, which essentially abandoned the system of communal farming and re-established the autonomy of the individual farm household. Millions of peasants were given the freedom (and responsibility) to plan and organize most of their production. They were no longer ordered around in semi-military formations to cultivate collectivized fields, dig irrigation canals, build dams, or even produce steel in backyard furnaces, as was the case during the “”.They were no longer coerced into unproductive cultivation by “Grain First” policies and strictly fixed grain quotas, which often forced them to produce crops under most unsuitable conditions.Now they could switch to the production of more profitable products, such as vegetables, fruits, tobacco or cotton, run fishponds or breed animals; and they could sell part of their production on free markets. They (or more often their children) could accept off-farm jobs in the emerging village industries, and they could join the millions of temporary migrants who went for labor in east-coast cities. With their remittances they greatly contributed to the economic development in the rural areas. 24

Gerhard et al (2005) further observed that, China’s spectacular economic growth in manufacturing industries and service sectors during the past 15 years was actually based on a fundamental reform of the agricultural sector almost 30 years ago. After decades of collectivization, mass campaigns and political indoctrination, farmers were allowed to make their own decisions and carry out their own initiatives. It was essentially the (cautious) introduction of entrepreneurial freedom (even if these words were never used) among millions of peasants. One of the biggest and most rapid rural development programs in human history was not triggered by huge public investments in infrastructure, or education or public spending, but by a change in the mentality among the leading cadres, who had learned to understand Deng’s saying that it is “not important whether a cat is gray or black, as long as it catches mice”. It was the pragmatic recognition that the Chinese agriculture can only develop, if farmers have the freedom to make their own (economic) decisions. Elwell et al (2007) stated that Prior to 1979, China maintained a centrally planned, or command, economy. A large share of the country’s economic output was directed and controlled by the state, which set production goals, controlled prices, and allocated resources throughout most of the economy. Beginning in 1979, the Chinese government reversed course and launched several economic reforms in the hope that they would significantly increase economic growth and raise living standards. The central government initiated price and ownership incentives for farmers, which enabled them to sell a portion of their crops on the free market. In addition, the government established four special economic zones along the coast for the purpose of attracting foreign investment, boosting exports, and importing high-technology products into China. Additional reforms, which followed in stages, sought to decentralize economic policymaking in several sectors, especially trade. Economic control of various enterprises was given to provincial and local governments, which were generally allowed to operate and compete on free market principles, rather than under the direction and guidance of state planning. Additional coastal regions and cities were designated as open cities and development zones, which allowed them to experiment with free market reforms and to offer tax and trade incentives to attract foreign investment. Beh (2007) in a comparative study of China and Malaysia stated that, one of the first steps China took in administrative reform was to establish a merit system by staffing the state administrative apparatus with technically competent professionals rather than politically loyal cadres. Besides, re-education of administrators was another way to improve government officials’ technical and administrative capabilities. On one hand, the civil service might be highly professionally with a merit-based recruitment, however, on the other, it might also be 25 highly politicized with a patronage system, in both countries. The process to bring about technically competent government officials were institutionalized with “The Provisional Regulations for State Civil Service” being put into effect on October 1, 1993. The new regulations stipulate that the recruitment of state civil service must follow the following procedure: public notice of entrance examinations, investigation of applicants’ qualifications, open examinations, assessment of political ideology, moral characters, and work capabilities for those who have passed the examinations and approval by personnel agencies at or above the municipal level. Beh (2007) further observed that China has made enormous progress in liberalizing markets and integrating itself in the market and world economy and the consequent rapid economic growth for the past decades. China’s economic performance has been remarkable, and its economy has changed from a state-owned, centrally planned into a mixed ownership and decentralized nature. Agricultural reforms were launched first and later extended to the rest of the economic activities. Provinces were left to defend themselves fiscally, and had to mobilize resources from their jurisdictions. Local governments must rely on the profits of state enterprises as the source of revenues. Therefore, an effective strategy for local governments is to enter a coalition with the enterprises; in exchange for the protection and preferential treatments offered by local governments, the enterprises agree to continue to support the local governments by contributing to either on or off budgets, or to both. At this stage, local governments play a dual role; on one hand they protect their local partners against the central government and on the other, they assume the role of the old patriarchs of enterprises. Far from being extinct, command economies continue to survive at the lower levels of government. In 2002, China undertook a major financial reform by overhauling its banking system. This led its biggest banks to take on foreign strategic investors and launch initial public offerings. Despite frequent reports of corruption and fraud in local branches, analysts say cash infusions from the government and the share sales put the banking system on a much stronger financial footing. Now Chinese banks are looking to move into developed economies to better serve their main corporate clients: Chinese companies that increasingly operate globally Beh (2007:30). China’s approach seems to be moving and adapting as responses and results become evident and four features can be traced as consistent themes in implementation: gradualism, partial reforms, decentralization and self-reinforcing reforms. It is noted that China’s reform approach continues to be on individual interventions at the sectoral level Beh (2007:30). 26

Williamson (1999) in his paper commended the success of China economic reform and growth. He observed that in 1978 China abandoned the commune system for agricultural production and effectively allowed the resumption of peasant agriculture. It employed a dual price system to manage the transition, where producers had to fulfill a quota that was paid for at a low, fixed price, while excess production could be sold on a free market. It permitted the establishment of enterprises with more capitalist characteristics, although some of the most successful were “town and village enterprises” that exploited the former communes to create industrial units that were managed collectively at the local level, that sold their output on free markets, and that used their profits to buy local public goods. Foreign direct investment was encouraged. Exports were promoted. The results of these policy changes were dramatic, with Chinese growth over the following 20 years averaging almost 10% per annum, resulting in over 200 million people being raised above the World Bank’s “dollar a day” line for absolute poverty. Pei (2003) in his paper noted that, Chinese leaders considered political reform in the late 1980s only when they encountered difficulties in pursuing economic reform. What Tiananmen – and the collapse of the former Soviet Union – did in China was to remove some of the most serious obstacles to economic reform. Thus, following Deng’s tour of the south in 1992, gathered momentum and China entered a decade-long economic boom. During this period, luck also appeared to be on Beijing’s side: globalization (which gave China almost unimpeded access to the markets in the West), massive foreign direct investment (nearly all of China’s stock FDI was made after 1989), and a generally benign international environment following the Cold War. The success in delivering high rates of economic growth obviously has not only boosted the Communist party’s legitimacy, but also vindicated the party’s neo-authoritarian strategy – economic take-off in a poor country requires a strong and undemocratic government. Pei (2003) noted further that the interesting about the post-Tiananmen leadership in China is that it also contains pragmatic, but not necessarily liberal, reformers (Zhu Rongji is perhaps the most representative). These technocratic leaders, many of whom actually protégés of Zhao Ziyang, were recruited into the economic bureaucracy, seemed to have decided that the best approach to changing China was to introduce significant economic institutional reforms that would limit the power of the party-state. As a result, these technocrats pushed for many of the far-reaching institutional reforms that were not attempted in the 1980s, such as state-owned enterprise reform, financial sector reform, fiscal reform, healthcare reform, social security reform, and various regulatory reforms. As long as the 27 technocrats have some success in pushing through these reforms, they will be content with this “substitution” approach to political reform. In discussing the stages of Chinese economic reform Morrison (2006) noted that the central government initiated price and ownership incentives for farmers, which enabled them to sell a portion of their crops on the free market. In addition, the government established four special economic zones along the coast for the purpose of attracting foreign investment, boosting exports, and importing high technology products into China. Additional reforms, which followed in stages, sought to decentralize economic policymaking in several sectors, especially trade. Economic control of various enterprises was given to provincial and local governments, which were generally allowed to operate and compete on free market principles, rather than under the direction and guidance of state planning. Additional coastal regions and cities were designated as open cities and development zones, which allowed them to experiment with free market reforms and to offer tax and trade incentives to attract foreign investment. Morrison (2006) further contend that several economists have concluded that productivity gains (i.e., increases in efficiency in which inputs are used) were another major factor in China’s rapid economic growth. The improvements to productivity were caused largely by a reallocation of resources to more productive uses, especially in sectors that were formerly heavily controlled by the central government, such as agriculture, trade, and services. For example, agricultural reforms boosted production, freeing workers to pursue employment in the more productive manufacturing sector. China’s decentralization of the economy led to the rise of non-state enterprises, which tended to pursue more productive activities than the centrally controlled SOEs. Additionally, a greater share of the economy (mainly the export sector) was exposed to competitive forces. Local and provincial governments were allowed to establish and operate various enterprises on market principles, without interference from the central government. In addition, foreign direct investment (FDI) in China brought with it new technology and processes that boosted efficiency. Qian and Wu (2000) in their paper which discussed how the economic reform in China led to market economy noted that, starting from 1994 China has attempted several radical reforms according to the November 1993 decision. The major ones include unification of exchange rates and convertibility under the current account; the overhaul of the tax and fiscal systems with the separation of national and local tax administrations; and reorganization of the central bank, including establishing cross-province (i.e., regional) central bank branches. China also started to privatize small-scale state-owned enterprises, to 28 lay off excess state employees, and to establish a social safety net. In section 4 we will provide a critical evaluation of the progresses in these areas between 1994 and 1998. Qian and Wu (2000) compared the dismal economic performance of the Eastern European reforms in the 1970s and 1980s to China's incremental reform between 1978 and 1993 and they contended that China’s economic reform was a remarkable success. During this period, according to Qian and Wu (2000), China's GDP grew at an average annual rate of about 9 percent, or 7.5 percent on a per capita basis. The living standard of ordinary Chinese people improved significantly. For example, an average Chinese consumer increased his/her consumption about three times for edible vegetable oil, pork, and eggs. The per person living space has doubled in urban areas and more than doubled in rural areas, and total household bank deposits, measured against the GDP, increased from less than 6 percent in 1978 to more than 40 percent in 1993. The number of people living in absolute poverty was substantially reduced from over 250 million to less than 100 million in this period as well. By the end of 1993, reform was supported by people in all walks of life simply because almost everybody benefitted from it. This was in sharp contrast with the frustration of Eastern European reformers in the late 1980s, when they saw only a dead end to their reform efforts of decades. They equally noted that China was able to avoid the failure of Eastern European reform because there were deeper institutional changes than those in Eastern Europe. These Changes according to them took the form of "incremental reform" (zenglianggaige), that is, introducing dramatic changes outside, rather than inside, the existing core of central planning. The most significant is the rapid rise of a sector outside the state sector, known as the "non- state sector" (Qian and Xu, 1993; Wu, 1999). In agriculture, nearly 100% activities have been organized by household farming by the early 1980s. In non-agriculture activities, the non- state sector includes a variety of ownership forms of enterprises, such as collectives, cooperatives, private businesses, joint ventures with foreign firms, and sole foreign invested firms. Unlike SOEs, non-state enterprises operated outside of the scope of central planning, and they were subject to harder budget constraints and faced more competition than SOEs. The non-state enterprises soon became the engine of growth and industrialization. In 1978, the share of the state sector in industrial output accounted for 78 percent of the national total; by 1993, it was down to only 43 percent. The share of the state sector in commerce was 55 percent in 1978, and it was down to 40 percent by 1993. Because of the absence of privatization of SOEs during this period, the changes of the relative weight of the non-state sector were entirely due to its very fast growth. In contrast, in Eastern European countries, despite decades of reform, in the late 1980s, the state sector continued to dominate the 29 economy and their "second economy" (that is, the non-state sector) remained insignificant, especially in industry (Kornai, 1986). Shangquan (1999, 19-21), noted that Chinese reforms during 1978-98 were undertaken in three successive stages. Reforms in the first stage (1978-84) consisted of: the introduction of household responsibility system in place of agricultural communes; free sale of output at market determined prices but for a relatively small proportion delivered to the state at fixed prices, formation of township and village enterprises; replacement by taxes of surrender of profits by urban enterprises; and opening to the outside world through the creation of 4 special economic zones and 14 coastal open cities. The second stage reforms (1984-85) were focused on urban areas and on state owned enterprises. These consisted of: introduction of a variety of contracts on enterprise leasing and management responsibility systems; creation of a share-holding system to facilitate mergers, leases, auctions as well as bankruptcy of enterprises: development of markets for production materials capital, labour, information and technology: role of mandatory plans reduced drastically and enterprises were free to make their own investment decisions; contracting of fiscal budgets, strengthening the regulatory role of the central bank; and further opening of the economy through the creation of the Hainan and Pudong special economic zones. In the third stage from 1992 on, reforms concentrated on the establishment of a socialist market economy. They consisted of: replacing the fiscal contract system by the tax- sharing system, with turn-over and value-added taxes at its core; regulation of money supply and supervision of financial systems entrusted to the central bank; transformation of state- owned banks into commercial banks; extension and deepening of the price and foreign trade reforms of earlier stages; legal and regulatory reforms; and reform of government institutions concerned with education science and technology. The World Bank (1992) did a critical evaluation of Chinese reform. The Bank found four consistent themes in the Chinese approach to reforms gradualism, partial reform, decentralization, and mutually reinforcing reforms in several areas. It claims that “in almost all areas of reform, implementation has been spread over time, often several years, and usually after experimentation. Typically, such experiments take place in designated ‘reform areas’ and after one results of trials are observed, they then spread to other parts of the country” (World Bank, 1992:37). Given the vastness of China and the inadequacy of its transport and communication networks as of then, it is not credible that the leadership designed ex ante a large enough number of independent trials of alternative reform strategies, 30 implemented them, received and evaluated their results in time to implement the most successful alternative. A more plausible story according to the World Bank report (1992) is that the success of Chinese reforms has been in part due to China’s being a closed dictatorship. Chinese leaders did not have to respond to pressure groups that stood to gain or lose from reforms and to a critical press. The top leaders were thus able to resolve their different views about the direction and pace of reforms by putting into practice each view and letting the performance of the economy determine which was most appropriate. The reforms therefore appeared to proceed in a two-step-forward-one-step-back manner. Further, the dominance of the coalition helped keep the bureaucratic apparatus intact and reasonably efficient while the pro-market policies of its paramount leader Deng Xiaoping took hold. The authoritarian roots of Chinese success were noted by the former Russian Prime Minister YegovGaidar, who is reported to have said that he too would have found China’s method of change easier but that it was possible only with a “powerful structure of authoritarian rule” (New York Times, October 7, 1992). This said, it is important to note that the Chinese success is also in part due to the reforms being gradual and experimental, allowing the possibility of correcting policies that failed and reinforcing those that proved fruitful. Sen (2001) in his paper stated that in the period after the catastrophe of the Great Leap Forward China’s leadership remained divided about economic strategy. Although self- reliance was a shared aim, one group, that included Zhou Enlai and Deng Xiaping, sought to restore what was, in effect, an import substituting strategy that had brought important gains during the 1950s. Other elites, including Mao Zedong himself and Lin Biao, were intent upon semi-autarchy with only very limited engagement with the capitalist world economy. Both groups considered the latter hostile and a dangerous adversary, but important differences of opinion obviously existed. It was the import-Substitution strategy that eventually prevailed, despite the setback of the period of the Cultural Revolution and the divisions following Mao’s death. By the Third Plenum in 1978, many of China’s elites had a keener appreciation of the limitations of inward economic orientation and sought to experiment with foreign economic policy. Sen (2001) further observe that the reforms adopted by the leadership of the after the Third Plenum included export promotion policies, imports of foreign capital and technology and the creation of export processing zones. These policy initiatives had post-revolutionary antecedents and were restored with renewed vigour by 1979. The results can be seen in China’s economic performance in the subsequent two decades. The goal of export promotion was formally adopted by in August 1979, by assigning 31 top priority to fulfilling export contract obligations. Exports were identified as the principal method for acquiring foreign exchange for the modernization of China’s economy. Various price, tax and loan provisions as well technological upgrading were approved, freeing export production from the imperatives of planning for the domestic economy. As far as foreign investment was concerned, investment by overseas Chinese had been regarded by China’s communists as somehow “genuine”, indeed, local in terms of national loyalties. Liu, (2005) noted that the leadership role of the CPC is paramount not only in political affairs but also in economic affairs. The CPC at the top of the structure is a unique and the most important feature of China’s policy making process. The highest level policy making body is the standing committee of the CPC Political Bureau. The NPC, the State Council and the Chinese People’s Political Consultative Conference (CPPCC) carry out their respective functions (i.e. legislature, administration, and policy consultation) under the leadership of the CPC. In fact, the top position of NPC, State Council and CPPCC has almost always been held by a Political Bureau standing committee member. Through this arrangement, the CPC is firmly in charge of the government. Liu, (2005) contend further that the CPC plays a leading role in setting national policy agenda, making national policy decisions, and even guiding the law making process. However, its role does not end there. It closely monitors and guides policy implementation. This is made possible by the so-called party/administration double-track implementation system, which is characterized by the party’s organizational structure set in parallel to the administrative organizational structure at every level of the government. Under the system, every government agency is led by an official who serves both as the party secretary and the administrator (commonly seen at the central level), or jointly by two officials, one as party secretary and the other as an administrator (more commonly seen at the provincial and local levels). In the second case, the party secretary does not engage in the day-to-day administration functions, but closely monitors the policy implementation process and would always have a final say on major policy and personnel decisions.He or she is accountable to the higher level party secretary. The administrators need not be a party member, but many of them are. The career of a government official with party membership, moreover, is not limited to just party or administration track. It could be both. They noted further that China is a unitary state and its political system is broadly composed of five layers of state administration: the center (zhongyang), provinces (sheng), prefectures (diqu), counties (xian) and townships (xiang). The Central Committee of the Chinese Communist Party (CCP) acts as the headquarters of this multidivisional system, which ultimately controls the mobility of 32 government officials within the system. This highly centralized structure of personnel control remains intact even to this day. Li and Li-An, (2005) further contend that China began its far-reaching economic reforms in 1978. These reforms have allowed provinces to play a much more important role in economic management than the ministries at the center which were traditionally in charge of planning and coordination, reflecting the strategic importance of provincial leaders (Qian and Xu, 1993; Huang, 1996). Moreover, reforms have also empowered provincial leaders with the ultimate authority in allocating economic resources in their provinces. Their political and economic decisions greatly influence the economic performance of these provinces. For this reason, they are also held accountable for the corresponding results arising from their decisions. To a degree, provincial leaders are just like the middle-level managers in a multidivisional corporation who are responsible for their divisional performance. They further contend that China’s reform of its personnel control system coincided with the beginning of its economic reforms. A crucial turnaround in personnel management was the wholesale change in the evaluation criteria for government officials. Political conformity, which was the only important pre-reform criterion for promotion, gave way to economic performance and other competence-related indicators. Although political loyalty remains important, three new elements were introduced into the evaluation process. Officials had to be of a young age, have good education and demonstrate expertise in administrative management. Above all, local economic performance became the most important criterion for higher level officials assessing lower-level officials. One revealing indication of the importance of economic performance for local officials is their obsession with economic ranking among peers. Government reports or provincial yearbooks often contain detailed information on the relative rankings of the provincial performance, ranging from GDP growth, to steel production, to miles of road constructed. All the studies reviewed analyzed and explained the economic reforms which occurred in China and Nigeria, especially why the reforms were successful in China, but turned out to be a failure in Nigeria. The studies all noted the various processes and events that underpinned this reforms, and also the various forces both political and economic that were at play during the reforms processes in both countries in detail form. None of the studies did a comparative study between Nigeria and China to ascertain and analyze why the economic reforms were successful in China and a failure in Nigeria and that is the lacuna this study seeks to fill. That is, this study seeks to analyze and explain why the economic reforms 33 were successful in China, but turned out to be a failure in Nigeria and the various forces that were at play in a comparative and detailed form.

