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Chapter 3: The Nigerian and Ghanaian Economies

Given our empirical analysis, this chapter expands our understanding of the existing literature by showing our own qualitative examination of Nigeria and Ghana. This allows greater knowledge of the processes which were taking place in these countries and sets the context something highly important in any discussion of export-led growth.

3.1 Nigeria

A United Nations narrate shows that in quality of life, Nigeria rates below all other major oil nations, from Libya to Indonesia. Hobbled ed by political instability, corruption, inadequate infrastructure, and poor macroeconomic management, its annual per capita income of $1,400 is only close to that of Senegal, which exports mainly fish and nuts. In 1960, agricultural products such as palm oil and cacao beans account for almost. Olaniyi Evans (2013) Testing Finance-Led, Export-Led and Import-Led Growth Hypotheses on Four Sub-Saharan African Economies 8 all Nigeria's exports. In 2000s, they barely register as trade items. The oil boom of the 1970s led Nigeria to neglect its strong agricultural and light manufacturing bases in favor of an anemic dependence on crude oil. By 2000, oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue. New oil wealth has led to the simultaneous slump of other economic sectors, and a lurch toward a static economic model. Due to inflation, per capita GDP, in 2012, remains lower than in 1960 when Nigeria declared independence. Nigeria is ranked 30th (40th in 2005, 52nd in 2000), in the world in terms of GDP (PPP) as of 2012, and 3rd largest within Africa (behind South Africa and Egypt).

The Nigerian economy has had a truncated history. In the period 1960-70, the Gross Domestic Product (GDP) recorded 3.1 per cent growth annually. During the oil boom era, roughly 1970-78, QDP grew positively by 6.2 per cent annually - a remarkable growth. However, in the 1980s, GDP had negative growth rates. In the period 1988-1997 which constitutes the period of structural adjustment and economic liberalization, the QDP responded to economic adjustment policies and grew at a positive rate of 4.0. In the years after independence, industry and manufacturing sectors had positive growth rates except for the period 1980-1988 where industry and manufacturing grew negatively by - 3.2 per cent and - 2.9 per cent respectively. The growth of agriculture for the periods 1960-70 and 1970-78 was unsatisfactory. In the early 1960s, the agricultural sector suffered from low commodity prices while the oil boom contributed to the negative growth of agriculture in the 1970s. The boom in the oil sector lured labour away from the rural sector to urban hub.

3.1.1 GDP

Possibly the most apparent indication of the rapid development of the Nigerian economy has been the extraordinary rise in GDP per capita since independence.  According to OECD 2015, the economy has enjoyed sustained economic growth for a decade, with annual real GDP increasing by around 7%; it was 6.3% in 2014. The non-oil sector has been the main driver of growth, with services contributing about 57% while manufacturing and agriculture, respectively contributed about 9% and 21%.  Figure 3.1 charts the progression of GDP per capita since 1980 in real 2014 Nigerian naira, based on data from the IMF's International Financial Statistics (IFS) database

  Figure 3.1 Real GDP per capital in Nigeria 1980-2014 (IMF 2014)

The incredible rise in average income is totally apparent. Since 1980s real incomes have increased more than fourfold from just in 1987 to 2013 (in constant 2013 naira). The Aggregate real GDP grew more than sevenfold from just under 150 billion naira at 1980 to 380 billion naira by 2013 the difference attributable to a 60% increase in population. This amounts to an average annual per capita growth rate of 2.8% and aggregate GDP growth rate of 6.2in 2014%. According to IMF estimates, Nigeria now has highest real per capita incomes in the world, in international dollars, which account for PPP (IMF, 2014). As figure 3.1 shows, per capita GDP growth was particularly steady over the period, aside from a sharp drop from 1985-1987 as a result of macroeconomic instability and the strict economic reform policies necessitated by the adoption of the SAP. Beyond the timeframe displayed here, growth has slowed in response to declining world demand. Nigerian GDP was resilient to the first wave of the financial crisis.

3.1.2 The Economy

The Nigerian economy is largely a petroleum based economy. The country has now been long troubled by the political instability, corruption and poor macroeconomic management and is now undergoing a substantial economic reform under the new civilian administration; the former military ruler of Nigeria failed diversifying the economy. The economy of Nigeria shows overdependence on capital intensive oil sector, which provides 28% of GDP, 95% of foreign exchange earnings and about 65% of government revenues. The largely subsistence agricultural sector has not kept up with rapid population growth, and the country which was once large net exporter of food is now importing some of it food products (World Bank, 2014). Figure 3.2 shows that the reined in and inflation generally remained under 20% subsequently a testimony to the government's resolve to maintain and improve the economic climate.

