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Policy reforms & entrepreneurship in Nigeria
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Policy reforms & entrepreneurship in Nigeria

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  • 1. REFORM POLICIES, MANUFACTURING ENTREPRENEURIAL ACTIVITY AND ECONOMIC GROWTH: EMPIRICAL AND QUALITATIVE OBSERVATIONS ON NIGERIA Egbetokun, A.A., Adelowo, C., Oladipo, O., Adepoju, A.O., Isola, O.O. & Olamade, O.O. National Centre for Technology Management (NACETEM), Federal Ministry of Science & Technology (FMST), Obafemi Awolowo University, Ile-Ife, Nigeria
  • 2. OUTLINE
    • Introduction
    • Objectives
    • Research Questions
    • Reforms in Nigeria
    • Focus: Entrepreneurship & Manufacturing
    • Approach
    • Findings
    • Conclusion
  • 3. INTRODUCTION
    • When a great number of new businesses enter the market, competition and economic growth are enhanced.
    • Business entry and density rates are significantly related to country-level indicators of economic development and growth (Klapper’s et al (2008).
    • Important among these country-level indicators are policy-related predictors & reforms (Jovanovic, 1982).
  • 4. OBJECTIVES/RESEARCH QUESTIONS
    • A reform-entrepreneurship-growth nexus is apparent.
    • This paper attempts to explore this relationship in the context of a large developing economy – Nigeria.
      • How have the structural adjustment programme (SAP), the indigenisation decree and the small and medium enterprise equity investment scheme (SMEEIS) impacted entrepreneurial activity?
      • Is there any noticeable impact of the foregoing on economic growth?
  • 5. REFORMS IN NIGERIA
    • In the mid-1990s the government introduced a series of reforms, including an allowance for greater foreign ownership in Nigerian industries, a loosening of controls on foreign exchange, and the establishment of an export-processing zone at Calabar (Stock, 2007).
    • In December 1999, Bankers’ Committee proposed that banks should contribute 10% of their profits. This fund formed the basis for the small and Medium Industries Equity Investment Scheme (SMIEIS).
    • The indigenisation decree which was promulgated in 1977.
    • The Structural Adjustment Programme (SAP).
  • 6. FOCUS: ENTREPRENEURSHIP & MANUFACTURING
    • Particularly for operationalisation purposes, entrepreneurship is characterised in this paper simply as the creation of a new enterprise or venture, whether in the formal or informal sector.
    • In today’s globalised world, manufacturing plays a key role in development.
  • 7. APPROACH
    • The data employed for our empirical analyses came mostly from two sources:
    • The National Bureau of Statistics (NBS, 2009); and
    • The Central Bank of Nigeria (CBN, 2004).
    • We implemented descriptive, correlation and regression analyses
  • 8. FINDINGS
    • GDP is significantly related to nearly all of the measures of entrepreneurial activity that were used.
    • Relationship exists between GDP growth and manufacturing firm entry.
  • 9. FINDINGS (Contd.) * Correlation is significant at the 0.05 level 2-tailed. ** Correlation is significant at the 0.01 level 2-tailed. Table 1: Correlation of reform and economic growth variables, Nigeria (1980 - 2003)   1 2 3 4 5 6 7 8 GDP                 GDPGROWTH 0.429*               MANGDPGROWTH 0.102 0.412             NENTRY 0.840** 0.424* -0.059           NSLT10ENTRY 0.802** 0.398 -0.123 0.988**         PERCENTSLT10ENTRY 0.607** 0.281 -0.290 0.774** 0.822**       NENTRYTREND -0.025 0.276 -0.215 0.383 0.435* 0.430*     NSLT10ENTRYTREND 0.015 0.129 -0.367 0.391 0.453* 0.540** 0.953**   ICU -0.433* -0.059 0.367 -0.453* -0.488* -0.314 -0.125 -0.097
  • 10. FINDINGS (Contd.) Figure 1: Manufacturing firm entry (1980-2003)
  • 11. FINDINGS (Contd.) Figure 2: Year-on-year trends in manufacturing firm entry rates (1980-2003)
  • 12. FINDINGS (Contd.) Table 2: Regression of entrepreneurial activity variables on GDP   B SE t Sig. (Constant) -89.36 175.18 -0.51 0.62 NENTRY 0.31 0.06 5.36 0.00 PERCENTSLT10ENTRY 4.55 4.46 1.02 0.32 NENTRYTREND -0.13 0.25 -0.53 0.60 NSLT10ENTRYTREND -0.14 0.53 -0.26 0.79 ICU 0.11 0.73 0.16 0.88 Adjusted R 2 0.760      
  • 13. CONCLUSION
    • Our effort represents a very early and basic attempt at exploring the issues the way we have done and our findings are consistent with current thinking on the subject matter.
    • Greater entrepreneurial activity generally means greater growth and that reforms targeted at economic revival should not choke entrepreneurship.
    • Increase in manufacturing firm entry would mean increase in GDP.