The Role Of Infrastructure Development On National Economic Growth

Project and Seminar Material for Economics

The Role Of Infrastructure Development On National Economic Growth


The study examines the role of infrastructure development in national economic growth. A model was specified for the purpose and secondary quarterly data was collected for the period 2000-2010. The objective of this research was primarily to investigate the level of telecom infrastructure development on the Nigeria economy. Statistical technique of ordinary least square (OLS ) was employed for the estimation. Our result shows that developments in telecommunications sector provided by teledensity have positive and significant impact on economic growth in Nigeria. We recommend that increased infrastructure development in the telecommunications sector, and greater deregulation for competition among operations will bring about sustained economic growth

Chapter One

1.0. Introduction

1.1 Background of the Study

It takes little analysis to see that infrastructure plays a major role in the economy of a country, whether developing or developed. The need for good infrastructure management is of great importance to the economics of countries all over the world and the various sectors of the economy need to be understood. The world is fast becoming a global village and a necessary tool for this process is communication of which telecommunication is a key elements. Development in the telecommunication industry all over the world is very rapid as one innovation replaces another in a matter of weeks. Nigeria is part of this race for rapid developments, as the years of economic reversal via mismanagement have had adverse effects on its rate of growth and development. The Nigeria telecommunications sector was grossly underdeveloped before the sector was deregulated under the military regime in 1992 and placed under the jurisdiction of the Nigerian Communication Commission (NCC) since then, the NCC has issued various licenses to private telephone operators. These licenses allow private telephone operators (PTO) to roll out both fixed wireless telephone lines and analog mobile phones. The return of democracy in 1990 however paved the way for the granting of GSM licenses to three service providers, MTN, ECONET (which is now AIRTEL) and NITEL Plc in 2001 with GLOBACOM joining in 2003. Telecommunication is a major driver of any economy infrastructure which is therefore regarded as a vital instrument in ensuring economic development. Attention this work would be focused on this area of Endeavour, as it appears to be one of the most neglected areas of economic development goals in most countries today.

1.2 Statement of the Problem

Infrastructure of any country is of immense importance to that country whether developed or developing. It is therefore of utmost necessity that the various infrastructure of a country should be managed in proficient ways which will serve not only as pride to such country but also as an encouragement to other countries towards economic development.

The various propositions for this research work include;

  1. The role of infrastructure is not vital to national economic growth?
  2. The role of infrastructure Development is vital to national economic growth.

1.3 Objective of the Study

The following are the objectives of this study:

  1. To analyze the effectiveness of infrastructure policies in the country.
  2. To protect the rights and interest of service providers and consumers within Nigeria.
  3. To carry about a critical appraisal of infrastructure development so as to show its role in economic development of a country.
  4. To proffer suggestions towards a better improvement on the infrastructural system in the country.

1.4 Research Hypotheses

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

  1. H0: there is no effectiveness of infrastructure policies in the country.
    H1: there is effectiveness of infrastructure policies in the country.
  2. H02: there are no rights and interest of service providers and consumers within Nigeria.
    H2: there are rights and interest of service providers and consumers within Nigeria.

1.4 Significance of the Study

The provision of infrastructure services to meet the demands of business, household and other users is one of the major challenges of economic development. The provision of economic infrastructure can expand the productive capacity of the economy by increasing the quantity and quantity of such infrastructure. The transformation curve or the production possibility frontier or curve would shift with the expansion of the economic infrastructural base, thereby accelerating the rate of economic development and enhancing the pace of socio-economic development. Better management of economic infrastructure would have positive output, income and employment effects on the economy. Moreover, it will impact directly on the poor, thus reducing poverty. Education as well as telecommunication is a very important source of economic growth. It is also an economic investment since it enhance the stock of human capital. Road infrastructure has been found to be a significant factor of economic growth and development. The development of seaports as an economic infrastructure assumes that like roads, communications and other economic infrastructure ports have a positive impact on the growth and developments of countries. Without ports the Americans might not have been easily explored. Today, the United States of America is one the leading economic global power. Seaports are an economic infrastructure with significant multiplier effects on the domestic economy. Infrastructure will provide benefits to rich and poor equally because of the non-exclusionary nature of the consumption of public goods and services it provides. To the extent that infrastructure improves the quality of life for the poor; the development of infrastructure is likely to alleviate poverty.