 Figure 3.2 Nigeria Consumer Price Index (CPI) 1980-2013 (World Bank, 2010)

Although recent events have again threatened the stability of the Nigerian economy, the government has some room to move given increases in tax revenues in recent years, inflation at its lowest rate for 20 years (2%), and growth forecast to pick up again in the near future (OECD, 2014).

The most significant aspect of this stability is that it has allowed the government to focus efforts on a remarkable policy of structural transformation. The move from agriculture to crude oil, while the economy is thus diversifying and is becoming more services-oriented, in particular through retail and wholesale trade, real estate, information and communication respectively has been one of the most defining characteristics of the Nigerian development story. Figure 3.3 below shows the current structure of the economy. Service industries now comprise the dominant pillar of the economy, but agriculture will still important particularly with the government recent of drop in crude oil price and most of exporting country are refusing to buy it because of the low quality.

Figure 3.3 Nigerian GDP by sector, 2009 (OECD, 2014)

The contribution of agriculture to GDP, which was 63 percent in 1960, declined to 34 per cent in 1988, not because the industrial sector increased its share but due to neglect of the agricultural sector. It was therefore not surprising that by 1975, the economy had become a net importer of basic food items. The apparent increase in industry and manufacturing from 1978 to 1988, was due to activities in the mining sub-sector, especially petroleum. Capital formation in the economy has not been satisfactory. Gross domestic investment as a percentage of GDP, which was 16.3 per cent and 22.8 per cent in the periods 1965-73 and 1973-80 respectively, decreased to almost 14 per cent in 1980-88 and increased to 18.2 per cent in 1991 -98. Gross National Saving has been low and consists mostly of public savings especially during the period 1973-80. The current account balances before official transfers are negative for 1965-73,1980-88 and 1991-98.

This structural transformation was very closely related to the export sector. The government effectively channeled the gains from successful sectors into the promotion of new ones, each of which had a largely export-focused nature and was aided by the adoption of policies conducive to increased FDI. It has been argued that this increased foreign input was crucial in the structural transformation of the economy, particularly in the early days of the Nigerian export drive when it brought not only capital but also technology and technical knowledge Olaniyi Evan(2013.

3.1.2.3 International Trade

The centrality of international trade has already been highlighted. What is interesting, however, is that the government's trade policies didn't promote free trade, but rather constituted what Rodrik (1999) termed heterodox opening returns to the export sector were kept high through subsidies. The first and most obvious fruit of the government's export strategy was the EPZ. Although successful, EPZ performance has been far outshone by those in Malaysia, Taiwan and Hong Kong where, unlike in Nigeria, production quickly moved onto more oil and gas sectors such as petroleum product. Overall, the amount of trade undertaken by the country has been average not as exceptional as in East-Asia but as the literature review suggested, it still seems to have played a crucial role. Nigeria main trade partners reflect its historical and ethnic identity: its main trading partner is the EU, which accounts for 37.6% of total trade (34.4% of imports but 64.3% of exports); followed by India with 13.4% of total trade (5.05% of imports but only 0.6% of exports, America with 11% and Brazil 10% respectively; OEC, 2013). Table 3.1 and Figure 3.4 reflect the importance of services in the composition of current exports. Petroleum oils, crude and gas account for the entire economy other service exports are followed by the declining sectors of agricultural products.

Figure 3.3 Nigeria major exports 2013

3.1.2.4 Finance and Investment

 According to World finance 2015, Nigeria's economic development has attracted investors in their droves, with all of them looking to capitalize on an array of emerging investment opportunities with the realization that Nigeria's GDP is far ahead of what was previously thought, Africa's most populous nation has recently become its biggest economy. What's arguably more important, however, is that investors, both international and local, are capitalizing on a number of new opportunities, and, bolstered by a growing non-oil sector, the country is fast-becoming a leading investment destination. There are numerous reasons why Nigeria, a member of the “N-11”, is increasingly viewed as a viable and attractive investment destination. Like the other countries that make up the N-11, Nigeria's “attractive demographics, rising income and increased domestic consumption could make it a significant contributor, along with the other N-11 countries, to global growth in the next decade. Foreign direct investment (“FDI”) increased to $8.9 billion in 2011 (in 2010 this figure was only $2 billion, primary due to the Arab Spring).

