Deregulation and Productivity Improvements In Developing Economies: The Nigerian Case
Deregulation is broadly described as the process where government reduces its direct ownership and involvement in activities that the private sector can handle productively. The debate on what the public and private sector can productively handle has remained unsettled. Pro-keynasian economists support more government involvement but neoclassical economists, particularly monetarists, support a minimal government that can influence the economy indirectly through the banking system. Deregulation, liberalism and market dominance are global mega trends that poor economies can hardly avoid. These trends compel the public and private sector operators into new roles that would ensure that the appropriate public and private sector mix is obtained. However, Nigeria in particular, has no substitute for a good government that is ready to generate growth in a weak private sector that is dwarfed by poverty, a culture of rent-seeking, and import addiction. Accordingly, government in Nigeria should go beyond the mere settings of targets, and provision of the so-called tax incentives. In addition to maintaining a reasonable regime of subsidies, the banking system would need to be re-engineered and monitored to ensure that it serves as the main channel for injecting funds for investment in the economy.