THE IMPACT OF MACRO-ECONOMIC POLICY ON RURAL SECTOR IN NIGERIA
Macro economic policy plays a significant role in an economy. We intend to ascertain the relationship between macro economic policy and rural sector development in order to achieve macro economic objectives of full employment, price stability, balance of payment equilibrium, increases Gross Domestic Product and the likes.
Macro economic policy can be said to be the instrument of fiscal and monetary policy use in solving, reducing or controlling economic problems such as poverty, unemployment, low productivity, inflation and deflation. In Nigeria, several macro economic policies has been adopted over the years in trying to control, solve or reduce some of these macro economic problems. Thus, the overall objective of this research work is to cheek the effect of macro economic policy on rural sector development. We shall consider the period of 1990-2006 with these control variables, Gross Domestic Product (GOP), Government Expenditure on Social and Community development, Composite consumer prices Index (CCPI) and unemployment Rate (UR).
TABLE OF CONTENTS
1.2 Statement of Problem
1.3 Aim and Objectives of Study
1.4 Research Questions
1.5 Significance Hypothesis
1.6 Methodology of the Study
1.7 Sources of Data
1.8 Scope of the Study
1.9 Significant of the Study
1.10 Organization of Study
2.1 The rural Sector and Macro Economic Policy
2.2 Problems of Macro Economic Policy in rural sector
2.3 Impact of Macro Economic Policy on rural sector
3.0 Structure of Macro Economic Policy in Nigeria
3.1 The rural sector of Nigeria Economy
3.2 Appraisal of impact of macro economic policy on rural sector in Nigeria
3.3 Constraints to achievement of policy objectives
3.4 Challenges of macro economic Policy in rural sector of Nigeria Economy
4.2 Analysis of technique
4.3 Model Specification
4.3.1 Econometric Model Specifications
4.3.2 A prior Expectation
4.3.3 Specification bias
4.4 Specification of data
4.5 Empirical results and interpretation of the regression results
Data for Regression
5.0 Summary, Conclusion and Recommendations
Macro-economic policy are policies used in achieving macro-economic objectives of price stability, equitable distribution of income, full employment, economic growth and balance of payment equilibrium. In of her words, it the instruments of fiscal and monetary policy used in solving, reducing or controlling economic problems such as poverty, employment, inflation and deflation.
In Nigeria, several macro economic policies has been adopted over the years in trying to control, solve or reduce some of these macro economic problems. In alleviating poverty, and reducing unemployment, National Accelerated Food production programmes and the Nigeria Agricultural and cooperative Bank was established to fund agriculture in 1972. This was followed by Operation Feed the Nation in 1976. In 1979, the Green Revolution Programme was also launched. Infact, various programmes, directorate and policies aimed at solving unemployment and poverty problem were launched & established such as Better life for rural women aimed at reducing poverty level in the rural areas; National Poverty eradication Programme (NAI'EP) project aimed at reducing unemployment and poverty, Bank recapitalization policy in 2005 aimed at consolidating and strengthening Nigerian Bank so as to achieve and ensure a diversified, strong; and reliable banking sector and also encourage the emergence of regional and unit/ specialized banks.
Most recently is the National Economic Empowerment and Development Strategy (NEEDS) which focuses on four key strategies: reorienting values, reducing; poverty, creating wealth and generating employment. The rural sector has from time experienced no or low impact of most of these macro economic policies. The rural sector which the primary occupation of its population includes fishing farming, forest product gathering and craft, albeit, at subsistence level. In other words, the rural sector is basically agrarian in nature. This research will show the impact of various macro economic polices so far adopted in Nigerian on the rural sector and the impact of the recent policy of NEEDS on the rural sector of the Nigerian economy.
1.2 STATEMENT OF PROBLEM
The major problem facing macro economic policy in Nigeria is the problem of usually conflicts that exist among the objectives of macro economic policy. This problem is not limited to Nigerian alone, it also exist all over the world. These conflicts occur when the attainment of one goal may mean the non-attainment of another. For instance, in using; the instrument of monetary policy, the essay and policy conflict to exist.
A necessary conflict occurs when the attainment of one goal prevent the attainment of the other while the policy conflict arises when there is no necessary conflict between two goals but when monetary authority has difficulty in pursing both goals simultaneously.