1.6 THEORETICAL FRAMEWORK

This study is rooted in the political economy approach as lucidly presented in the works of Marx (1977); Ake (1981); and Aja (1998). The political economy approach is based on dialectical materialism. This was propounded by Karl Marx. The theory of dialectical materialism places emphasis primarily on material or economic conditions of society. It is premised on the belief that man is dominantly motivated by material needs. Labour is the essence of material existence; hence the economic activity is man’s primary concern. Ake (1981: 9), corroborated the above assertion by positing that ‘man above all else is a worker or a labourer. Work is his primary existence. If man does not work, he cannot live ... in a sense, man is as he works’. Similarly, Aja (1980 cited in Oddih, 2005: 459), opines that “the understanding of a society’s politics and culture depends primarily on the understanding of its economic structure as defined by the relations between employers of Labour and the working class in the process of production. According to Marx (1977) cited in Oddih, (2005: 459), ‘every political system corresponds and reflects its kind of economic structure’. Marx places emphasis and premium on the production base, i.e., the Sub-structure, since this determines the super-structure which is made up of the political, cultural and ideology of the society. Thus an understanding of the sub-structure enables one to understand easily the nature of internal relations, how a society organizes, manages and reproduces itself, also the cause of tensions, conflicts or contradictions in any given society and bearing or direction of social change. Thus, Marx believes that the primary cause of tension and other social dislocation in a society is economic factor. In the words of Aja (1998), “if one understands the economic structure of a society, the relations between the people in the production process, it is easier to understand the nature of politics, culture, national security, socio-psychological consciousness, ideological inclinations, etc. of the society”. The political economy approach lays emphasis on (a) the primacy of material conditions (b) the dynamic character of reality and (c) the relatedness of different elements of society (Ake, 1981:4). First the approach gives priority to economic factors as the bases for international relations among state. In other words, nations interact with one another in an effort to satisfy their economic needs. As a result, their interactions centered more or less on 34 economic activities aimed at increasing productivity and political influence. Essentially, nations pay particular attention to their economic structures and those of other countries in their relations in view of chances of advancing their economic interests. The dynamic character of reality as the second principle of the political economy approach refuses to look at aspects of the world as simple entities or discrete elements, or as being static (Ake, 1981).

It sees the world in terms of continuity and relatedness, and that this continuity is essentially complex and problematic, full of movement and dynamism resulting from contradictions which pervade the co-existence among states at the international system. It looks at society dialectically. Hence, political and economic relations in the society should not be seen in terms of simple harmonies and irreconcilable contrasts.

Karl Marx first employed the political economy approach for analyzing and justifying the root causes of conflicts and contradictions in human societies. Applying this approach to the issue at stake, we observe that colonialism bequeathed so many deleterious and debilitating legacies to the post-colonial states. Some of the legacies, as recorded in Oddih (2004), Obasi, (2002), Ntalaja (2002), include: 1. Incorporation of African economy into the global capitalist system with its concomitant dependent relationship and disarticulation of African economies. 2. Underdevelopment of African economies, states and communities. Establishment of institutions, process, linkages that made neo-colonial ties inevitable which have led to the continued dependence and exploitation of the post-colonial states. 3. Reluctance in nurturing an indigenous bourgeoisie that could lead to economic self- reliance and independence. 4. Nurturing an indigenous bourgeoisie that constituted another exploitative class. 5. Institution and legitimization of corruption and ethno-religious conflicts as a way of life through divide and rule policy. 6. Introducing military intervention in politics, etc. All the legacies listed above, are applicable to the Nigeria situation. Looking back history lane, we will notice how Nigeria was incorporated into the global capitalist system through imperialism which metamorphosed into colonialism with its concomitant dependent relationship and disarticulation of Nigerian economy; the underdevelopment and establishment institutions, process, linkages that has made these neo-colonial ties inevitable which equally have led to the continued dependence and exploitation of the Nigerian state by 35 the Metropolitan countries; the reluctance of the Nigerian state to forming and nurturing an indigenous bourgeoisie that could have led to economic self-reliance, independence and political stability of the Nigerian polity; rather the nurturing of an indigenous bourgeoisie which constituted another exploitative class thereby replacing the outgone Metropolitan bourgeoisies; this led to the institution and legitimization of corruption and ethno-religious conflicts as a way of life through divide and rule policy thereby leading to the various intervention of the military in Nigerian politics whose only genuine purpose was to perpetuate itself in power until it was forced out power through much sacrifice of human and material resources after having done much harm to the economy of Nigeria. Political economy, being an inter-play of politics and economy will help us to better appreciate and understand the reasons why the Chinese economic reform led to a dynamic and dramatic development of the Chinese economy, the improvement of the state of infrastructures and the living standard of the average Chinese, which altogether culminated into an improved national development. This theory will enable us to understand how decisions made by the political leaders, especially with regard to the economy will or have been affecting economic outcomes or development, especially in Nigeria and China. In Nigeria and China, the governments which are part of the state have been well involved in making plans or policies that give direction to the economy. China has always been a socialist state though with its own distinct characteristics, so it is natural for the state to be in the centre-stage towards economic planning and development. Nigeria though is not a socialist state; its economy is centrally plan as a result of the concentration of political power in the centre. Also the Western countries through the international Financial Institutions (IFIs) and other agents or agencies - that are clamouring for Nigeria to adopt a liberal market oriented reform or liberalization- still pass through the Nigerian government to push through its economic reform model instead of them going through the private sector that is dominated by Multi-National Corporations (MNCs) and Trans-National Corporations (TNCs) which originate from them (Western countries). This goes a long way to show the underlying intertwining or the inter play of politics and economy which the political economy approach as an analytical framework tries to analyze. For us to fully understand and explain the economic reform success in China and its failure in Nigeria, we have to first of all understand the nature of politics and economy of Nigeria and China from a historical perspective and the mode of production and relations of production in both countries. Also who owns and control the means of production and who make the major economic and political decisions in both countries. This will enable us to 36 understand, analyze and explain why the economic reforms were in comparative terms more successful in China than it was in Nigeria. 1.7 HYPOTHESIS This study shall be guided by the following hypotheses 1. The economic reforms were successful in China and led to National Development, while it was not successful in Nigeria. 2. Policy inconsistencies and policy consistency is implicated in the economic reforms failure in Nigeria and success in China. 1.8 METHODS OF DATA COLLECTION AND ANALYSIS The importance of methodology (method of data collection and analysis) in any research undertaking cannot be overemphasized. Obikeze (1990: 3) sees research as a systematic process of investigation or inquiry carried out in accordance with laid down (scientific) procedures for the purpose of finding answers or solutions to a set of defined problems or perplexing issues. The three distinguishing features of research are: i. Its activity is planned and well thought-out. ii. It is purposeful and aimed at achieving well-defined and specific objectives finding answers or solutions to identified problems. iii. Research activity is ordered, systematic and follows well known and clearly laid out procedures. Adherence to a systematic procedure ensures that the research activity can be repeated or verified. This study will make use of both primary and secondary sources of data. The data collected will be thoroughly synthesized to ensure coherence and objectivity. In addition to primary sources, this work will appropriate from existing secondary data relevant to our study. Such secondary documents will be derived mostly from journals, magazines, periodicals, newspapers, textbooks, seminar and conference papers and the internet websites that dwelled on the issue of economic reform and national development in Nigeria and China. Due to the fact that this study is using the Ex-post-facto research design that deals with events that have already taken place. Field observation technique shall be used to collect data on the empirical indicators of the hypothesis. Hence our data collection will be based on secondary sources. That is, our data will be sourced from published works such as books, journal articles, conference papers, technical report findings, Newspaper publications, government documents such as the constitutions and publications of the electoral umpires that dwells or tries to explain the economic reform process and why these reform has not 37 engendered the anticipated national development in Nigeria as that of China did. In other words, this study will be on documentary analysis of secondary sources of data. These sources of data include institutional and official documents from government agencies that were involve in the reform process in Nigeria and China like the BPE, and Ministry of Communication in Nigeria and official government agencies in China such as The National Development and Reform Commission (NDRC) of China, State Development and Planning Commission, China Statistical Yearbook Chinese State Statistics Bureau. Apart from institutional and official documents, this study will extensively source materials from the internet websites and other secondary sources of data as textbooks, journals, magazines, articles and other written works dealing on the subject matter of this inquiry. To be sure, secondary sources imply information originally collected for the purpose other than the present one (Asika, 2000). The advantage of secondary data is that it saves time and money through purpose and random selection of recorded material in order to investigate the problem and test the hypothesis. There is also the possibility of using the work of others to broaden the base from which scientific generalizations can be made.

1.9 DATA ANALYSIS In this study, content analysis will be used in our data analysis. Content analysis can thus be conceptualized as a method of transforming the symbolic content of a document such as words or other images from a qualitative unsystematic form into a quantitative systematic form (Stone et al, 1966; Hosti, 1969; Krippendorf, 1980). Content analysis gives out the motives as well as the producer’s target audience and its raison d’être, thus enabling the researcher to select what is dependable from what doesn’t meet such criterion (Berelson, 1957). In other words, the central objective of content analysis is to convert recorded raw phenomena into data, which can be treated in a scientific manner so that a body of knowledge may be build up. The justification behind the use of content analysis is that it allows research on areas where the researcher cannot have physical access to the respondents.

1.10 RESEARCH DESIGN In conducting researches, research designs are indispensable. Igwe (2002:383) shows the link between research and research design thus: Research is a systematic enquiry to discover phenomena, the laws governing them and the diverse means of the application of the knowledge to practical situations. On the other hand, research design is the methodological and related processes employed in research especially with regard to theoretical framework, and the collection and manipulation of data. 38

Therefore a research design is a plan which guides a researcher and prevents him from veering off course in the process of collecting, analyzing, presenting and interpreting data. It is a logical model of proof that allows the researcher to draw inferences concerning causal relations among the variables under investigation. It also defines the domain of generalizability, that is, whether the obtained interpretations can be generalized to a larger population or to different situations (Bailey, 1978; Nnabugwu, 2006). Nwana (cited in Obasi, 1999: 49) defines design as a term used to describe a number of decisions which need to be taken regarding the collection of data before ever the data are collected. Similarly, Anikpo (also cited in Obasi, 1999: 49) defines design as a plan or structure of any aspect of the research procedure. Such plan, he argues, will be realized in the selection of the most appropriate concepts, hypothesis, analytical paradigms, specific sampling techniques, instrument and tools of data collection, test for the hypothesis and also the most effective format to present research report. Ali (2006:255) defines research design as the proposed or adopted systematic and scientific plan, blueprint, road map of an investigation detailing the structure and strategy that will guide the activities of the investigation, conceived and executed in such a way as to obtain relevant and appropriate data for answering pertinent research questions and testing hypothesis. This research is basically qualitative and non-experimental; thus we are using the observation method of documentary sources, that is, going through documented evidence to discover the various data and information that have made this work scientific. Non-experiments are based on the same logic as experiments and can be designed to determine associations. Thus the study does not use experiment or controlled groups. The research design will focused on the economic reform as carried out by the government of Nigeria and China and to ascertain the reason(s) why the reform was a success in china and a failure in Nigeria. Ex-post facto research refers to those studies which investigate possible cause and effect relationships by observing an existing condition and searching back in time for plausible factors. Asika (1999: 35) observes that in ex-post facto, the events that are observed have indeed taken place already. The researcher attempts to link some already existing effects or observation to some variable(s) as causative agent(s). The researcher will find that, at the commencement of the study, the subjects are already assigned to or classified into various levels of the variable whose effects are being investigated and the researcher cannot alter the situation. In other words, data are collected after the event or phenomenon under investigation has taken place. 39

This type of design is particularly common in investigating the cause and effect of events that had already taken place. This requires the researcher to carry out an in-depth study of the phenomenon, and identify the independent and dependent variables. This will guide the researcher to identify reliable relationship between the variables, where independent variables are represented by X, while dependent variables are represented by Y. Ali (2006:304) observes that for one to reach conclusion that one variable (X) causes another variable (Y), the statistical relationship between X and Y has been established through alternative hypothesis testing that was upheld. The researcher investigates the relationship between X and Y descriptively. Any relationship between X and Y observed and reported were pre- existing in the subjects. A descriptive study which determines the relationship pre-existing between X and Y is referred to as ex-post facto or causal comparative design. The test of hypothesis involves observing the independent and dependent variable at the same time because the effects of the former on the latter have already taken place before investigation. The choice of ex-post facto design is necessitated by the nature of our research question. The essential variables in our hypothesis are such that control groups cannot be introduced to address the various issues arising from the economic reform which was carried out in Nigeria and china. Being a non-experimental research, the use of textual technique will be employed to analyze the data generated. The use of ex-post facto is necessary because it will help in a retrospective analysis since the study is out to ascertain the reason why China successful economic reform has led to economic development and that of Nigeria has rather led to economic stagnation despite all the hues and cries that greeted the process in Nigeria.

