IMPACT OF TRANSPORTATION ON NIGERIA ECONOMIC GROWTH (1981 -2011)

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IMPACT OF TRANSPORTATION ON NIGERIA ECONOMIC GROWTH (1981 -2011)

INTRODUCTION

Nigeria became independent in 1960, having a population of over 150 million people with diverse culture and abundant resources. Nigeria has a very large labour force to support the labour market and economy which consists of different sectors, such sector includes the Agriculture sector, the Energy sector, the Mining sector, the Manufacturing sector, the Banking sector, the Communication sector, the transportation sector and so on.

Many economists have been interested in factors which can cause the growth of their nations, one major factor is TRANSPORTATION. The study of Transportation in Nigeria has become important due to the view or thought of researchers trying to formulate better policy that will affect the transport sector positively which will later bring about an efficient, effective and standard transport system. Thus the demand for Transport service in the country over the year has increased rapidly, while the supply of transport services has declined due to lesser infrastructure in place in the system, because a well-functioning and integrated transport system among other thing in the economy stimulates national growth and development which enhances the quality of life for all enabling the seamless movement of goods and services and people, through the provision of vital linkages between spatially separated facilities which enables social contact and interaction possible and also providing access to employment, health, education, and other services which brings about civilisation. For instance, Agricultural products generated in the rural areas needs to be carried/taken to the urban centres for further distribution which can take place or be achieved only through means of transporting those goods from that place to another, here transportation provides the means by which product are circulated around the country.

The evolution to modern transport system in Nigeria can be viewed from two phases according to the federal government of Nigeria draft on national transport policy on august 2010.The first phase is the colonial period that marked the origin of modern transport system.

The networks of rail, water and road developed then were geared essentially to meet the exportation of cash crops, such as groundnuts, cocoa, cotton and palm products and to the importation of cheap, mass produced consumption goods. These early transport systems were planned in the most economical way possible, as typified in sub-standard road and rail alignments and a sub base, which later proved inadequate to accommodate heavy vehicles. The second phase is the postcolonial period/attainment of independence. With a re- orientation of goals, transport became one of the instruments of unification of the country and an important tool for social and economic development. The development of petroleum resources from the 1950‟s had significant impact on the nation‟s social and economic growth, putting increasing demands on the transport system.

This study will examine the impact of transportation infrastructure on economic growth in Nigeria by evaluating the relationship that exists between transportation infrastructure and economic growth.

STATEMENT OF THE PROBLEM.

Given the fact that transportation Infrastructure is very crucial to the growth of the economy, the situation of Nigeria transportation infrastructure is at a poor state. Recent studies by Adeniji (2000), Innocent C. Obi (2011) shows that: less than 50% of the National road network are in fair or good condition causing an average death of 50 people per day; Less than 300,000 tonnes of freight and less than 2.3 million passenger are been transported by rail; More occurrences of air crashes in the Aviation sector; High rate of congestion in the sea port; and More vandalization of pipeline. When all this losses are added up to economic cost for loss of productive man-hour, it becomes clear that the situation really need urgent attention. However, various research studies have been descriptive showing the importance of having a better transportation infrastructure in place so as to increase the sector contribution to economic growth and development, although there are few study that are empirical. Thus, this study will enlighten us on the situation and empirical linkage of transportation infrastructure improvement and economic growth, in which more emphasis will be on Nigeria transport infrastructure.

OBJECTIVE OF THE STUDY.

The broad objective of this study is to examine the impact of transportation infrastructure improvement on economic growth in Nigeria. The specific objectives of the study are as follows:

i. to describe the situation of transportation infrastructure in Nigeria.

ii. to evaluate the empirical linkage between transportation and economic growth.

iii. to access the channel through which transportation affect economic growth.

RESEARCH QUESTIONS.

Based on the problems of the research topic, the research questions are as follow:

i. what is the situation of transportation infrastructure in Nigeria?

ii. what is the empirical linkage between transportation and economic growth?

iii. what channel does transportation work through to affect economic growth?

JUSTIFICATION OF THE STUDY.

The study is justified by the need to provide empirical understanding of the impact of transportation infrastructure improvement to the economic growth of Nigeria and how it influences the development process. Thus, there is no doubt that transportation is essential in operation of a market economy; Planners needs guidance based on solid grounds, to aid in their decision to improve existing transportation and build new infrastructure. As stated by Boopen(2006), Transport improvement have opportunity cost in terms of alternative investment that can be carried out by the government. To ensure that resources are well allocated, policy makers need to have empirical base on which to draw their plan. An empirical knowledge of how transportation infrastructure improvement will affect economic growth need to be established so that adequate plan can be made for the transport sector. Also, there is the need to have a direct linkage between transport infrastructure and economic growth, in which prediction can be made to determine the level of transport investment that can achieve a desired level of economic growth.

If capital improvements in transportation facilities lead to greater development than when capital is used in other areas, then planner should realize the benefits to be gained by developing the transportation infrastructure. If on other hand, capital improvement in transportation facilities cannot be linked to economic performance, then scarce resource could, perhaps, be put to better use. There is therefore the need to examine the linkage

between transport infrastructure and the economic growth of developing countries, particularly Nigeria, in order to help policy makers formulate policies that will favour the transport sector to enhance growth of economy. To the people, this study will enlighten them more on the important of having a better transport system; To students and researchers, this study reveal the current situation in the sector by adding to the work done by other researcher so as to provide base for future research; To the policy maker this study will reveal the state of transport infrastructure across the country making them known that more funds and implementation of policy already made is needed critically to be in place in the sector.

RESEARCH METHODOLOGY.

This study makes use of the econometric technique in evaluating the relationship between transportation sector infrastructure sector infrastructure components and economic growth in Nigeria, The Ordinary Least Square (OLS) technique is employed in obtaining the numerical estimates of the coefficients in different equations, The OLS method is chosen because it possesses some optimal properties: its computational procedure is fairly simple and it is also an important component of most other estimation techniques. The estimation period covers a thirty years since the data needed are available for this period. The data for this study are obtained mainly from secondary source, particularly from Central Bank of Nigeria (CBN) publications.

SCOPE OF THE STUDY.

This study is a macro-study that covers the transportation in Nigeria economy as a whole. The data generated covers the contribution of the sector to GDP from the year 1981 to 2011. The concept of economic growth has to do with the entire economy; hence the study is a macro study, Also the choice of time frame is as a result of the limited access to data. Likewise, data availability also pose problem in the water and air transport network.

PLAN OF THE STUDY.

The study will be classified into five chapters. Chapter1 contains the introduction, background of the study, statement of the research problem, objective of the study, research methodology, significance of the study, scope of the study. Chapter 2 contains Literature review as well as the theoretical framework, in which the chapter review the work and contribution of different researchers on the relative impact of transportation on growth. Chapter 3 concentrates on the research methodology stating the model formulation, technique

of data analysis etc. Chapter 4 contains the empirical analysis and interpretation of results. Chapter 5 contains the summary, conclusion and recommendation.

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