In line with Nigeria's drive to increase FDI, the legal and regulatory framework is favorable in a variety of sectors, to attract foreign investors which they initiate The Nigerian Investment Promotion Commission (“NIPC”) and Strategic Initiatives. The NIPC was established to promote, co-ordinate and supervise all investments in Nigeria and has various functions including; coordinating and monitoring the creation and operation of businesses; introducing measures to promote investment in Nigeria; collating and providing information on investment opportunities in Nigeria; keeping record of businesses subject to the Nigerian Investment Promotion Commission Act No.16 of 1995 (the “NIPC Act”); promotional activities and advising the Nigerian federal government on policy matters. The NIPC is made up of various departments that facilitate its primary objectives. There is a department that focuses on direct marketing, with the aim of promoting Nigeria and highlighting investment opportunities (the NIPC has promoted investment in Nigeria by hosting business investment forums globally). The department of investor relations provides pre-investment and after-care services and keeps a record of FDI in Nigeria. There is also a department dedicated to campaigning for the improvement of the Nigerian investment climate by proposing policy changes.

The NIPC also has a One Stop Investment Centre (“OSIC”) that allows investors to perform all the necessary administrative functions needed for setting up and investing in businesses in Nigeria. Investors can go to OSIC to obtain licenses, permits and for incorporation purposes. OSIC ultimately aims to streamline procedures and reduce the cost of doing business in Nigeria. OSIC also aims to maintain transparency in Nigerian business administrative services and provides investment information to prospective investors. The center also has the aim of upholding the professional working relationship between government agencies and ministries to further support investors in their dealings with business administration.

In other to sustain economy growth Nigeria government has brought about tax as an investment intensive and this corporation tax for non-resident companies in Nigeria is charged at 30 per cent and is only charged on Nigerian sourced income. For resident companies there is also an additional 2 per cent education tax levied. Capital gains, interest and dividends are taxed at 10 per cent for both resident and non-resident companies. Companies in the oil and gas sector and construction companies that serve the oil and gas sector have separate tax regulation. There are various tax incentives in place that reduce tax liability, especially in key sectors to the Nigerian economy needing investment. These have allowed and attract a lot of investor (Foreign and domestic) in all area of Nigeria economic sector especially in oil and gas, energy and agricultural sector in the country.

3.2 Ghana

Ghana, a country on the West Coast of Africa, is one of the most thriving democracies on the continent. It has often been referred to as an "island of peace" in one of the most chaotic regions on earth. It shares boundaries with Togo to the east, la Cote d'Ivoire to the west, Burkina Faso to the north and the Gulf of Guinea, to the south. A recent discovery of oil in the Gulf of Guinea could make Ghana an important oil producer and exporter in the next few years. The country's economy is dominated by agriculture, which employs about 40 percent of the working population. Ghana is one of the leading exporters of cocoa in the world. It is also a significant exporter of commodities such as gold and lumber. A country covering an area of 238,500 square kilometers, Ghana has an estimated population of 25,199,609 (July 2013 est.), drawn from more than one hundred ethnic groups each with its own unique language. English, however, is the official language, a legacy of British colonial rule. In 1957, Ghana (formerly known as the Gold Coast) became the first country in sub-Saharan Africa to gain independence. After leading the country for nine years, the nation's founding president, Kwame Nkrumah was overthrown in a coup d'état in 1966. After Kwame Nkrumah, Ghana was ruled by a series of military despots with intermittent experiments with democratic rule, most of which were curtailed by military takeovers. The latest and most enduring democratic experiment started in 1992 and it is what has gained recognition for Ghana as a leading democracy in Africa. Ghana has several tourist attractions such as the castles. Most of the major international airlines fly into and from the international airport in Accra. Domestic air travel is thriving and the country has a vibrant telecommunications sector, with six cellular phone operators and several internet service providers (Ghana Web 2015).

3.2.1 GDP

Ghana's economy grew by four percent for last year.

The 4 percent is the final growth for 2014 after it projected a 4.2 percent growth when it gathered about 70 percent of data for calculating the GDP estimates. According to the Government Statistician, Dr. Philomena Nyarko, the reduction was influenced by declining import. “The indications are that there were lower imports volumes in 2014 than earlier estimated. Marine fishing output also declined considerably,” Dr. Nyarko said. The services sector, had highest share of the annual GDP with 49. 6 percent, followed by industry with 28.4 percent, and agriculture with the least share of 22 .0 percent.

