THE IMPACT OF FISCAL POLICIES AS A TOOL FOR STABILIZING A DEVELOPING ECONOMY (NIGERIAN EXPERIENCE 2006-2011)

Thesis Overview

<p> </p><p><strong>1.0 INTRODUCTION</strong></p><p><strong>1.1 BACKGROUND OF THE STUDY</strong></p><p>&nbsp; &nbsp; &nbsp; The economy of any country, irrespective<br>of its structure is regulated by certain policies developed by the government.<br>Some of these include economic policies, social policies, monetary policies<br>etc. however of all these policies economic policies are most fundamental. The<br>economic factors are cynical because they serve as a foundation for the success<br>of the other policies of government. The constituent element of these economic<br>policies need to be manipulated simultaneously to achieve the desired results.<br>The techniques of manipulating the economic factors play an important role two.<br>One of the essential arms of economic policies – the fiscal policy, serve as a<br>means of planning, organizing, controlling and coordinating the tempo of<br>activities in the economy. Fiscal policy in itself can be said to be made up of<br>specific course of action involving the formulation of tax structure and<br>expenditure patterns. The direction of these expenditures and taxes are<br>specific in nature for results or changes. Before the world war, fiscal policy<br>as a key to economic restructuring and development has been in existence. Many<br>economists had propounded theories as a means to economic prosperity from the<br>destruction of the world war, but in the early 20the century, Lord John Keynes<br>put forward on articulated and constructive solution to solving economic<br>problem. Lord Keynes in his book explain that the revamping of an economy could<br>be achieved through the redirection of government expenditures from war<br>machines to soft loans to increase investment, generate employment and<br>consequently increase aggregate demand as a means of getting hold on the<br>hyperinflation that existed after the Second World War.</p><p>&nbsp; &nbsp; &nbsp; In Nigeria, the earliest known forms of<br>fiscal policies were used. It was established as far back as 19th century by<br>the British Administration. Then the political system became complex due to the<br>existence of the indigenous government under Emirs, Obas, Obongs, Obis etc.<br>along with the colonial masters. In effect, payment for the administration of<br>the country were made to the British government.</p><p>&nbsp; &nbsp; &nbsp; The government policy used by the<br>colonial masters on revenue for development was adopted from Dr. Earl Grey<br>report (1852) in which he advocated economic development amongst civilized<br>people. Through self determination under the British supervision. Because of<br>the existence of local authorities which led to indirect rule policy, the<br>policy suited Nigeria. The revenue generation method which was based on duties<br>paid on imported goods was pursued because it avoided disruption of the<br>indigenous social and economic system and its incidence did not directly affect<br>the average Nigerian. Besides, revenue from duties the British government<br>support however, began to dwindle due to increase public criticism in Britain<br>against spreading of Brutish influence in West Africa. 1870, the government<br>supplement stopped and was reduced from #5,000.00 to #2,000.00 to #1,000.00 in<br>1862, 1863 and 1865 respectively. The expenditure was solely directed towards<br>improving the comfort of the British officers and the maintenance of law and<br>orders. These and then. The revenue and expenditure volume also increase<br>considerably well into the 20th century. Considering this modern time, fiscal<br>policy as a means of economic development are not developed in isolation. They<br>are formulated and implemented simultaneously with monetary policies, foreign<br>policies by the government with the aim of having a synchronized approach in<br>tackling economic problems. The generally accepted fiscal policy measure<br>incorporates welfare economics as a means of reducing adverse effects that may<br>arise thus reducing the standard of living of the citizens of the country.</p><p>&nbsp;From the foregoing, this research is aimed at identifying the role of fiscal policies in the development of Nigerian economy.</p> <br><p></p>