40

CHAPTER TWO

4.0 HISTORY AND DEVELOPMENT OF ECONOMIC REFORMS IN NIGERIA AND CHINA 2.1 History of Economic Reforms in Nigeria The pattern of economic reforms that have been implemented and is still been implemented in Nigeria is rooted in the neo-classical economic tradition. The position of the neo-classical school of thought is premised on the notion of open and competitive economy in which the forces of the market determines the working of key economic variables. Relying on the postulations of the neo-classical economists the Bretton Wood Institutions (IBRD and IMF) advocate and promote the idea of a minimalist government in their structural adjustment programme policies prescriptions in many developing countries starting from the 1980s. Core prescriptions include; the removal of subsidies, price liberalization, currency deregulation and the privatization of state owned enterprises among others (Jega, 2000; Olukoshi, 1997). The bust in the international price of crude-oil serves as the catalyst that accelerated the impending Nigeria’s economic doom. The rapid decline in government revenue and burgeoning national debt were exacerbated economic miss-management that characterized governance process during the second republic, 1979-1983. The management of the economic crisis shows that the civilian regime largely lacks a coordinated policies measures to steer the economic out of decline. Political exigencies, rampaging official corruption and the need to finance the second national elections of 1983 largely constrained the federal government ability to make necessary adjustments in light of national fiscal realities (Dudley, 1982; Forrest, 1995). The austerity measures hastily put in place by the civilian regime of President Shagari failed to alleviate major imbalances in the national economic indexes while worsening socio-economic realities stoke popular resentment (Lewis, 1996). It was in the midst of these economic woes that the second republic was terminated through a military coup in December, 1983. The regime of General Buhari put in place a stabilization programme aimed at reining in public spending, reducing government payroll and extending administrative controls over trade and foreign exchange (Olukoshi and Abdulraheem, 1985). While the measures improved budgetary position and the balance of payments, however, mounting external debt and impasse with the IMF over debt renegotiation and rescheduling undermined economic recovery (Duru, 2005). The regime 41 stern administrative style and continued economic stagnation erode it popular appeal and it was overthrown in a military coup in August 1985. By the time the military junta of General Babangida came to power, Nigeria has enter a dire economic situation. Mounting international pressure from the Bretton Wood institutions and heightened popular demand for a speedy resolution of the national economic crisis has rising to a high level. The military regime tried to curry public sympathy by opening forums for public debate of the IMF structural adjustment programme packages. While Nigerians showed strong resentment to the IMF conditionalities, the regime through deft maneuvering put together a home grown adjustment programme that encompassed most of the conditionalities of IMF Structural Adjustment Programme without immediately accessing the institutions loan facilities (Jega, 2000b). With its declaration of a national economic emergency, the regime was able to sustained a consistent course of stabilization that includes the abolition of the import licensing system, tariffs reduction, currency devaluation, dissolution of agricultural products boards, liquidation and privatization of some public companies and enterprises, reduction of subsidies (notably fuel subsidy) among other adjustment measures (Duru, 2005; Adesina, 2000; Lewis, 1996). The regime doggedly implemented the adjustment measures without putting much thought to measures for cushioning the socio-economic effects on the welfare of Nigerians downtrodden in the informal sector and the working class (Adesina, 2000). Though, the adjustment measures resulted in some improvement in the basic indices of the economic yet the negative socio-economic impacts of the adjustment gave rise to privation and popular discontent. The increasing pauperization of large segment of the population feed into series of anti-government protests spearheaded by student bodies, traders, and organized labour unions (Adesina, 2000). Under pressure from the public, the Babangida regime implementation of the adjustment measures becomes haphazard. While central elements of the adjustment programme were maintained. There emerged a pattern of selective circumvention of core policies and reduction of macro-economic discipline. Jega (2000a) notes that adherence to the structural adjustment programme policy prescription worsened Nigeria economic crisis resulting in a generalized and acute immiseration of majority of Nigerian people. Following adjustment policy prescription, the Nigeria state systematically disengaged from the provision of key social services. Such disengagement resulted in the hike in the cost of education, medical and health care service among other social services earlier subsidies by the state. Currency devaluation and the institution of deregulation regime also resulted in the worsening of the purchasing power of the incomes of the working and peasant classes, heightening the cost of living, thus 42 pushing a large percent of the Nigerians below the poverty line. Whatever indicators are used to assess the impact of adjustment programme, the picture invariably looks grim and disconcerting argued Jega (2000). The political economy of adjustment under Babangida military regime was laced with deft political manipulations and characterized by inconsistency and half-hearted implementation of adjustment measures. In sum, the regime managed the adjustment programme through a mixture of domestic political orchestration, compensatory measures, and coercion. For elites, the state provided special access to nascent markets and illegal activities, and manipulated key policies to provide opportune 'rents'. The Babangida regime initially employed these tactics to sustain the implementation of orthodox policies, but senior leaders eventually abandoned a basic commitment to economic recovery. Faced with growing political contention, looming personal insecurity, and a fortuitous appearance of new revenues, the President engaged in increasingly reckless economic management. The twilight years of the regime was noted for massive diversion of public resources, abdication of basic fiscal and monetary controls, and expansion of the illicit economy nurtured and controlled by senior members of the ruling junta (Lewis, 1996). Between 1993 when Nigeria plunged into political turmoil following the annulment of the 1992 presidential elections and the return to democratic rule in 1999, Nigeria economic reform process was stalled. The regime of the reclusive General Abacha that came to power after sacking the interim national government undone numbers of the measures implemented under Babangida regime. The Abacha regime adopted a populist and nationalist stance in it managing of the economy. The implementation of economic policy once again reverts back to administrative controls on finance, trade and foreign exchange. Though the Abacha regime somewhat make attempt at partial return to liberalization, a combination of untenable policies, corruption, diversion of state resources and the state of political instability continued to undermined the basis of the national economy. It was in this state that Nigeria return to democratically elected civilian rule in May, 1999. During the inauguration of his regime in May, 1999 then President Obasanjo made a commitment to implement economic reform with the objectives of liberalizing the nation’s economy, promote diversification, and privatize core public enterprises with the view to drive economic growth and overall national development. Based on the realization of the relevance of the tenets of SAP to Nigeria’s economic reality, the civilian regime of President Obasanjo embarked on the reform of the economy with a view to enhancing efficiency and higher productivity growth, transparent and accountable governance. The reform efforts, however, met with opposition. The document on 43 which the reform programme of Obasanjo rested was the National Economic Empowerment and Development Strategy (NEEDS). The development of NEEDS at the federal level was complemented by individual State Economic Empowerment and Development Strategies (SEEDS), which were prepared by all 36 Nigerian states and the Federal Capital Territory (FCT). The NEEDS program emphasized the importance of private sector development to support wealth creation and poverty reduction in the country. The objectives of NEEDS were addressed in four main areas: macroeconomic reform, structural reform, public sector reform and institutional and governance reform.

Strategies on Which Needs is Claimed to Rest The main objectives of NEEDS as was outlined by Olaopa et al, (2006: 17-19), rests on four key strategies: reforming the way government works and its institutions; growing the private sector; implementing a social charter for the people; and re-orientation of the people with an enduring African value system.

(a) Reforming Government and its Institutions The goals are to restructure, down-size, re-professionalized and strengthen government and public Institutions to deliver effective services to the people. It also aims to eliminate wastes and inefficiency, and free up resources for investment in infrastructure and social services by Government. A key aspect of the institutional reforms is to fight corruption, ensure greater transparency, and promote rule of law and stricter enforcement of contracts. An explicit Service Delivery Programme to re-orientate government agencies towards effective delivery of services to the people is being introduced in government for the first time.

(b) Growing the private sector NEEDS is a development strategy anchored on the private sector as the engine of growth --- for wealth creation, employment generation and poverty reduction. The government is the enabler, the facilitator, and the regulator. The private sector is the executor, the direct investor and manager of businesses. The key elements of this strategy include the renewed privatization, de-regulation and liberalization programme (to shrink the domain of the public sector and buy up the private sector); infrastructure development especially electricity and transport; explicit sectoral strategies for agriculture, industry/SMEs; services (especially tourism, art and culture, and information/communication technology), oil and gas, and solid minerals. Other elements of this agenda include the mobilization of long-term capital for 44

investment; appropriate regulatory framework; a coherent and consistent trade policy and regional/global integration regime; and specific interventions to encourage the development of some sectors. For instance, in order to enhance rapid industrial growth and efficient exploitation of resources, Government shall encourage strong linkage between Science and Technology Parks (STPs), industry and R&D Institutions. In addition, there shall be deliberate efforts made to promote technology acquisition from within as well as across national boundaries. In collaboration with the States, a key strategy is to promote the emergence and flourishing of industrial clusters. In a global economy characterized by increasing agglomeration of industries, promotion of clusters to ensure economies of scale is an important element of the strategy. The small and medium enterprises (SMEs) are critical for employment generation, and therefore receive special attention under NEEDS. In addition, NEEDS seeks to promote the emergence of medium and large commercial farms, plantations, and industrial conglomerates that would harness the economies of scale and effectively compete in today’s global market.

(c) Implementing a social charter: NEEDS is about people It is about their welfare, their health, education, employment, poverty-reduction, empowerment, security and participation. This is the overarching ultimate goal of NEEDS. With about 50 percent of the population as children, education is seen under NEEDS as the most important bridge to the future and a powerful instrument of empowerment. The HIV/AIDS epidemic is not just a social problem; it is a major threat to productivity and the economy. Effective health care delivery system, especially aspects directed at combating the scourge of HIV/AIDS and other preventable diseases (malaria and tuberculosis) is a key strategy for preserving a healthy workforce. Explicit programmes are directed at youth reorientation and employment. The existing pension scheme which is in crisis is being replaced by a contributory pension scheme to give the senior citizens a better retirement life. Under NEEDS, reforms were carried out to promote the emergence of a vibrant mortgage and housing development system that is led by the private sector. The priority to agriculture (especially to improve the productivity of peasant farmers) is a key element of the poverty reduction strategy since over 50 percent of the poor are in agriculture. The continuing investment in water resources not only provides a key social service --- water to the people – it also provides irrigation for increased agricultural productivity. Industry, especially the SMEs, is also expected to provide a boost to employment, particularly to the urban labour force. In collaboration with the States (under SEEDS) and 45 local governments, an integrated rural development programme is a major strategy to stem the rural-urban migration. Another key strategy of the social charter is inclusiveness and empowerment. This is not just on the economic front, but deliberate programmes to give voice to the weak and the vulnerable groups through increased participation in decision- making and implementation, and laws and programmes to empower women, children, the handicapped, and the elderly. For example, NEEDS aims for a minimum of 30 percent representation for women in all aspects of national life wherever feasible.

(d) Value Re-Orientation The key message of the NEEDS is that ‘it is not business as usual’. The privatization programme is designed to shrink the domain of the state and hence the pie of distributable rents which have been the haven of public sector corruption and inefficiency. The act of privatization will release a few thousands of appointed Board members of parastatals to go into productive engagements. Public sector reforms would also aim to emphasize professionalism, selfless service, and efficiency (value-for-money). The anticorruption measures, flight against the advance fees fraudsters, and strive towards greater transparency in public and private sector financial transactions will help to ensure accountability, and send the message that those who make money through illegal and illegitimate means have no hiding place. Part of the reform agenda is to ensure that hard work is rewarded and that corruption and rent-seeking are punished. The people will be empowered to hold public officials accountable through some Bill of Rights (especially the Right to Information Act). The people will be mobilized to re-emphasize the virtues of honesty, hard work, selfless service, moral rectitude and patriotism. The National Orientation Agency (NOA) and their state counterparts will be strengthened to actively lead the campaign. Government will also encourage the civil society organizations, Community-based organizations, NGOs, private sector organizations, religious and socio-cultural-traditional organizations, etc. to provide leadership in the campaign for a new value system. Agencies and organizations will be encouraged to take specific steps to reward excellence as the demonstration effect could help to motivate imitation of exemplary behaviour by others. Figure ….. Institutional Framework for Implementing NEEDS 46

Source: Adeyemo et al, 2008 2.2 History of Economic Reforms in China Before 1978, China’s economy was dominated by the state, and private enterprises played only a negligible role. According to China’s State Statistics Bureau, in 1978, private enterprises accounted for only 0.2% of China’s national industrial-output, while state-owned enterprises (SOEs) and collectively owned enterprises controlled the rest of the economy (http://www.cei.gov.cn). With factories being relegated to units of the state productive machinery, there was essentially no need for competition as we know it today. At times the government promoted “labor competition” among factories or productive units in an effort to indoctrinate the populace with communist ideology, but competition motivated by profits was condemned as a symptom of corrupt capitalism systems. The inefficiency of central planning was repeated in the industrial sector. All enterprises were state-owned before the 1978 reform. The government set up plans for the production and distribution at all enterprises. The government also set prices for almost all goods and services. Workers were assigned to enterprises by the government and were guaranteed lifetime employment. In order to “modernize” quickly, priority was given to heavy industries and these industries were heavily subsidized. For example, during the Great 47