1.5 Scope and Limitation of the Study

This study has reported empirical findings on the perception of her stakeholders regarding the impact GSM on Nigeria rural economy. However the study has a number of weaknesses. These includes the fact that it drew samples, the perception of the work force linked to the petroleum sector were not included in the target population of the study despite the fact that petroleum comes from rural areas and it has impacted the economy in those zones. The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.

1.7 Definition of Terms

(A) Infrastructure:

This refers to the basic physical and organizational structures needed for the operations of a society or enterprises or the service and facilities necessary for an economy to function. The term typically refers to the technical structures that support a society such as roads, water supply, sewers, electrical grids; telecommunication etc. viewed functionally infrastructure facilities the production of goods and serves.

(B) Economy:

An economy consists of the economic system of a county or other areas, the labour, capital and land resources, and the economic agents that socially participate in the production, exchange, distribution and consumption of goods and services of that area.

(C) Economic Growth:

Thus is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increase in productivity which lowers the inputs (labour, capital, material energy etc) for a given amount of output. Economic growth is concerned with he log run trend in production due to basic causes such as industrialization.

(D) Economic Development:

This refers o the increase in the standard of living in a nation’s population with sustained growth sustained growth from a simple, low-income economy to a modern high-income economy. It typically involves improvements in a variety of indications such as literacy rates, life expectancy, and poverty rates. A country’s economic development is related to its human development, which encompasses, among other things, health and education.

1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five

Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain the role of infrastructure development on national economic growth

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of infrastructure development on national economic growth

5.2 Summary

This study was on the role of infrastructure development on national economic growth. Five objectives were raised which included: To analyze the effectiveness of infrastructure policies in the country, to protect the rights and interest of service providers and consumers within Nigeria, to carry about a critical appraisal of infrastructure development so as to show its role in economic development of a country, to proffer suggestions towards a better improvement on the infrastructural system in the country. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of telecommunication sector, Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up information technology officers, administrative staff, senior staff and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies.

5.3 Conclusion

The linkage between infrastructural development and economic growth outcomes is one of the most popular topics for debates in recent scientific literature and economic research. The role of infrastructure is widely analysed as very vital to household and firms as availability and quality of infrastructure result in different decisions to invest and may influence migration, business establishment location. Although, the result of the two estimations speak that infrastructural development has a positive linkage with our economy growth but, the researchers believe this is in term of availability and quality of infrastructure in our economy .And also, the magnitude of the contribution leaves a lot to question. This questionable contribution or lack of quality infrastructural development has been seen in the relocation of some firms out of Nigeria to other neighbouring countries like Ghana etc. The relocation of some firms out of Nigeria which is as a result of weak quality of our infrastructure base has not only affected the economy negatively in the short run but also in the long run which are manifesting in a lot of social/ youth restiveness like Niger Delta militancy, boko haram in the North to mention but a few. Know fully that infrastructure services are used as final consumption item for households and intermediate consumption item for firms , any wrong action taken by government that negates the growth and development of infrastructure has both micro and macroeconomic effect to the economy at large

5.4 Recommendation

Infrastructure development is one of major elements of structural reforms in developing economy like Nigeria because of its expected large economic and social impact. As can be inferred from the studies by other researchers, infrastructure investments alone do not have a significant influence on economic growth. The institutional environment is a very important complement, allowing infrastructure investments to be translated into economic growth. Based on this, the following are the recommendations of this study: In the area of transportation, more roads should be constructed and the existing one adequately maintained particularly the ones already taken over by gully erosion as it will lead to the reduction of production of firms as well as inability of the firms to evacuate consumables both final and intermediate from rural to urban centers. The government should enhance the competition between and the efficiency in infrastructure industries, (especially electricity) and with it, the government can make an indirect contribution to economic development. The railways sector should receive government blessing as exemplified by the Chinese and Indians governments. This is because since passengers and goods are carried by railways cheap and significant compared to other means of land transportation. Demand for infrastructure is said to expand significantly in the decades ahead, driven by major factors such as global economic growth, technology progress, urbanization and growing congestion. The researchers propose that government should as a matter of priority create more favorite institutional policy and regulatory framework to meet up these challenges.

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