An example of a necessary conflict is the Philip's curve, which depicts the trade off between the rate of inflation and unemployment.
In this example, the focus of emphasis may be price stability. Pursuing price stability may conflict with objective of full employment or economic growth.
Another example is full employment and balance of payment objectives. The policy designed to promote domestic and rural employment can weaken balance of payment position. As the level of domestic and rural employment rises, income will increase. The increase in come will cause importation to rise too, even at a faster rate. This will have an adverse effect or worsening the balance of payment position.
At time when the objectives of macro economic are mutually conflicting, the policy makers has to make choice. In choice making, it must be ensured that an optional different objective, which in the prevailing condition would be in the nation, be adopted.
1.3 AIM AND OBJECTIVES OF STUDY
This study aimed at undertaking an in -depth analysis of policy makers like the Central Bank of Nigeria in relation to macro economics policies such as Structural adjustment Programme (SAP), Better Life for Rural Women and the recent National Economic Empowerment and Development Strategy (NEEDS).
The objectives are;
i. To show the impact of macro economic policy in reducing unemployment in rural sector.
ii. To analyse the impact of macroeconomic policy on rural development.
iii. To analyse the impact macroeconomic policy so far in promoting rural development reduction of rural poverty level.
1.4 RESEARCH QUESTIONS
In order to achieve the aim and objective of this research study within the specified scope of study, series of important questions will be needed during; the study. While attempts will also be made to find answers to the questions which include:
- Can macro economic policy be used to increase productivity and growth in Nigeria?
- Can macro economic policy be used to encourage full employment in rural sector of Nigeria?
- Can macro economic policy be used to reduce poverty in rural area of Nigeria
1.5 STATEMENT OF HYPOTHESIS
Hypothesis 1: That effective macro economic policy can be used to increase productivity & growth of Nigeria.
Hypothesis 2: That effective macro economic policy can be used to encourage full employment in rural sector of Nigeria.
Hypothesis 3: That effective macro-economic policy can be used to reduce poverty in rural sector of Nigeria.
The methodology that will be used is called regression analysis and the type of regression that will be used is called multiple regression analysis.
The normal procedure is to develop a mathematical model, apply statistical method to the available data to obtain estimates of the model parameters, and decides whether or not the hypothesis should be accepted or rejected.
1.7 SOURCES OF DATA
This study will require a lot of information from the Central Bank of Nigeria (CBN); and the federal office of statistics (FOS).
This research work will be limited to date availa.ble from the annual budget report, Journals and other materials that will be useful in carrying out an effective research. The date will be analysed and interpreted with the used of theoretical analysis.
1.8 SCOPE OF THE STUDY
This study will be restricted to the impact of macro economic policy on rural sector of Nigeria. Some of the areas which are intended to cover are the trend of the objectives of macro economic policy on rural sector of Nigeria, the techniques of macro economic policy in rural sector of Nigeria. The coverage of this study will be limited to ten years.
But the scope of macroeconomics policy is severely limited to its impact on viral sector in creating wealth, full employment, enhancing growth, and reducing poverty.
1.9 SIGNIFICANCE OF THE STUDY
The reason why I decide to base my research on this area of study is that despite all the available instruments put in place in achieving macro economic objectives, the rural sector of Nigeria is still faced with the following problem.
1. Low productivity, which has created the problem of food shortage, and low output.
2. Unemployment situation, which cart be in form of functional unemployment, cyclical unemployment, voluntary unemployment and seasonal unemployment.
3. High level of poverty, which has led to high crime rate.
4. High living standard in the country, which can be viewed from Rev. Thomas. Malthus perspective, which states that population is growing at a geometrical rate, while food production is growing at an arithmetical rate.
1.10. ORGANISATION OF STUDY
This research work will be divided into five chapters. Chapter one, will be introductory part, which contain that objective, significant of the study and the hypothesis that will be tested. Chapter two will be the literature review which gives the opinions of author, in journals and articles about the role of macroeconomic policy. Chapter three will give the Structural background of macroeconomic policy in Nigeria. Chapter four will accesses the impact of macro economic policy using the analysis of data by regression. Chapter five will give the summary recommendation and conclusion.