Leap Forward, launched at about the same time communes were established in rural areas, people were encouraged to build furnaces all over the country to produce iron and steel. Already in 1977, Deng Xiaoping made it clear that performance should be the main consideration in the economic and social advancement of individuals. In other words, professionalism and results should count. Furthermore, he emphasized the importance of academics and scientists for the future of the economic development and the international standing of China. He thought that this should be more widely recognized by the Chinese people. During 1978, Deng Xiaoping’s reform philosophy gained growing support in the CCP and its desirability was accepted in December 1978 at the Third Plenary Session of the Eleventh Central Committee (Tisdell, 2009: 289). In 1978, Deng Xiaoping initiated economic reforms. Reform started in rural areas where population was more dispersed, the commune system had obviously failed, and some reform experiments had already self-started at the village level. Under the newly established household responsibility system, farmers were given much freedom on what to do with their land and got to keep much of what they earned. Then Township and Village Enterprises (TVEs) were formed and collectively owned by the local government. Where they had enough resources and incentives, they grew very quickly to become a significant part of the rural economy and started to compete with the SOEs. In contrast, the reform of the SOEs has been more difficult. SOEs reflected the central planning perspective of the past and there were various government agencies whose very existence relied on control over the SOEs. The functioning of SOEs is complex, both because of the lack of management training and because of the need to serve social objectives (e.g., employment stability). Major steps were taken to reform SOEs, such as the contract responsibility system introduced in 1987, where SOEs were given much autonomy and could retain profits after paying taxes to the local government. More recently in 1997 SOEs were restructured into share-issuing companies. The price system was also decontrolled with a transition during which a two-tier price system allowed the coexistence of market prices with government-controlled prices for important goods. Government agencies responsible for economic management and regulation have also been reduced and restructured in recent years. The economic reform process embarked on by the Chinese leaders in 1978 came at a time of need. In 1976, the political class that assumed the leadership saw the great need for economic reform and transformation. This vision was strengthened specifically by the assumption of power by Deng Xiaoping. The formal diplomatic relations the P.R. China established with United States in 1979 further strengthened the drive towards economic 48 restructuring – the transition from the planned system to a more market friendly economic system where economic decisions are decentralized. This led to a gradual decline and the eventual erosion of the role of central planning and of the state planning Commission in the 1980s. The Commissions were replaced by the convention of setting five year economic plan, overseen by the State Development Planning Commission, the State Economic and Trade Commission, the Ministry of Finance, and the People's Bank of China (Chow, 2002). The reform of the Chinese economy was premised on four cardinal reasons. First, the Cultural Revolution was very unpopular, and the party and the government had to distance themselves from the old regime and make changes to get the support of the people. Second, after years of experience in economic planning, government officials understood the shortcomings of the planning system and the need for change. Third, successful economic development in other parts of Asia including economies like Taiwan, Hong Kong, Singapore, and South Korea, known as the Four-Tigers demonstrated to Chinese government officials and the Chinese people that a market economy works better than a planned economy. This lesson was reinforced by the different rates of economic development between countries in Eastern and Western Europe. Fourth, for the reasons started above, the Chinese people were ready for and would support economic reform (Chow, 2002). The reform was designed to overhaul the entire economic system but on gradual basis. Specifically the reform has the following aspects: agriculture, state enterprise, the banking system, price reforms, non-state sectors foreign trade and investment and institutional infrastructure (see Lin, 1988; Lin, et al., 1996; Reynolds, 1988 and Perkins, 1988). In 1992, China significantly accelerated its pace of economic reform after the in- spection tour of the southern regions by its paramount leader, Deng Xiaoping. In the fall of 1992, the 14th Congress of the Chinese Communist Party officially declared that the central goal of China’s economic reform is to establish a “socialist market economy.” In the following decade, far-reaching reform measures were undertaken to overhaul China’s SOE sector, taxation, banking, and foreign currency systems. Private enterprises grew rapidly, and large amounts of foreign investment flowed in. Now, nearly thirty years after the start of economic reform in 1978, China’s economic structures have undergone dramatic changes. One of the most significant changes is the decline of the importance of the SOEs and other state-controlled enterprises and the emergence of the country’s private sector. According to a national census, among 3 million enterprises that existed on December 31, 2001, SOEs and enterprises with a controlling share held by the State accounted for 56.2% in capital and 49.6% in annual revenue, a big contrast to when the reform first started in 1978 with all 49 enterprises being state-owned (http://www.stats.gov.cn/tjgb/jbdwpcgb/qgjbdwpcgb/t20030117_61467.htm). Given the economic backwardness and poor economic performance of the state sector, the post-Mao leadership, led by Deng Xiaoping, shifted their focus on economic growth from the class struggle in the late 1978 when the reform and open-door policy was adopted. While open-door policy was adopted to attract foreign investment and advanced technology, the market-oriented reform strategy was launched to revive the poor national economy. To destroy the egalitarian legacy of the Maoist era, unbalanced growth theory and pragmatic principles were justified. New policy slogans became popular, such as “getting rich is glorious”, “let a few people get rich first”, and “No matter it is white or black, those who can catch mice are good cats”. Economic growth became the paramount policy goal of the party-state and the source of its legitimacy, as Deng Xiaoping put it, “growth is the hard truth” (fazhanshiyingdaoli). China’s growth and development was not accidental; it was a product of careful and well thought-out planning and dogged implementation and commitments to the development of the country. In 1978 China abandoned the commune system for agricultural production and effectively allowed the resumption of peasant agriculture. It employed a dual price system to manage the transition, where producers had to fulfill a quota that was paid for at a low, fixed price, while excess production could be sold on a free market. It permitted the establishment of enterprises with more capitalist characteristics, although some of the most successful were “town and village enterprises” that exploited the former communes to create industrial units that were managed collectively at the local level, that sold their output on free markets, and that used their profits to buy local public goods. Foreign direct investment was encouraged. Exports were promoted. The results of these policy changes were dramatic, with Chinese growth over the following 20 years averaging almost 10% per annum, resulting in over 200 million people being raised above the World Bank’s “dollar a day” line for absolute poverty (Williamson, 1999:11-12). Agricultural reforms were launched first and later extended to the rest of the economic activities. Provinces have been left to defend itself fiscally, and must mobilize resources from their jurisdictions. Local governments must rely on the profits of state enterprises as the source of revenues. Therefore, an effective strategy for local governments is to enter a coalition with the enterprises; in exchange for the protection and preferential treatments offered by local governments, the enterprises agree to continue to support the local governments by contributing to either on or off budgets, or to both. At this stage, local 50 governments play a dual role; on one hand they protect their local partners against the central government and on the other, they assume the role of the old patriarchs of enterprises. China’s economic reform started from rebuilding the market system and evoking competition instead of privatizing most of the state-owned enterprises. As a result, even many years after the establishment of the market-oriented economy, the government in general, still keeps a large share of the ownership (Beh, 2007: 20). China began a major overhaul of its banking system in 2002, which led its biggest banks to take on foreign strategic investors and launch initial public offerings. Despite frequent reports of corruption and fraud in local branches, analysts say cash infusions from the government and the share sales have put the banking system on a much stronger financial footing. Now Chinese banks are looking to move into developed economies to better serve their main corporate clients: Chinese companies that increasingly operate globally.

CHAPTER THREE

5.0 ECONOMIC REFORMS POLICIES IN NIGERIA AND CHINA Under this chapter, we seek to test our second hypothesis which states that; Policy inconsistencies and policy consistency is implicated in the economic reforms failure in Nigeria and success in China.i.e, we seek to explain and analyze how lack of consistency in policies over the years have hampered the successful implementation of economic reforms and have led to economic failure and underdevelopment in Nigeria, while the consistency in policy formulation and implementation has led to successful economic growth and national development in China.

3.1 Economic Reforms Policies in Nigeria Much of the failure of policy and the lack of development have been attributed to the abnormal situation where Nigeria was denied democracy and the rule of law, but rather was forcibly subjected to military misrule. Unfortunately, the quality of leadership was low as the military establishment was led by poorly educated and often ill-trained soldiers. During much of this period, there was the problem of ethno-religious violence and a vicious struggle for resource control. While oil resources were located in the South, the leaders (military and 51 civilian) were usually from the North. These Northern leaders were bent on transferring the oil resources to develop the North. This regional redistribution syndrome resulted in an unending tribal and religious strife during most of the period. The development conundrum was exacerbated by the fact that many of the military rulers were corrupt. Thus, the nation’s oil resources were stolen when they were not misspent on “white elephant” projects in the Northern parts of the country. The quality of economic policy making was also poor. Given the prevailing orthodoxy that industrialization was a prerequisite for rapid economic growth, the aim of government was to promote industry and manufacturing through import substitution, using development planning. During 1962-1985, the country used the approach of fixed medium-term plans. Four Development Plans were adopted and implemented thus: (i) First National Development Plan, 1962-68; (ii) Second National Development Plan, 1970-74; (iii) Third National Development Plan, 1975-80; (iv) Fourth National Development Plan, 1981-85. During the era of development programming, macroeconomic management policies were used as the key tools for achieving plan objectives. However, in the end, the policy of Import Substituting Industrialization failed. The discovery of oil and its predominant position after 1974 soon led to the relative neglect of agriculture. But, the oil boom only lasted until 1982. With the end of the oil boom in 1982, Nigeria found itself in a quagmire of economic problems. The internal problems included recession, inflation, high unemployment and rising fiscal deficits while the external problems consisted of chronic current account and balance- of-payments deficits, an escalating external debt stock and a crushing debt-service burden. There was also ample evidence of sectoral disequilibrium as demonstrated by the emasculation of the agricultural sector, the stunted development of the industrial sector, a lop-sided dependence on the oil sector and the repression of the financial sector. Between 1982 and 1986, the government made a valiant attempt to combat the economic crisis by adopting various austerity measures as reflected particularly in the Economic Stabilization Act of 1982 and the National Economic Emergency Act of 1985. However, because of the fundamental nature of the economic and financial disequilibriums, the government found that mere austerity without structural adjustment constituted an inadequate response to the economic crisis. Matters came to a head in early 1986 when the world oil market collapsed and the price of oil fell by over 50%. With Nigeria's earnings from petroleum exports tumbling from approximately US$25 billion in 1980 to US$6.4 billion in 1986, trade arrears 52 piling up, and international credit lines drying up, the nation was on the verge of economic collapse. Accordingly, in July 1986, the government adopted the Structural Adjustment Programme (SAP) in order to bring about a fundamental restructuring of the economy to ensure its long-term survival. Unfortunately, the SAP policy of economic liberalization and deregulation did not succeed, mainly as a result of poor implementation and policy inconsistency. The problem of poor and direction-less leadership also continued. Thus, in the end, economic growth performance during the liberalization period was only marginally different from what was recorded during the preceding period of economic controls. The Structural Adjustment Programme introduced in 1986 constituted the institutional framework for the design and application of trade and commercial policies for a substantial part of the 1987–2000 period. The government abolished Commodity Boards and deregulated the pricing and marketing of agricultural commodities. The import and export licensing system was also abolished and the number of import-prohibited items reduced. In 1988, the desire to provide a more stable and predictable tariff regime prompted the introduction of tariff reform. Hence, a tariff structure expected to last seven years was initiated. A variety of incentives were introduced to promote non-oil exports and foreign direct investment, including duty and tax concessions. The Babangida administration introduced the SAP in 1986 and was responsible for its initial implementation. The efforts of this administration were hampered by continuous declines in oil revenues and increases in external debt, but also by its commitment to an unending program of political transition. The quality and consistency of economic policy management declined sharply. The government yielded to domestic political pressures, and despite repeated official pronouncements that it would continue with reforms, could not sustain the original objectives of the SAP. Ad hoc policies were implemented instead, to meet short-term expediencies. The most serious issue was irresponsible fiscal behavior, primarily in the form of excessive spending. The early 1990s were characterized by rising fiscal deficits, increasing poverty and mounting discontent, a situation that resulted in several anti- SAP protests, riots, and strikes. The SAP led to a major decline in expenditure on the social sector and created a new class of the poor. It forced down capacity utilization in industry, from an average annual rate of 53.1% between 1981 and 1985 to 39.8% between 1986 and 1993. It may also have contributed to the widespread distress in the banking system which destroyed the confidence of the public in the financial system and caused hardships to bank customers (Iyoha, 1996). 53

Unfortunately, the SAP did not deliver all its protagonists promised. Deregulation and liberalization improved conditions for agriculture and led to positive developments in the financial sector; and overall economic growth rebounded during the SAP period. But, as of the early 1990s, there was little evidence that reforms had transformed the overall climate for growth. Indeed, overall economic growth differs only marginally between the two periods, amounting to 0.18% during the period of economic controls and 0.80% during the liberalization era. But the inter-temporal pattern of growth differs markedly, with the first period characterized by a massive boom and bust cycle and the second by protracted stagnation following an initial burst of growth. However, while 1986/87 marks the outset of a cumulatively substantial reorientation of economic policy in Nigeria, the legacies of the earlier period, combined with the continued realities of political conflict in Nigeria, prevented any fundamental transformation of the growth environment through the end of the century. For the first two years after the return to democratic rule in 1999, the Nigerian economy continued to report poor overall economic performance, contrary to the hopes and expectations of Nigerians, donor partners, and the entire international community. It was widely expected that with the dawn of democratic revival in Nigeria, economic growth would resume and accelerate, leading to significant reduction in poverty. Unfortunately, this did not immediately happen and economic growth continued to be lackluster and unprepossessing. Indeed, the poor growth performance of the economy during the first two years of President Obasanjo’s first term made it clear that fundamental economic reforms were warranted. Additionally, in the new millennium, it became necessary to make a concerted attempt to actualize the U.N.’s Millennium Development Goals (MDGs). Thus, starting from 2001, government started to introduce economic reforms. In 2003, the reform programme was formalized and systematized and government began to implement a comprehensive reform program known as the National Economic Empowerment and Development Strategy (NEEDS). According to the NEEDS document issued by the Nigerian government, the National Economic Empowerment and Development Strategy is a nationally coordinated framework of action in collaboration with the State and Local governments and other stakeholders to reduce poverty. Indeed, NEEDS is Nigeria’s home-grown poverty reduction strategy (PRSP). In effect, the State Economic Empowerment and Development Strategy (SEEDS) of each State of the Federation are to be coordinated with NEEDS as a weapon to reduce poverty and underdevelopment in the country. In addition to the State and Local governments, the implementation of NEEDS will be predicated on a close collaboration and coordination between the Federal government and donor agencies, the private sector, civil society and non- 54 governmental organizations (NGOs). As articulated by the Nigerian authorities, poverty reduction is the core objective of NEEDS. Accordingly, NEEDS includes interventions and policies aimed at poverty reduction and the policies are intended to benefit virtually all segments of the Nigerian society. The National Economic Empowerment and Development Strategy also encompasses important structural reforms designed to enhance the transparency and accountability of public sector policies and institutions. In the process, it is expected that many deep-rooted macroeconomic and structural challenges will be addressed in order to restore macroeconomic stability and promote rapid and sustainable economic growth. The NEEDS document declares that the strategy is to be implemented by creating a conducive environment for business and foreign investment so as to ensure a government sector cum private sector partnership for growth. In particular, government’s attention is to be focused on the provision of basic services and empowering the generality of Nigerians to take advantage of new livelihood opportunities while encouraging the private sector to become the engine of growth in the economy. People empowerment will especially focus on the areas of health, education, the environment, integrated rural development, housing, employment, gender mainstreaming, and youth development. NEEDS has also become an umbrella organization for the various poverty eradication programmes established by the Obasanjo Administration since its inception in 1999. Chief among these programmes is the National Poverty Eradication Programme (NAPEP), which was established in 1999. The objectives of NAPEP include: • Poverty Eradication; • Economic empowerment of the citizenry, especially women; • Provision of skill acquisition for youths and reduction of unemployment among youths; • Provision of Universal Basic Education to all Nigerians; • Revitalization of agriculture as a means of raising the incomes of rural dwellers; and • Provision of motorable roads in rural areas to enhance evacuation of produce to markets. The comprehensive reform programmes have been implemented in four main areas: Macroeconomic Reform, Structural Reform, Governance and Institutional Reform, and Public Sector Reform. Under the Macroeconomic Reform Program, government adopted prudent oil price-based fiscal rule; introduced Medium Term Expenditure Framework (MTEF) and Medium Term Sector Strategies (MTSS); improved implementation of monetary policy by Central Bank; undertook a bank consolidation exercise to strengthen financial 55 sector; adopted trade liberalization policies; and undertook the privatization of some government enterprises. Under the Structural Reform Program, there has been a bank consolidation exercise to strengthen financial sector; Trade liberalization reform; and privatization of some government enterprises. Under Institutional and Governance Reforms, government introduced the Due Process mechanism in public procurement; adopted the Extractive Industries Transparency Initiative (EITI) in Nigeria; and established the Economic and Financial Crimes Commission (EFCC) and Independent Corrupt Practices Commission (ICPC) to address corruption in public offices. Under the Public Sector Reforms, there was a restructuring of some government agencies and an increased focus on service delivery. Successive governments have formulated and implemented conflicting policies to support economic reforms, and as a result economic reform policies have tended to change frequently with changes in political leadership. The fragmented approach to policy making has constrained economic growth because it has prevented a sustained commitment to a coherent, integrated strategy for national development. The loose policy framework does not encourage stability in the economy. The policy process is personalized rather than vested in formal institutions, and is typically driven by informal interest group lobbying rather than robust and formalized consultation Utomi et al, (2007). Policy making is driven primarily by informal processes of interest group lobbying rather than robust, formalized and consultative processes. Consequently policies tend to serve the interests of the ruling elite rather than the general public. The political system in Nigeria is characterized by the concentration of power in the executive, and in particular the President and State Governors. Other institutions of government, including the legislature, judiciary and civil service, have limited influence and capacity. The concentration of power in the hands of the Presidency reflects a long-standing trend since independence and several periods of autocratic military rule. However, since the return to democracy and constitutional rule, there has been a gradual shift in the balance of power. The National Assembly has begun to reassert itself, and some elements of the civil service linked to the reform programme have been reinvigorated. However, the Presidency has retained its dominant position in the policy process. State Governors with their constitutionally-defined powers are important sources of patronage, and in practice are relatively unconstrained by checks and balances. 24. In this context many policy decisions are taken personally by the President often in response to active lobbying from individuals and interest groups. This has resulted in a shifting and unpredictable policy environment that benefits certain interest groups, and can lead to vigorous change, but does not provide a coherent stable and predictable basis for investment 56 and broad-based, private sector-led growth. Furthermore, weak capacity and corruption in the civil service has meant that policies are often inadequately prepared and inconsistently implemented. The policy framework has been incoherent, inconsistently applied, subject to frequent reversals, and has had highly distorting effects on patterns of industrial development. Because the economic reforms in Nigeria have been leadership-driven they have also tended to be “top-down”, and have been applied using a bulldozer approach rather than careful consensus building. There may have been little alternative in a complex country such as Nigeria that is riven by social divisions, has weak institutions and no strong tradition of civil society participation in the policy process. Reform imposed from above may have been necessary to kick start the reforms, but may not be sufficient to extend and sustain them. Further the early signs are that the new presidency starts from a position of greater weakness than did its predecessor, and may well be unable to adopt the same approach, or indeed any approach that offers a good prospect for sustaining reform momentum. The reform experience in Nigeria is notable for the relative weakness of public participation, reform coalitions and vertical systems of accountability. All of these elements will need to be strengthened in order to sustain the reform process. In spite of this, there are indications of a gradual shift in public attitudes and expectations towards government that may strengthen pressure for reform from below. Early quick wins have helped to build public support for reform, but greater progress in improving service delivery and generating employment will be required to sustain this Utomi et al, (2007). 3.2 Economic Reform Policies in China The economic reform policies in China could be situated under two broad headings such as; the command economy and the market oriented economy. The Command Economy The Chinese economy had been predominantly agrarian before 1949 when the Civil War ended and the Chinese Communist Party (CCP) came to power (Perkins, 1975:117; Riskin,1987,17; Wong, 1993:12). In order to strengthen state capacity to mobilize and organize resources, the CCP embarked on economic and social transformation in both rural areas and urban areas, which consequently laid the foundation for the so-called socialist command economy. The command economy paradigm began with significant advances in the early 1950s, but subsequently faced a series of challenges in late 1950s and 1960s, and finally had to be reformed in 1978. In retrospect, the CCP and China’s government mainly took the following economic policies under the command economy paradigm. 1. Setting up National Economic Command Apparatuses. 57

During 1950s, the rehabilitation of economy and development were two main tasks under the goal of “three years of recovery, then ten years of development”. After three-year successful economic rehabilitation and centralization of state power (1949-1952), the development planning was given priority. In order to match it, a series of institutional setting measures were taken nationally, including setting up the State Planning Commission(SPC) for long term and perspective planning and the State Statistical Bureau(SSB) in 1952, the State Construction Commission(SCC) for overseeing capital investment in 1954, the State Economic Commission(SEC) for short term planning, the General Bureau for Supply of Raw Materials(GBSR) for materials allocation, and the State Technological Commission(STC) for long term technological development in 1956, etc.. By the end of 1957, China’s command system was highly centralized (Riskin, 1987:55). In Frederick C. Teiwes’ words’; By 1953 the CCP had amassed substantial resources on the basis of which socialist construction and transformation could begin. In economic terms, 70 to 80 percent of heavy industry and 40 percent of light industry were state owned in late 1952. State trading agencies and cooperatives handled more than 50 percent of total business turnover, while government leverage over the remaining sectors had increased due to the development of joint firms and revamped trade unions. (inMacFarquhar and Fairbank,1987:93-4).

2. Land Reform and Institutional setting in Rural Areas. In early 1950s, the land reform in rural areas was carried out from 1950 to 1953 under the slogan of “setting free the rural productive forces, develop agricultural production, and thus pave the way for New China’s industrialization”(cited in Riskin,1987: 48), in which four classes were divided based on properties, i.e. poor peasant, middle peasant, rich peasant and landlord, and land and other means of production were redistributed while land, drought animals, farm implement and surplus grain of landlords were confiscated. At the same time, a series of institutional reform were designed to promote agricultural development, including the mutual aid teams (1950-1955), agricultural cooperatives, the Soviet-type collectives in 1956, and finally people’s communes in 1958. By the end of 1958, the people’s communes became the only existing production organization in agriculture and private ownership disappeared completely in rural areas. 3. Industrial Policies and Industrialization in Urban Areas. Compared to agriculture and land reform in rural areas, the industrialization in urban area was much more complicated over the same period. After three years of economic reconstruction and social transformation from 1949 to 1952, the “general line for the transition to ” was put forward in mid-1953 and announced publicly in October, under which “both industrialization and transformation would take place over a fairly long 58 period of about fifteen years in a step-by-step manner” (MacFarquhar and Fairbank,1987:92). By copying the Soviet model under Soviet aid, China stipulated the First Five-Year Plan(1953-1957) and priority was given to large-scale, capital-intensive manufacturing, which almost took up 90 percent of total industry investment. The core of the industrialization program in the FFYP consisted of 156 Soviet-aided projects and collectively absorbed about half of total industrial investment ( inMacFarquhar and Fairbank, 1987:158). The FFYP attested to be successful in the sense that national income grew at an average annual rate of 8.9 percent (measured in constant prices), with agriculture and industrial output expanding annually by 3.8% and 18.7 percent respectively during the Plan period (Nicholas R. Lardy, in MacFarquhar and Fairbank, 1987:155), even compared to the Soviet economic performance under similar conditions from 1928 to 1940 where industrial production grew at an annual rate of 11 percent and agricultural production at an annual rate of only one percent(Gregory and Stuart 1981:83), let alone to most of these newly independent developing countries with average 2.5 percent per capita growth and agrarian India similar to China’s initial conditions with a per capita growth rate under 2 percent during 1950s(Lardy, in MacFarquhar and Fairbank, 1987:156).

4. Irrational Economic Policy. From late 1950s to late 1960s, partially because of the inspiring economic performance during the FFYP period, and partially due to the Sino-Soviet split, the CCP first took irrational economic policy known as the Great Leap Forward(1958-1960), and then replaced economic development with “politics in command” during the Cultural Revolution (1966-1976). Starting from GLF, the CCP indulged in class struggle. Theses indulgences followed by chaos in China resulted in economic stagnation, notwithstanding attempts in making adjustments in 1963-65 (Wu, 1999a: 469-495; MacFarquhar and Fairbank, 1987:391- 397; Wong, 1993:18) and rectification in 1975(Wu, 1999a: 726-732) from pragmatic leaders within CCP.

The Market-Oriented Economy In 1970s, it was partially due to power struggles within the CCP after Mao’s death domestically(Shirk,1994:18), and partially because of the improvement of Sino-US relations and inspiring economic performance of neighboring countries such as Japan, “four little dragons” and other NIEs, that the “reform and open door” policy under Deng Xiaoping leadership was carried out in 1978. From then on, China has entered a new era known as the transition period (The World Bank,1996), namely the transitions from the command economy 59 to a market-oriented one; from a rural, agricultural society to an urban, industrial one; and from a non-WTO nation to a WTO one. In contrast to a “shock therapy” approach to the transition from the command economy to a market economy by the former Soviet Union, consequently leading to political collapse and economic stagnation, China has undertaken the transitions smoothly, at least in past two decades, although it also has faced a variety of serious challenges. The question is what kinds of policies China’s government took to govern through transitions smoothly while maintaining its robust economic growth? 1. 1978 to 1993 was the first stage of China’s reform and transition, during this period, a series of economic policies were carried out in both rural area and urban area, of which four economic policies were vital to China’s early smooth transition. First was the decentralization of governance. The new round of decentralization as a policy, starting with the 1980 fiscal reform called “eating in separate kitchens” and followed by the 1984 foreign trade apparatus reform(Shirk,1993:178-181), including administrative decentralization and fiscal decentralization, under which the local governments not only enjoy lower tax rates and higher share of revenues, but also enjoyed special institutional policy and policy environments and gained more authority over local economic development(Lin, Tao and Liu, 1997: 10-12). Second, the expansion of non-state firms rather than massive privatization of state-owned enterprises (Qian, 1999). As a result, the township and village enterprises (TVEs) became the engines of China’s economic growth in 1980s and early 1990s. It is estimated that by 1993, TVEs already accounted for 36% of the national industrial output, up from 9% in 1978, and within the rural sector, the TVEs accounted for three-quarters of rural industrial output, or more than one-quarter of the national total (Che and Qian, 1998). Third, the dual-track approach to market liberalization. The “dual-track price system” was another key economic policy in 1980s which contributed to economic boom. Different from the single fixed price system under centrally planned economy, the “dual-track price system” as a policy means that the prices for the key commodities like coal, petroleum and steel was fixed while the prices for ordinary consumer goods depended on more or less free market. Last but not the least, particularistic contracting system (Shirk, 1994). The particular contracting system included “household responsibility systems”(HRS) in agriculture in rural area and “contract responsibility system” in the state owned enterprises(SOEs) in urban area aimed to “expand enterprise autonomy”. In contrast to success of agriculture reform under HRS, the “contract responsibility system” (CRS) was introduced to state enterprise in 1986 and 90% of stated- owned enterprises were covered by the CRS by 1988, the CRS, however, could not solve the deep-rooted problems underlying the state enterprises(Wong,1993:32-33). 60

2. From 1994 to 1998, China’s reform and transition entered into a new stage known as a market-oriented economy following the “Decision on Issues Concerning the Establishment of a Socialist Market Economic System” adopted at the Third Plenum of 14th Party Congress in November 1993, and subsequent “Outlines of State Industrial Policy” by the State Council in March 1994. A series of radical reforms was launched: 1) Unification of Foreign Exchange rates and Convertibility of the Current Account On January 1 1994, the plan allocation of foreign exchange under dual-track system was completely abolished, and in December 1996 a farther step was taken to promote account convertibility of its currency without liberalizing capital account. Because of this policy, not only did export and foreign direct investment increase dramatically during this period, but it also helped China ride the Asian Financial Crisis in 1997(Qian,1999). 2) Overhaul of the Tax and Fiscal Systems On January 1, 1994, the National Tax Bureau and local tax bureaus were established, each responsible for its own tax collection which made it difficult for local governments to reduce taxes as they had in the past. The taxes were divided into three parts: “central taxes” are taxes needed to maintain the ability to exercise macro control on a national scale for the national benefit; “regional taxes” refers to taxes to meet regional needs; and “shared taxes” are taxes to directly support economic development at the central level and local level (Qian, 1999) 3) Monetary Centralization and Financial Reform While cleaning up the banks’ bad debts, the banking system was divided into three types in 1994: commercial banks, policy banks and cooperative banks. Policy banks including three newly-established Banks(China Development Bank, the Agricultural Development Bank and the Export-Import Bank of China) mainly look after government-mandated lending, and the commercial banks including four state banks (the Industrial and Commercial Bank, the Bank of China, the Agricultural Bank of China, and China Construction Bank) and cooperative banks were given greater capacity to make loans on a commercial basis. In 1995, the central bank was endowed the mandate to control monetary policy so that it reduced local government influence over monetary policy and credit allocation decisions (Xie,1996; Qian,1999). After Asian Economic Crisis, the central bank of China was freed from political interference of local authorities in 1998 and strengthened its regulatory functions while replacing its 30 provincial branches with 9 cross-province regional branches (Qian, 1999; Saich, 2001: 238). 4) Privatization of State-Owned Enterprises 61

From 1992 on, a series of new economic policies were issued to promote SOEs reform, first the “14 stipulations” issued by the State Council in July 1992, in which SOEs autonomy including hiring and firing and allocating investment capital was legally endowed, then policy of “grasp the large and release the small” in 1995 was issued, under which the central government promote privatization of state-owned enterprises. While 50-55 large state-owned enterprises are kept under state control, the small and medium-size enterprises supervised by county and city government would be turned into a variety of non-state firms through the expansion of shareholding system (Saich, 2001: 234; Wu, 1999b:1061; Qian, 1999). 5) Reconstruction of a New Social Contract In order to cope with rising unemployment from inefficient SOEs and growing social discontent derived from traditional inequalities between urban and rural area, coastal provinces and inland areas, and newly emerged inequality between those in the official core of the economy and those surviving in petty and informal economic activities, the Ministry of Labor and Social Security was established and a National Social Security Fund was set up in 1998. “Two guarantees” policy has been adopted since then. The first is a guarantee of the basic livelihood of the laid-off personnel from SOEs in which the laid-off personnel receive allowance for basic living expenses and are paid social insurance premiums; the second guarantee is to ensure basic livelihood for all retirees and that they receive basic pensions in full and on time (Wang, 2004). Although it is on initial stage, the institutionalization of a new social contract is available for both laid-off workers and residents in most urban areas. For example, in today’s China, the enterprises, either state-owned or private, have to pay social insurance premiums for both old employees and new-recruited employees. From the evolution of China’s macro-economic policies from the command economy to a market-oriented one, we can see that the central government has played an active role, by and large, in both promoting earlier industrialization and creating Chinese pattern of primitive accumulation in 1950s (Selden, 1993), and in managing the transition from centrally planned economy to a market-oriented one while maintaining its robust economic growth in 1980s and 1990s. In the 1950s, it emphasized on development of capital-intensive heavy industry by institutional setting, invest, technology fostering and getting aid from the Soviet Union at the expense of agricultural development. In 1980s and early 1990s, it carried out a series of institutional reforms, for example, administrative decentralization and particularistic contracting such as “household responsibility system” in rural area and “contracting responsibility system” in enterprises in urban area, to promote and maintain its robust economic growth Zhengyi, (2002). 62

Another famous Chinese reform is the special economic zone (SEZ) development and the subsequent meteoric rise in foreign direct investment (FDI). Thanks to this reform, even though China started with virtually zero FDI and almost negligible trade and foreign reserves in 1978, in a quarter of a century China has become one of the largest FDI recipient countries in the world, with the world’s largest foreign reserves, and also one of the largest trading countries in the world. FDI in China and Chinese exports are essentially driven by the SEZs. When China first opened up and began attracting FDI and trade, 37% of FDI was located in SEZs in 1985, and 89% of the national exports came from the SEZs in 1985. In 2005, when China became the largest FDI recipient country in the world, 93% of FDI was located in SEZs, and 93% of China’s exports came from the SEZs. It is not an exaggeration to claim that it is the SEZ that made China the country with the largest foreign reserves in the world, as well as the country with the largest trade surplus with the US and the EU. Therefore, among all the Chinese reform measures, the SEZ has had the greatest direct impact on the global economy (Xu, 2010:37). Official Chinese policy up to and including the late Mao period of the mid-1970s sought to level disparities between coastal and inland provinces. Industrialization, income, education and productivity all lagged in the interior relative to the coast. Coastal area fiscal revenues were often used to subsidize interior provinces. Prior to the reform period, the Beijing authorities were reluctant to grant greater autonomy to the dynamic coastal areas. The notion of special economic zones, even if they could attract foreign investment and technological development, was antithetical to the political objectives of egalitarianism. But practical leaders, especially Deng, were abundantly aware that the coastal areas must be permitted to "guide the way" for the rest of the country. Thus, before the end of the Mao era, the conceptual ground was prepared for what came to be known as special economic zones and regional opening. The setup of China Economic and Technological Development Zone (ETDZ) started from the end of 1984. By the end of 1988 fourteen ETDZs including Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Minhang, Hongqiao, Caohejing, Ningbo, Fuzhou, Guangzhou, Zhanjiang are the first that had been established by the approval of the State Council. To date, there are 56 national grade ETDZs, among which, eastern coastal regions 29, Middle West regions 27. The pattern of national-level ETDZs in various provinces, cities, autonomous regions and other open cities is quite reasonable especially the newly established national-level ETDZs, which will play an active role in implementing the strategy of developing the west strengthening the economic cooperation between eastern and middle western regions and promoting the coordinated growth of regional economy. Through 63 two decade’s development, the key economic indicator has been increased up to 25% annually, it created a miracle of supernormal development in region’s economy, and it has been extremely promote local economic development, system renovation and science & technology development. The development zones in China have been developed into eight kinds which were classified by their different function in use. The eight kinds of development zone are: National Economic and Technology Development Zone (ETDZ); National Free Trade Zone (FTZ); National Hi-Tech Industrial Development Zone (HIDZ); National Border and Economic Cooperation Zone (BECZ); National Export Processing Zone (EPZ); National Tourist and Holiday Resort (THR); Taiwanese Investment Zone (TIZ); National Agricultural Hi-Tech Industrial Demonstration Zone (AHIDZ).

Table …. A Chronology of Events Affecting China’s Development Policies in the Last Three Decades Time Event Jan 1976 Premier Zhou Enlai dies Sept. 1977 Chairman Mao Zedong dies. HuaGuafeng becomes Chairman of the CCP and subsequently Deng Xiaoping returns from political exile. Dec. 1978 Increasing CCP support for Deng Xiaoping’s reformist agenda culminates in its basic acceptance by the 11th Central Committee of the CCP. It is argued that the reforms should begin with agriculture. 1979 Deng Xiaoping becomes Chairman of the Military Commission. He criticizes dogmatic approaches to policy and favours a pragmatic approach. 1980 HuaGuofeng steps down as Chairman of CCP Mid. 1981 Under the influence of Deng Xiaoping, the CCP stresses that China’s policies for modernization must be realistically based, systematic and staged, and take account of the Chinese conditions. 1984 The CCP decides that the economic reforms commenced in agriculture should be extended to the whole economy. An end to the privileged position of state enterprises is signaled. Increasing emphasis occurs on greater economic openness as an instrument of development policy. 1989 Chairman Jiang Zemin confirms the direction of China’s development policies, such as extension of the market system and greater economic openness as well as measures to limit population growth. He saw the need for China to improve its science and technology policy because as China catches up with the rest of the world’s technology, it will need to do more to advance its own scientific and technological improvements. 2002 Jiang Zemin in his report to the 16th Congress of the CCP re-affirms China’s policies for economic development but expressed concern about growing economic inequality in China. Given changed economic conditions in China, it seemed that Deng Xiaoping’s principle of Payment according to work (expounded in 1978) was going to be modified. 2007 Chairman Hu Jintao in his report to the 17th Congress of the CCP then confirmed support for continuing earlier economic reforms but also indicated that policy must pay more attention to income inequality, approaching technological (and similar) barriers to China’s continuing development, and environmental and energy issues. 2008 China faced the challenge of the global economic crises and formulated policies to weather the economic storm. This has been described as ‘China’s greatest 64

[economic] crises since its reforms thirty years ago’. Early 2009 Signs of recovery of economic activity in China as a result of Governemtn intervention. China aims for 8% growth in GDP in 2009.

Source: Tisdell, (2009: 275)

65

CHAPTER FOUR

4.0 THE IMPACT OF ECONOMIC REFORMS IN NIGERIA AND CHINA In this chapter, we will discuss the impact of the economic reform process on Nigeria’s economic and national development and that of China also.

4.1 The Impact of Economic Reforms in Nigeria The implementation strategies of the economic reforms in Nigeria are significantly and radically different from that of China. There was a rush and haphazardness in the implementation of the reform package mainly because the agenda was externally designed and the implementers had to be in the rush to hit the goal post set by the Bretton Woods institutions in order to qualify for the so called development assistance. For instance, at the beginning of the structural adjustment program in 1986, Nigeria was persuaded to instantly embark on currency devaluation so as to promote aggressive exports. Meanwhile the largely import dependent Nigerian economy had little to offer to take advantage of the massive devaluation. Consequently, a large number of the Nigerian industries run aground because of the high operation costs arising from the sudden upsurge in the cost of imported raw materials and the capital goods following the devaluation of the domestic currency. This scenario led to a high rate of job loss; and unfortunately the then military government pursued the policy of devaluation simultaneously with fiscal expansionary policy, thereby creating a high rate of inflation, which peaked at 72.8 percent in 1995. The economic mismanagement and the wrong methodology of the reform implementation created untold hardships for the Nigerian people and worsened the poverty situation. Another instance is the deregulation of the downstream sub sector of the oil sector. While deregulation remains a key step in the economic reform process, the need to lay the necessary economic structures before embarking on deregulation of a key sector like the Nigerian petroleum sector cannot be overemphasized. The unnecessary rush towards the deregulation of the oil sector without the appropriate economic structures and institutions only created opportunities for the bourgeoisie to exploit the already impoverished masses. This has made many Nigerians to view the deregulation concept as nothing but an arbitrary increase in the cost of living and the economic strangulation of the masses rather than being a vital step in economic reform process. 4.1.1 Political Elite and Economic Reforms in Nigeria 66

Nigeria’s experience has been one of formulating good plans, policies, programmes, and projects and then failing to achieve the stated objectives because of ineffective implementation (done deliberately to favour those in government and their cronies) or lack of political will to carry out the implementation at all. The origin of political instability in Nigeria (which has equally hindered national development) has been the inability to forge a national entity that transcends ethnic, regional, religious and economic interests. These diverging interests led to scores of political coups and counter coups. To reverse the worsening economic fortunes in terms of declining growth, increasing unemployment, galloping inflation, high incidence of poverty, worsening balance of payment conditions, debilitating debt burden and increasing unsustainable fiscal deficits, among others, government embarked on austerity measures in 1982. Arising from the minimal impacts of these measures, an extensive structural adjustment programme was put in place in 1986 with emphasis on expenditure reducing and expenditure switching policies as well as using the private sector as the engine of growth of the economy via commercialization and privatization of government-owned enterprises. Though some benefits were achieved at the initial stage, such benefits could not trickle down to the poor. Rather, the incidence of poverty keeps on increasing. As such, resistance came up from many stakeholders, particularly the civil society, the labour unions and the organized private sector. Even the economic reform programmes of the present democratic government were not spared from this resistance. In fact, it is increasingly becoming difficult to implement any credible economic reform programmes given people’s experiences with the previous ones. Pressured by international financial agencies and bilateral donors, African governments adopted policies designed to reduce the role of the state and increase that of private actors in their economies. In most cases, reforms have been instituted in a half-hearted manner. Ibrahim Babangida, the Nigerian military head of state from 1985 to 1993, introduced structural adjustment policies supported by the World Bank, but the reforms were incomplete. Some industries were privatized and government subsidies to commercial agriculture were reduced, but cuts in social spending had a long-term negative impact on education and health. Obasanjo built on the liberal economic reforms with a plan to create a corporate sector that could compete internationally with fast-growing economies such as Brazil’s and Indonesia’s. Under the guidance of highly capable technocrats such as Finance Minister NgoziOkonjo- Iweala, notable achievements in macroeconomic management were realized. Nigeria’s external debt, valued at the time at roughly $36 billion, was largely erased in an impressive 2005 package of debt relief and buyback financed by the post-2003 boom in oil prices. 67

Charles Soludo, appointed by Obasanjo to head Nigeria’s central bank, initiated extensive banking reform and consolidation after 2003 (Joseph and Kew, 2008: 167-173). The experience of reform process in a democratizing Nigeria offers a vivid demonstration of how deeply ingrained political practices notably rent seeking, patronage politics and clientelism can influence the depth, reach and strategy and distorted the intended outcomes of economic liberalization. The Nigeria experience also show how political practices that are inimical to reform success can have negative moderating effects on the institutionalization and strengthening of governance institutions that are critical for the success of economic reform. The negative effects of these practices constitute the main challenges to the reform process in Nigeria under the present democratic dispensation. The regime of General Buhari put in place a stabilization programme aimed at reining in public spending, reducing government payroll and extending administrative controls over trade and foreign exchange (Olukoshi and Abdulraheem, 1985). While the measures improved budgetary position and the balance of payments, however, mounting external debt and impasse with the IMF over debt renegotiation and rescheduling undermined economic recovery (Duru, 2005). The regime stern administrative style and continued economic stagnation erode it popular appeal and it was overthrown in a military coup in August 1985. The political economy of adjustment under Babangida military regime was laced with deft political manipulations and characterized by inconsistency and half-hearted implementation of adjustment measures. In sum, the regime managed the adjustment programme through a mixture of domestic political orchestration, compensatory measures, and coercion. For elites, the state provided special access to nascent markets and illegal activities, and manipulated key policies to provide opportune 'rents'. The Babangida regime initially employed these tactics to sustain the implementation of orthodox policies, but senior leaders eventually abandoned a basic commitment to economic recovery. The regime of the reclusive General Abacha that came to power after sacking the interim national government undone numbers of the measures implemented under Babangida regime. The Abacha regime adopted a populist and nationalist stance in it managing of the economy. The implementation of economic policy once again reverts back to administrative controls on finance, trade and foreign exchange. Though the Abacha regime somewhat make attempt at partial return to liberalization, a combination of untenable policies, corruption, diversion of state resources and the state of political instability continued to undermined the basis of the national economy. It was in this state that Nigeria return to democratically elected civilian rule in May, 1999. During the inauguration of his regime in May, 1999 then President 68

Obasanjo made a commitment to implement economic reform with the objectives of liberalizing the nation’s economy, promote diversification, and privatize core public enterprises with the view to drive economic growth and overall national development. The regime also intends to implement series of other reforms social reforms. No doubt the Obasanjo years will be remembered for the economic and structural reforms initiated, however, like many African states, the reform processes in Nigeria exhibit what has been described as ‘partial-reform syndrome’ (Joseph and Kew, 2008). Aside this, the reform process has also been dodged with problems and controversies. At the centre of the crisis that confront the reform process was the marked dominance of the policy process by the donor communities and the Bretton Woods Institutions. This dominance was vividly illustrated by the fact that the leading lights of the regime’s economic management team; NgoziOkonjo- Iweala, Finance Minister, ObiageliEzekwesili, and Charles Chukwuma Soludo all have Bretton Woods Institutions background and approaches the theoretical and practical aspects of the reform process and general economic management from the purview of these institutions.

4.1.2 Reform Process under the Obasanjo Presidency (1999-2007) The economic reform under Obasanjo was tailored towards Bretton Woods Institutions economic template. It was anchored on economic liberalization, the major highlights of which was the privatization of the nation’s ailing public enterprises by the Bureau of Public Enterprise set up by the regime to oversee the implementation of the privatization process. Between 1999 and 2006 about 116 state enterprises operating in industries like as aluminum, telecommunications, petrochemical, insurance and hotel were privatized by BPE. The major highlights of the reform programme are the deregulation of the downstream sector of the nation’s oil industry the highlight of which is the removal of subsidies from petroleum products and the unbundling of the Power Holding Company of Nigeria [PHCN] into 18 companies responsible for power generation, transmission and distribution. The privatization exercise was carried out alongside the deregulation of various sectors of the economy to encourage private sector participation and reduced state domineering role. The implementation of deregulation exercise in the downstream sector of the oil industry was particularly tenuous as the removal of subsidy resulted in hike in the price of petroleum products a situation that contribute to the worsening of living condition of the poor giving the centrality of petroleum products pump price to general commodities prices in Nigeria. 69

The regime also initiates civil service reform which resulted in the monetization policy and the drawing up of ‘service compact’ to guide service delivery by public agencies, parastatals and ministries. In an effort to curb wasteful spending on pecks and fringe benefits, the regime embarked on the monetization exercise directed at eliminating the practice of paying for maids, drivers, personal assistants, security guards and so on for public officials at the expense of government (Ihonvbere, 2004). The most highly resisted issue in the civil service reform was the elimination of redundancy through the severance of workers. Okonjo-Iweala and Osafo-Kwaako (2007) noted that a total of 37,000 officials have been severed from the Federal civil service with spending on severance payment and retraining programme cost estimated at N26 billion. The regime conducted verification exercise directed at updating personnel records and payroll data and instituted the implementation of an Integrated Personnel and Payroll Information System all directed at curbing waste and repositioning the civil service. The regime of former President Obasanjo was vigorous in it promotion of policy measures directed at wooing foreign investors and attracting investment in the bids to stimulate economic growth and development. However, the most outstanding achievement for which the reform efforts of the regime will be remembered, was the successful negotiation of debt relief package under the guidance of then Finance Minister NgoziOkonjo- Iweala (Joseph and Kew, 2008; Saliu, Amali and Olawepo, 2008). The debt negotiation process with the Paris Club entails the payment by Nigeria of outstanding arrears totaling US$ 6.4 billion, the granting of a debt write-off amounting to US$ 16 billion on the remaining debt stock and the purchase of an outstanding US$ 8 billion debt under a buyback agreement of 25% discount for US$ 6 billion. The entire debt relief package amounted to US$ 18 billion and is equivalent to 60% write-off in return for the payment of arrears and buyback totaling US$ 12.4 billion. According to Okonjo-Iweala and Osafo-Kwaako (2007) the buyback was the second largest debt relief operation in the club’s half a century history. The economic reforms carried out in Nigeria were made possible by the initial strong support and political commitment of President Obasanjo and the hard work of an exceptional band of 12 women and men and later 17 known as the Presidential Economic Team (Nigeria’s economic team was made up of Finance Minister, the economic adviser to the President, Director-General of Budget; Senior Special Assistant to the President on Budget and Due Process; Minister of Federal Capital Territory; Director-General BPE; Director, Debt Management Office; and Chairman, Economic and Financial Crimes Commission), along with other cabinet colleagues and advisers who supported them. The reforms met with enormous resistance, mainly from a selfish political elite. The resistance at various stages 70 involved vested interests whose opportunities for rent-seeking were threatened by the implementation of the reforms. The biggest obstacles to reform occurred in instances in which greater transparency was to be introduced in government business. Various entrenched interests who had benefited from the status quo often resisted any attempts to have a searchlight beamed on their activities. For example, the monthly publication of government revenues at state and local government levels was disliked by a small political elite holding power, but greatly welcomed by the Nigerian public. This small booklet of figures containing national financial allocations data for the past seven years of the Obasanjo administration was viewed as one of the “most boring bestsellers” in the country. Citizens were now able to quote figures to their policymakers and public officials and demand to know why there was no chalk in classrooms, why teachers had not been paid, or why potholes on local roads had not been patched. Ake in his analysis of the political economy of post-colonial African state, however, has identified the weak material base of the emergent Africa leaders as the major impetus that drove most of their political and economic actions after independence. Because these leaders were marginalized by the discriminatory economic policies of the colonial regime; because they had little or no capital, when they came to power, Ake notes, they were obliged to explore the one leverage they had: control of state power to strengthen their material base. Therefore, the need for a more secure material base drove the indigenous elite to increase the statism of the economy (Ake, 1996: 6). Whenever any form of economic reform was carried out in Nigeria, it was also done in such a way that will enable them to consolidate their hold on power so as to dominate the economy by giving large share of the economy to themselves or their cronies in order to secure their material base. It was under such situation that the economic reforms of President Obasanjo were carried out in Nigeria between the periods of 1999 to 2007. The higher emphasis on privatization as against commercialization insinuates the possibilities of the re-parceling of the Nigerian economy to a few elites; a process which had begun with the Indigenization Decrees of the 1960s and 1970s. The currently high growth in income inequalities testified also by the recent bank failures in the country all point to these possibilities (Umezuruike 2010:15). The inability to achieve the goals of these reform programmes have been linked to several factors. Apart from the top down approach to initiating and implementing these 71 programmes, political and ethnic instability has been adduced as important factors. Nigeria, for instance, has been ruled by the military for 25 of its 50 years as an independent nation. Resistance to reforms occurred in many forms. Some were genuine, to be expected, and respected, such as protests by the Nigeria Labor Congress (NLC) following the withdrawal of petroleum subsidies. Other resistance occurred in the form of physical threats to economic team members and others involved in the reforms. There were constant media attacks (although the media also played an important role in publicizing and backing some of the reforms) and occasional reversals of implemented actions based on false stories to the highest authorities (Alozieuwaand Golwa, 2010).

4.2 The Impact of Economic Reforms in China This reform process in China has transformed the world’s largest developing country from a centrally-planned economy into a mixed market economy, while simultaneously reducing poverty at a scale unparalleled in world history (World Bank, 2002). During the reform period the Chinese per capita GDP increased by almost eight-fold, and China has transformed from one of the poorest countries in the world into a major economic power. Today’s China is the world’s largest producer and largest consumer of many conventional industrial staples and high-tech products, such as steel, cars, TV sets, personal computers, cell phones and internet usage, etc. and has the world’s largest foreign reserves. The current size of the Chinese economy, in terms of GDP, is larger than the sum of 83 countries in Eastern Europe, the CIS and all of Africa (Pei, nd:3). Since the introduction of economic reforms, China’s economy has grown substantially faster than during the pre-reform period and has been one of the world’s fastest growing economies. From 1960 to 1978, annual real GDP growth averaged 5.3%. However, in the post-reform period from 1979 to 2006, growth averaged 9.7% (it grew by 10.5% in 2006 over the previous year). Economic reforms have transformed China into a major trading power. Chinese exports rose from $18 billion in 1980 to $969 billion in 2006, while imports over this period grew from $20 billion to $791 billion. Trade has constituted an important source of China’s economic growth and efficiency gains. In 2004, China surpassed Japan as the world’s third-largest trading economy (after the European Union and the United States). China’s trade continues to grow dramatically: in just three years (2003 to 2006), the size of China’s trade doubled (Morrison, 2008). A distinctive feature of China’s reform is the vital roles played by highly motivated subnational governments. Governors Zhao Ziyang of Sichuan and Wan Li of Anhui initiated land reform experiments in a few localities within their jurisdictions in the late 1970s when 72 the national policy, including the Party’s “reform” manifesto, did not allow any ownership change to collective farming. Similarly, governor Xi Zhongxun of Guangdong proposed the special economic zone reform while some top central leaders were hostile to this reform plan (sections 4 will elaborate on this below). Later, when those locally initiated reforms were endorsed by the central government as national policies, the reforms were implemented by all levels of government nationwide. After the initial success of the regional reforms, these reform pioneers were all promoted to national level posts. Zhao and Wan became the premier and executive deputy premier of the state council, respectively, responsible for national reform; Xi became a vice Chairman of the National People’s Congress (Xu, 2010:23).

4.2.1 Political Elite and Economic Reforms in China The leadership role of the CPC is paramount not only in political affairs but also in economic affairs. The CPC at the top of the structure is a unique and the most important feature of China’s policy making process. The highest level policy making body is the standing committee of the CPC Political Bureau. The NPC, the State Council and the Chinese People’s Political Consultative Conference (CPPCC) carry out their respective functions (i.e. legislature, administration, and policy consultation) under the leadership of the CPC. In fact, the top position of NPC, State Council and CPPCC has almost always been held by a Political Bureau standing committee member. Through this arrangement, the CPC is firmly in charge of the government.

Figure …. Organizational Structure of the Chinese Government

Source: Liu, (2005)

The CPC plays a leading role in setting national policy agenda, making national policy decisions, and even guiding the law making process. However, its role does not end there. It closely monitors and guides policy implementation. This is made possible by the so- 73 called party/administration double-track implementation system, which is characterized by the party’s organizational structure set in parallel to the administrative organizational structure at every level of the government. Under the system, every government agency is led by an official who serves both as the party secretary and the administrator (commonly seen at the central level), or jointly by two officials, one as party secretary and the other as an administrator (more commonly seen at the provincial and local levels). In the second case, the party secretary does not engage in the day-to-day administration functions, but closely monitors the policy implementation process and would always have a final say on major policy and personnel decisions. He or she is accountable to the higher level party secretary. The administrators need not be a party member, but many of them are. The career of a government official with party membership, moreover, is not limited to just party or administration track. It could be both Liu, (2005). The government’s desire to build a socialist market economy, to modernize, and to become part of the World Trade Organization all fuelled the move to try to improve shareholders’ rights and protection of those rights, the insulation of company boards from inappropriate influence, and greater transparency and disclosure. However, although many of the provisions are on paper for an effective corporate governance system, in practice, the state still owns large shareholdings in many companies, minority shareholders’ rights are sometimes ignored, and companies are liable to have influence exerted over them. In the PRC, corporate governance developments involve a number of regulatory bodies, including the China Securities Regulatory Commission (CSRC), the Ministry of Finance (MOF), the State Economic and Trade Commission (SETC), and the People’s Bank of China, which is essentially the Central Bank of China. China’s recent experience in infrastructure development planning and policy coordination is unique. It is unique in the sense that most key factors contributing to the success are integral elements of the evolving system that had struggled under the central planning regime but also has led the economic transition. The success in the infrastructure development is part of the overall success of the economic reform. The main characteristics of the system include strong leadership, clear policy emphasis on the improvement of the economic well-being of the nation, and a professionally run bureaucracy with technical sophistication and experiences. The most important factor is perhaps the extraordinary pragmatism demonstrated by the CPC over what could be done and what could not. It is characterized consistently by the bold vision, sensible national strategy, careful macro management, cautious step, and small step at a time before being ready to take off (Beh, 2007: 13). 74

CHAPTER FIVE

5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS Under this chapter, we seek to summarize our study, list our findings and conclude with some recommendations which we believe will reverse the economy of Nigeria from it stagnant state and place it on development trajectory that will lead to national development, and also recommendations that will enhance China’s economic growth and development.

5.1 Summary The study set out to examine the factors responsible for the success of the Chinese economic reform over the past three decades and also the factors that is equally responsible for the failure of Nigerian economic reform. The study adopted a comparative policy decision and implementation approach in addressing the questions posed by the research, “has the economic reforms impacted on National Development in Nigeria and China? And is policy inconsistencies and policy consistency implicated in economic reforms failure in Nigeria and success in China?” The hypotheses posed by this study state that The economic reforms were successful in China and led to National Development, while it was not successful in Nigeria, and Policy inconsistencies and policy consistency is implicated in the economic reforms failure in Nigeria and success in China. In the context of the hypothesis, we adopted the political economy theory as our framework of analysis to enable us explain that through the interplay of politics and economy, the economic reforms process in China has been very successful over the past three decades, while the same reform efforts made in Nigeria to reform her economy over the decades has turned out to a farce. In other words, the economic reforms so far carried out in Nigeria over the decades have turned out to be a failure. 75

The observation technique was used in collecting data for this study by observing both primary and secondary sources of recorded documents. The results gotten were used in verifying our research hypothesis. The findings of the study shows that the political elites in China were more proactive and pragmatic in their approach to the reform policy formulation and implementation. Also the Chinese elites adopted an inward looking, ‘trial and error’ method or what can be called gradualism. In other words, China’s approach was moving and adapting as responses and results become evident and four features can be traced as consistent themes in implementation: gradualism, partial reforms, decentralization and self-reinforcing reforms. It is noted that China’s reform approach continues to be on individual interventions at the sectoral level. while the reform efforts in Nigeria was foreign oriented. That is, the Nigeria economic reform blue prints were designed and handed down to the Nigerian leaders, even though they claimed that it was home-grown.

5.2 Conclusion The finding of the study reveals that the reform process in China was a bottom-up approach, starting from the village level, to the regional or provincial level and from there to the national level. While the economic reform process in Nigeria was a top-down approach, starting from the national level, down to the regional or state level before getting to the village level, even though most of the reform efforts of the Nigerian political and economic elites did not get to the village level because it was sabotage by the same people who were supposed to be responsible for the implementation of these reform process. The study further reveals that the reform efforts by the Chinese political elites had a strong control of the national economy, and as such play a dominant role in the formulation of economic policies. The Chinese political elites not only formulate economic decisions, they equally monitor the implementation of these policies to the later through a trial and error basis, making amend where necessary before applying the result to the national economy. Through these efforts, the economic reforms process in China was very successful and has led to the development of the national economy of China and its spill-over effects on its neighbours. The reform efforts by the Nigerian political elites was that half-heartedness. A situation whereby the political elites were fighting among themselves to see who would buy over the economy and control it for selfish purposes. Moreover, the reform blue-prints were not home-grown as was claimed, it was handed down to the Nigeria government by foreign capital through the agents; the World Bank, International Monetary Fund (IMF) and othe International Financial Institutions who only gave the Nigerian government an economic 76 reform package that would retard the Nigerian economy, thereby tying it more and more to their apron. In other words making the Nigerian economy more and more depended on foreign capital. Who could have been a better tool than the Nigerian political elites that has been polarized even before independence in 1960, making the struggle for state power to a warfare where every kind of deadly weapon is used in the pursuit of state power. Whoever captures it uses it appropriate economic spoils of the war to himself and his cronies. By so doing the Nigerian political elites only made themselves a willing tools in the hands of foreign capital to dominate and control the Nigerian economy and making sure that the Nigerian economy remains an out-post to the Western developed economies who then uses the Nigerian economy as a dumping ground to their out dated and expired goods, while creating employment for their own people back home. Summarily, the Nigerian economic reforms over the decades has been a massive failure as the little gains that was made before the reforms has been lost in the process of implementing these reform policies. The study also reveals that China’s reforms have not only benefited the Chinese people but have brought substantial economic and global benefits. They have stimulated global economic growth and have contributed to global economic and political stability. China has developed into a new global economic centre, making countries such as Australia less dependent on traditional overseas markets for their international trade. China’s contribution to diversifying the location of regional and global economic activity appears to have provided a stabilizing force for reducing global and regional fluctuations in economic activity. Although China has become very dependent on international trade and exchange as a contributor to the level of its economic activity, its economic development during the reform period has expanded its domestic market greatly (Tisdell, 2009: 289). Under a relatively stable political environment, the Chinese leaders were determined and visionary about the transformation of the economy. The reform got the nod of the people and much sacrifice was paid and is being paid to ensure its realization. The leaders were and are pragmatic and meticulous in the adoption of the policies. In fact, the policies were adopted through experimentation, a kind of learning by doing process, a strategy that circumvents any large-scale economic shock. The political stability and policy consistency are the major catalysts of the reform success. Since the Chinese leader Deng Xiaoping initiated the vision in 1978, there have been consistent policy drives towards the realization of the reform goals by the successive leaders (Bello, 2005). The study equally reveals that the economic reforms that started in 1986 have been characterized by political instability, lack of transparency, policy inconsistency and blurred vision. Although the Nigerian people have always been ready and have made tangible 77 sacrifice for a better future of the country, the generations of the Nigerian governments have consistently failed the nation. The situation is such bad that after about twenty years of reform, apart from the Nigerian telecommunication industry, of which the Nigerian people are still been heavily exploited, there is clearly no other case of successful reform in the country. The end result of the economic mess tagged adjustment or reform has been the liquidation of the domestic industries of different scales, increased incidence of unemployment, poor economic growth and poverty aggravation (Bello, 2005). The reform processes in Nigeria exhibit what has been described as ‘partial-reform syndrome’ (Joseph and Kew, 2008). Aside this, the reform process has also been dodged with problems and controversies. At the centre of the crisis that confront the reform process was the marked dominance of the policy process by the donor communities and the Bretton Woods Institutions. This dominance was vividly illustrated by the fact that the leading lights of the regime’s economic management team; NgoziOkonjo-Iweala, Finance Minister, ObiageliEzekwesili, and Charles Chukwuma Soludo all have Bretton Woods Institutions background and approaches the theoretical and practical aspects of the reform process and general economic management from the purview of these institutions. Conclusively, the Chinese economic reform was designed to be gradually implemented through experimentation which is exactly what the government has done overtime. The government started with the economy s grass root sector of agriculture; tested, assessed and monitored every stage of the adjustment to ensure efficiency and prevent a possible crash of the experiment. The industrial reform was planned to be implemented in phases, with the success of one stage carefully leading to another and this meticulous implementation approach applies to all aspects of the economic reform. Rather than being home initiated, the economic reform policies of Nigeria was the brainchild of the International Monetary Fund, later designated in Nigeria as the International Ministry of Finance and of course the World Bank. The reform package was externally designed and imposed on the Nigerian system whose peculiarities and existing economic structures were not taken into consideration (Ibid).

5.3 Recommendations Having analyzed and explained the various factors which made the economic reforms in China to be very successful and also the factors that made the same attempt at economic 78 reforms in Nigeria to be a mass failure, we then conclude by stating the following recommendations. 1. There is an urgent need to diversify the Nigerian economy. It is, therefore, imperative that we re-examine and reactivate the following sectors: Agriculture, Manufacturing, Infrastructure/Utilities, Education and Human capital development, Science and Technology, focus on competitive/comparative advantage, attractive financial resources for development, macroeconomic stability, war on corruption, better goal- oriented reforms, solid innovative behavior, and institutional perception of the people. 2. The high quality of human capital is deeply-rooted in Chinese culture. This is advanced by the strong work ethic promoted by appropriate incentive structure with almost no room for rent-seeking behaviour and zero tolerance for corruption. These factors made Chinese workers dedicated to their various callings. Thus, the strong culture of working round the clock of the Chinese is unprecedented. 3. Nigeria should try and improve on the quality of human capital and also encourage a dedicated and truthful work ethic and leave no room for rent seeking behavior. She should also show zero tolerance for corruption and stop treating issues of corruption as family affairs. Second, the growth rate of Chinese population has been brought under control. Notwithstanding the large population, the Chinese population growth rate has decreased from a high rate of about 2.8% in 1970 to about 0.6% in 2005. The population growth rate in Nigeria is still high; however from an upward trend in the 1970s through early 1990s, the downward trend in the population growth in Nigeria is still sluggish. The Nigerian government should equally endeavor to bring the Nigerian population under control as this will enable her to be able to take into cognizance the true number of her population and to plan accordingly. 4. The reform was comprehensive as it covered almost all the facets of the economy. The process reflected a deep understanding of the workings of the Chinese economy as demonstrated in the sequencing of the various elements, programmes and activities. More importantly, it was based on a principle of “comparative-advantage-following” strategy. While it is recommended that development strategy in Nigeria should take a cue from the Chinese reform it is important to avoid some of the challenges facing the Chinese economy including environmental pollution and degradation, and widening inequality. 5. A country needs good physical infrastructure—for transportation, communications, power, and information technology—to strengthen competitiveness and expand productive capacity. Nigeria’s infrastructure is of poor quality by any absolute 79

standard, even if it is better than average for Africa, and constrains business; in a recent World Bank Survey, manufacturing firms ranked infrastructure as their most severe business constraint. It stand to reason then that, government reform programs, with plans for major reforms in the power and transportation sectors, aim to resolve the problems of infrastructure will not succeed unless the problem of corruption in large infrastructure projects is addressed (Bolnick, 2006:21-22). 6. Infrastructure development and human capital investment are fundamental conditions needed to place an economy on sustainable growth path. What China has done over the years is a massive investment in these key areas. To jump start the economy, Nigeria must follow suit in the Chinese tradition of inward looking. In Nigeria, certain infrastructures are either not existing or they are in deplorable states; investment in education is poor, adult illiteracy is still very high in the country. 7. Nigeria must invest heavily in infrastructures, human capital development and provide good governance rather than engaging in senseless ethnic and religious crises and corruption. 8. Nigeria must truly realize that the attainment of a long-term development in the continent can only be the product of its determination and stop paying lip service to this all important fact. The Chinese world, practically accepted this fact decades ago and through patriotism, commitment, bold and imaginative leadership met the ensuing challenges. Nigeria must learn from this. The Nigerian people must be patriotic in their demand and investment structure, the leaders must take bold and visionary steps to chart the course of Nigeria’s success. Nigeria must realize that their destiny lies in their hands and not in the hands of IMF or other International Financial institutions and agents. 9. What Nigeria needs above all is a transformation of institutions and infrastructure that can engage the energies of the country’s myriad entrepreneurs, revitalize its universities and health care system, and attract the talent and capital of Nigeria’s large overseas diaspora. Unlike many poor countries, Nigeria can satisfy much of its development needs without relying on foreign aid. 10. The Chinese economic reform despite its success has created an income inequality among the Chinese populace. The Government has to make sure that huge amount of revenue pouring into the country is not restricted to few individuals as it is obtainable in Nigeria, rather the Chinese leadership should make sure that these revenues get down to the masses through a trickledown effect in the form employments and incentives to boost private initiatives and also the provision of the necessary 80

infrastructural facilities and conducive environment for the citizens to exhibit their potentials and realize their dreams.

BIBLOGRAPHY

BOOKS

Ajayi, S.I. (1994) ‘The State of Research on the Macroeconomic Effectiveness of Structural Adjustment Programs in Sub-Saharan Africa’. In: R. Van Der Hoeven and F. Van Der Kraaij (eds.), Structural Adjustment and Beyond in Sub-Saharan Africa, The Hague, Ministry of Foreign Affairs, Netherlands.

Ake, C. (1996) Democracy and development in Africa. Ibadan: Spectrum Books Limited.

Chow, G. C. (2002) China s Economic Transformation. Princeton University: Blackwell Publishers.

Deng, X. (1993) Selected Works of Deng Xiaoping: Volume 2, in Chinese. Beijing: The People's Press. 81

Djeri-wake Nabine(2009) The Impact of Chinese Investment and Trade on Nigeria Economic Growth.

Dong, F. (1997) "Yusuanfa he YinghuaZhengfu de Yusuan" ("The 'Budget Law' and Hardening Governments' Budget Constraints"), in TianqingXu and Jinyan Li (eds.), Zhongguo de ShuizhiGaige(China's ), in Chinese. Beijing: China Economics Publishing House.

Garnaut, R. (2010) The Turning Period in China’s Economic Development: a Conceptual Framework and New Empirical Evidence, in R. Garnaut, J. Golley and L. Song (ed) China: The Next Twenty Years Of Reform And Development. Canberra: (ANU) E Press. http://epress.anu.edu.au/china_20_citation.html

Golley, J. and Song, L.(2010) Chinese economic reform and development: achievements, emerging challenges and unfinished tasks, in Ross Garnaut, Jane Golley and Ligang Song (eds) China: The Next Twenty Years Of Reform And Development. Canberra : The Australian National University (ANU) E Press. http://epress.anu.edu.au/china_20_citation.html

Kornai, J. (1990) The Road to A Free Economy." New York: Norton.

Kornai, J. (1992) The Socialist System: The Political Economy of . Princeton University Press and Oxford University Press.

Lin J.Y. Fang Cai and Zhou Li, (1996) The China Miracle: Development Strategy and Economic Reform, Hong Kong : Chinese University Press.

Lin J.Y., Fang, C. and Li, Z. (1996) The China Miracle: Development Strategy and Economic Reform, Hong Kong : Chinese University Press.

North, D. (1981) Structure and Change in Economic History, Norton.

Obadan M.I. (2003). National Development planning and Budgeting in Nigeria. Some Pertinent Issues. Lagos, Broadway Press Limited.

Perkins, Dwight and Yusuf (1984), “Rural Development in China”. Baltimore: John’s Hopkins University Press.

Rawski, T. (1979), Economic Growth and Employment in China. New York: Oxford University Press.

Reynolds, B.L. (1998) Chinese Economic Reform: How Far, How Fast? San Diego:Academic Press, USA.

Rosenberg, N; and Birdzell L.E. (1986) How the West Grew Rich: The Economic 82

Transformation of the Industrial World, Basic Books.

Shirk, S. (1993) The Political Logic of Economic Reform in China. Berkeley: The University of California Press.

UNCTAD, (1999) Foreign Investment in Africa: Performance and Potential, New York and Geneva: United Nations.

UNCTAD, (1999) Foreign Investment in Africa: Performance and Potential, New York and Geneva: United Nations.

Xia, M. 2000. The Dual Developmental State: Development Strategy and Institutional Arrangements for China’s Transition, Aldershot: Ashgate.

Wu, J.(1999) DangdaiZhongguoJingjiGaige: Zhanlue Yu Shishi(The Contemporary Chinese Economic Reform: Strategy and Implementation), in Chinese. Shanghai: Shanghai Far East Publishing House.

JOURNAL ARTICLES

Adeyemo, D., Adeleke, S. and Olu-Adeyemi, L. (2008) ‘An Appraisal of Economic Reforms in Nigeria’. Contemporary Management Research, Vol. 4, No. 2, Pages 119-136, June 2008

Alozieuwa, S. H.O. and Golwa, J. (2010) From Economic Statism to Free-Market Regime: Re- Considering Nigeria’s Private-Sector-led Economy Drive. Journal of US- China Public Administration, ISSN 1548-6591, Volume 7, No.8 (Serial No.58), Aug. 2010.

Bello, S. T. (2005) ‘A Comparative Analysis of Chinese-Nigerian Economic Reforms and Development Experiences’, China & World Economy, Vol. 13, No. 4, 2005, Ps.114-121.

Dong, F. (1979) "Guanyuwoguoshehuizhuyisuiyouzhixingshiwenti" ("On China's Socialist Ownership Form Problem"), in Chinese, Beijing: Economic Research, 1.

Elbadawi, I. et al., (1992) ‘Why Structural Adjustment has not Succeeded in Sub- Saharan Africa’, Policy Research Working papers, No. 1000, Washington DC, The World Bank. Gunde R. (2007). “Economic Theory and Economic Reform in China: Neo-Classical Contemporary Management Research 133

Igbuzor, O. (2011) “Peace and Security Education: A Critical Factor for Sustainable Peace and National Development.”International Journal of Peace and Development Studies Vol. 2(1), pp. 1-7, January 2011. Available online at http://www.academicjournals.org/IJPDS

Joseph, R.A and Kew, D. (2008), Nigeria Confronts Obasanjo’s Legacy, Current History, 83

(April), 167-173

Kura, S.B. (2008), African Ruling Parties and the Making of ‘Authoritarian’ Democracies: Extending the Frontiers of Social Justice, African Journal on Conflict Resolution, 8, (2), 63-101

Lin, J.Y., 1988. The Household Responsibility System in China s Agricultural reform: A Theoretical and Empirical Study, Economic Development and Cultural Change, 37, April.

Li, H. and Li-An, Z. (2005) ‘Political Turnover and Economic Performance: The Incentive Role of Personnel Control in China.’ Journal of Public Economics 89 (2005) 1743– 1762. www.elsevier.com/locate/econbase

Luqman, S. and Lawal, F. M. (2011) ‘The Political Economy of Oil and The Reform Process in Nigeria’s Fourth Republic: Successes and Continue Challenges’. International Refereed Research Journal, Vol. – II, Issue –2, April 2011. Retrieved on 25th June 2011 from, www.researchersworlld.com

Kornai, J. (1986) "The Hungarian Reform Process: Visions, Hopes, and Reality." Journal of Economic Literature, December 1986, 24(4), pp. 1687-1737.

McBride, M (2005) Crises, reforms and regime persistence in sub-Saharan Africa, European Journal of Political Economy, 21, 688-707

Obi, C. (2004), Nigeria: Democracy on Trial, Nordic Africa Institute, Occasional Electronic Paper, Number 1

Olaopa, O.R., Elumilade, D.O and Asdaolu, T.O (2006) ‘An Evaluation of the Effectiveness of the National Economic Empowerment Development Strategy (NEEDS)’, Research Journal of Internatıonal Studıes - Issue 1, ISSN: 1453-212X. Pages 15-27.

Omoleke, I.I. (2010), The Nigerian privatization policy and hope of the grassroots, International Review of Business Research Paper, 6 (1), 108-123

Pearson, Margaret M. 2007. Governing the Chinese Economy: Regulatory Reform in the Service of the State. Public Administration Review 67(4):718-30.

Perkins, D. (1988) ‘Reforming China s Economic System’, Journal of Economic Literature, June.

Reynolds, B.L. Perkins, D. (1988) ‘Reforming China s Economic System’, Journal of Economic Literature, June.

Perkins, D. (1994) "Completing China's Move to the Market." Journal of Economic Perspectives, Spring 1994, 8(2), pp. 23-46. 84

Perkins, D. (1988) Reforming China s economic system, Journal of Economic Literature, June.

Qian, Y. (1996) "Enterprise Reform in China: Agency Problems and Political Control." Economics of Transition, 4(2), pp. 427-447.

Qian, Y. (2000) "The Institutional Foundations of China's Market Transition," in Boris Pleskovic and Joseph Stiglitz, eds., Proceedings of the World Bank's Annual Conference on Development Economics 1999, The World Bank, 2000. (http:/www.econ. stanford.edu/faculty/workp/swp99011.html).

Sen, G. (2001) ‘Post-Reform China and the International Economy: Economic Change and Liberalisation Under Sovereign Control’. International Relations, London School of Economics. www.theglobalsite.ac.uk

Swartz, Spencer; Oster, Shai (19 July 2010). "China Becomes World's Biggest Energy Consumer". Wall Street Journal. Retrieved 10 June 2011.

Tisdell, C. (2009) ‘Economic Reform and Openness in China: China’s Development Policies in the Last 30 Years’, Economic Analysis & Policy, Vol. 39 NO. 2, September

Xu, C. (2010) ‘The Fundamental Institutions of China’s Reforms and Development’. Journal of Economic Literature, University of Hong Kong

Wu, J. and Renwei, Z. (1987) "The Dual Pricing System in China's Industry." Journal of Comparative Economics, 11, pp. 309-318.

Xu, C. (2010), ‘The Fundamental Institutions of China’s Reforms and Development.’ Journal of Economic Literature. JEL Classifications: D02, D86, E02, E62, G20, G30, H11, H70, K00, O10, O53, P36

CONFERENCE PAPERS

Beh, L. (2007) ‘Administrative Reform: Issues of Ethics and Governance in Malaysia and China’. Paper presented at the International China World Conference at the Institute of China Studies, University of Malaya, "Implications of a Transforming China: Domestic, Regional and Global Impacts", on 5-6 August 2007

Gerhard K. H., Zhang, M., Long, H., Li, X. and Wu, X. (2005) Poverty Alleviation in China: A Lesson for the Developing World? Paper presented at the International Conference on the West Development and Sustainable Development August 2-4, 2005 Urumqi, China

Ibeanu, O. (2004) ‘Nigerian State and the Economy’, A paper presented at the Research 85

Methodology Workshop (Damina 2004) organized by the Centre for Research and Documentation (CRD) Kano on the theme: Democratisation and Economic Reform Processes between 15th -29th, August.

Pogoson, A. I. (2009) Globalization and Anti-Corruption Reform in Nigeria: 2003-2007. In Enweremadu, D.U and Okafor E.E. (Edt), Anti-corruption Reforms In Nigeria Since 1999: Issues, Challenges and the Way Forward. Ibadan: IFRA Special Research Issue vol. 3.

Qian, Y. and Wu, J. (2000) China's Transition to a Market Economy: How Far across the River? Paper prepared for the Conference on Policy Reform in China at the Center for Research on Economic Development and Policy Reform (CEDPR), Stanford University, on November 18-20, 1999.

OFFICIAL DOCUMENTS

Adeyemi, K.S. (2006) Economic Policy Reforms in Nigeria: Achievements and Challenges. Executive Director, Union Bank of Nigeria Plc Revised 1/17/02

Baden S. (1997) “Economic Reform and Poverty: A Gender Analysis”. Report Prepared for the Gender Equality Unit, Swedish International Development Cooperation Agency (SIDA). Report No 50.

Elbadawi, I. et al. (1992) Why structural adjustment has not succeeded in Sub- Saharan Africa, Policy Research Working papers, No 1000,Washington DC, The World Bank.

Elwell, C.K., Labonte, M. and Morrison, W. M. (2007) Is China a Threat to the U.S. Economy? Order Code RL33604

Garuba, D.S. (2010) ‘Trans-Border Economic Crimes, Illegal Oil Bunkering and Economic Reforms in Nigeria’. Policy Brief No. 15, October 2010, http://www.securitytransformation.org/bli.php?id=185

International Monetary Fund, (2003) Africa: Recent Economic Development and IMF Activities an IMF Issues Brief, 03/01; July.

Iyoha, M. A. (2007) “Leadership, Policy-Making and Economic Growth in African Countries: The Case of Nigeria.”WORKING PAPER NO.17 for Commission on Growth and Development, 1818 H Street NW Washington, DC 20433.

Lewis, P.M and Bratton, M. (2000), Attitudes to democracy and markets in Nigeria, Afrobarometer Working Paper, No. 3

Liu, Z. (2005) ‘Planning and Policy Coordination in China’s Infrastructure Development‘. A Background Paper for the EAP Infrastructure Flagship Study

86

Liu, Y. (2003) ‘Development of Private Entrepreneurship in China: Process, Problems and Countermeasures.’ A Working Paper for the Chinese Academy of Social Sciences (CASS)

Liu, Z. (2005) ‘Planning and Policy Coordination in China’s Infrastructure Development.’ A Working Paper, Prepared for the ADB-JBIC-World Bank East Asia Pacific Infrastructure Flagship Study.

Lou, J. (1997) Macroeconomic Reform in China: Laying the Foundation for a Socialist Market Economy, World Bank Discussion Paper No. 374. The World Bank.

Morrison, W.M. (2008) China’s Economic Conditions. A Publication of Congressional Research Service Order Code RL33534

Morrison, W.M. (2006) China’s Economic Conditions. Congressional Research Service (CRS) Issue Brief for Congress. Order Code IB98014

Narayanan, R. (2006) The Politics of Reform in China: Deng, Jiang and Hu. Strategic Analysis, Vol. 30, No. 2, Apr-Jun 2006. Institute for Defence Studies and Analyses.

NCEMA (2004) Structural Adjustment Programme in Nigeria: Causes, Processes and Outcomes’. A Publication of National Centre for Economic Management and Administration (NCEMA), Nos. 1 & 3,

Ngok, K. and Zhu, Y. (2008) ‘Bring the state back in: Social policy development under the Hu- wen Administration’. A Working Paper of Institute for Social Security and Social Policy, Sun Yat-sen University.

Nwaobi, G.C. (2002) ‘Solving the Poverty Crisis in Nigeria: An Applied General Equilibrium Approach’. A Working Paper, for the Quantitative Economic Research Bureau, Abuja, Nigeria.

Ogunkola, O., Adewuyi, A., Oyeranti, O. and Bankole A. (2008) Nigeria-China Trade and Economic Relations. Working Paper for Trade Policy Research and Training Programme (TPRTP), Department of Economics, University of Ibadan, Ibadan, Nigeria.

Okonjo-Iweala, N and Osafo-Kwaako, P. (2007), ‘Nigeria’s Economic Reforms: Progress and Challenges.’ Washington, DC: The Brookings Institution, Working Paper, Number 6.

Osagie, E. (2004) ‘Reforms in Nigeria: Lessons of Experience’. Ibadan, NISER. Lecture Series No.1.

Pei, M (2003) Political Reform in China: Leadership Differences and Convergence. A Publication of the Carnegie Endowment for International Peace

87

T.N. Srinivasan, T. N. (2002) ‘Economic Reforms and Global Integration.’ Center for Research on Economic Development and Policy Reform (CREDPR), Stanford University

Tongxun, W. (2000) China’s Administrative Reforms in the Economic Transition. A Publication of the Institute of Personnel and Talents Science People’s Republic of China.

UNDP (2006), Niger Delta Human Development Report, Abuja: United Nations Development Programme

Williamson, J. (1999) ‘Economic Reform: Content, Progress, Prospects.’ A Working Paper for Indian Council for Research on International Economic Relations and the Maharaja Sayajirao University of Baroda

World Bank (2009), From Poor Areas to Poor People: China’s Evolving Poverty Reduction Agenda, an Assessment of Poverty and Inequality in China, East Asia and Pacific Region. The World Bank, Washington, DC.

World Development Report, (2003) Sustainable Development in a Dynamic World: Transforming Institutions, Growth, and Quality of Life. A Publication of World Bank, pp. 234-235.

World Bank, World Development Report, (2003) Sustainable Development in a Dynamic World: Transforming Institutions, Growth, and Quality of Life, pp. 234 235.

GOVERNMENT DOCUMENTS

Central Bank of Nigeria (CBN)(2006a). Annual Report and Statement of Accounts.

Central Bank of Nigeria (CBN)(2006b). Statistical Bulletin.

Central Bank of Nigeria (CBN)(2003a). Annual Report and Statement of Accounts.

Central Bank of Nigeria (CBN)(2003b). Statistical Bulletin.

Central Bank of Nigeria (CBN)(2000). The Changing Structure of the Nigerian Economy and Implications for Development. Lagos: Realm Communications Limited.

Central Bank of Nigeria, (1993) Perspectives of Economic Reforms in Nigeria , A Study Report by the Central Bank of Nigeria (CBN), Abuja, Nigeria.

Central Committee of Chinese Communist Party (CCCCP) (2003) The Communiqué of the Third Plenary Session of the Sixteenth Central Committee of the Chinese Communist Party, 14 October 2003. 88

Central Committee of Chinese Communist Party (CCCCP) (2006) The Resolutions of the CCP Central Committee on Major Issues Regarding the Building of a Harmonious Socialist Society, 11 October 2006.

Essien E.A (2005). “A Consistent Macroeconomic Framework for the Agriculture Sector under the National Economic Empowerment and Development Strategy (NEEDS).”Central Bank of Nigeria, The Bullion. 29 (4) Oct/Dec, pp1-3.

Federal Government of Nigeria, (1986) ‘Structural Adjustment Program for Nigeria, 1986- 1988’. Lagos: Government Printers.

National Bureau of statistics (NBS)(2007). National Account Statistics.

National Bureau of statistics (NBS)(2006). The Nigerian statistical facts sheet on Economic and Social Development.

Nigeria, (2004) ‘National Economic Empowerment and Development (NEEDS)’. A Monograph, The NEEDS Secretariat, National Planning Commission, Federal Secretariat, Abuja.

The Research Department of Party Literature, Central Committee of the Communist Party of China (1991). Major Documents of the People’s Republic of China – Selected Important Documents since the Third Plenary Session of the Eleventh Central Committee of the Communist Party of China (December 1978 and November 1989). Beijing: Foreign Languages Press.

MAGAZINES

African Action, (2003) New! Africa’s Debt Fueling the Fire of AIDS, an online Publication of Africa’s Action, April 2003.

Kwanashie M. (2005). “ Nigeria and Economic Reforms” Nigeria Tribune, Tuesday 15 February. pp 27-28 and 40.

WEBSITES

Feller, Gordon. "China’s Coal". ECOworld. Retrieved 10 June 2011.

Golley, J. and Song, L.(2010) Chinese economic reform and development: achievements, emerging challenges and unfinished tasks, in Ross Garnaut, Jane Golley and Ligang Song (eds) China: The Next Twenty Years Of Reform And Development. Canberra : The Australian National University (ANU) E Press. http://epress.anu.edu.au/china_20_citation.html Hu, V.(2005) The Chinese Economic Reform and Chinese Entrepreneurship. 89 http://www.uoc.edu/symposia/caixamanresa/jornadaeconomia/2005/eng/vic ky_hu.pdf