However, in terms of growth, services had a 5.7 percent growth, agriculture 4.6 percent, and industry, 0.9 percent. For quarter on quarter bases, the economy grew by 1.2 percent just for the fourth quarter of last year. This however, represents a marginal reduction of 2.6 percent recorded in the third quarter of 2014.The Ghana Statistical Service said the country is now worth 113 billion Ghana Cedis and the country's per capita GDP is now 4,165 Ghana cedis

Ghana is rich in natural resources, including gold, diamonds, manganese ore, and bauxite. High prices for oil, gold and cocoa help to sustain economic growth. The industrial sector is more developed than in many other African countries, yet agriculture is the economic pillar accounting for 50 percent of employment and 40 percent of exports. However, mining and construction have sustained the industrial sector, while manufacturing has been declining as a share of GDP over the past 20 years. Ghana, the world's second-largest cocoa producer after Côte d'Ivoire, harvested around 835,000 tonnes of cocoa during the 2012/13 season, about 21% of the global total. In 2010

3.2.2 The Economy

Although Ghana economy have not been consistent in their macroeconomic stability but when,  Ghana enacted a legal framework for sound management of its oil wealth, and thus far its programme of hedging oil imports and exports has succeeded in maintaining macroeconomic stability. Oil production at Ghana's offshore Jubilee field began in mid-December, 2010, and is expected to boost economic growth. Estimated oil reserves have jumped to almost 700 million barrels. Although Ghana has been classified as a low middle-income country by the World Bank since 2010, its development indicators compare poorly with those of most countries in this SOUTH AFRICA NIGERIA 0.00% 5.00% 10.00% 15.00% 2012 2011 2010 FIG. 1 GDP Growth Rates SOUTH AFRICA KENYA NIGERIA GHANA Olaniyi Evans (2013) Testing Finance-Led, Export-Led and Import-Led Growth Hypotheses on Four Sub-Saharan African Economies 7 category. Even so, Ghana remains heavily dependent on international financial and technical assistance. Gold and cocoa productions, and individual remittances, are major sources of foreign exchange.

Of course, all governments have difficulty balancing their budgets. Unfortunately, signs of stagnation on the policy front are broader. Pereira, et.al, point to worrying signs that the financial sector is once again in trouble with bad credits, despite the huge financial sector adjustment credits of 10-15 years ago. In the Bank's recent Country Assistance Evaluation (2000), the main issues cited are the fiscal deficit, burgeoning public sector employment, privatization or liquidation of public enterprises, including the Cocoa Board, and decentralization. Of these, only the latter was not at the top of the agenda fifteen years ago. In fact, the deficit has worsened, and the problem of excess public sector employment may have as well, despite a huge donor-financed retrenchment program. In short of this, on the macroeconomic front, most of the steam was let out of Ghana's reform effort many years ago, and it has never been recovered.

Figure 3.7 Ghanaian Consumer Price Index (CPI) 1980-2013 (World Bank, 2014)

Structural transformation took place throughout this entire period, sometimes even contributing to the economy's instability. Socialist development was characterised by significant public investment into agricultural production, and during the mixed economy phase the manufacturing industry was encouraged and grew rapidly, along with Tunisian exports. Mass beach tourism had been suggested as part of a development plan as early as 1962, but it wasn't until the 1970s that the government began to make significant investments and promote international investment into the tourism sector (Poirer, 1995). The stability achieved after the SAP allowed the government to actively promote much broader diversification of the economy, through direct investments and various schemes to attract both domestic and foreign private investment into priority sectors (Baliamoune-Lutz, 2009). Before long, tourism and other service industries replaced manufacturing as the cornerstone of the Tunisian economy. Figure 3.8 below shows the structure of the economy in 2008.

Figure 3.8 Ghanaian GDP by sector, 2013 (OECD, 2014)

Agriculture is one of the largest employment sectors in Ghana, employing around 42% of the labour force, and contributing approximately 22% to GDP.

The largest disaggregated sector graphed is a combination of service based sectors which indicates the importance of services in the modern Ghanaian economy. Industry and agriculture remain important, but their importance is waning in comparison to the service sector, particularly as the government encourages further development of the flourishing ICT, mining and offshore financial services sectors and as tourism continues to expand even in light of the world recession (OECD 2014). Energy primarily constitutes crude oil production, and this is likely to increase over the next few years in light of increased investment and prospecting (OECD, 2013).

3.2.2.3 International Trade

This discussion has highlighted the importance of trade particularly the export sector in Ghanaian development.  And stating the policies in trade and industry sectors by the Ghanaian government

Trade Sector Policies

In implementing medium-term policies in the trade sector; account is taken of Ghana's objectives of participating fully in the globalized market, the rationalization of tariffs, and the promotion of intra-regional trade. Policies are therefore being pursued within the framework of national macro-economic objectives and strategies that take account of the opportunities presented by the Uruguay Round results and other multilateral trade agreements.

In the medium term, trade sector policies that are the focus of attention are:

1. creation of a buoyant and self-sustaining export sector

2. expansion of domestic trade thereby ensuring the countrywide availability of goods at reasonable prices

3. pursuit of efficient and effective import management practices

4. adoption of anti-monopoly legislation and other regulations to protect the consumer

5. pursuit of anti-dumping policies in international trade through rationalization of all tariff and the identification of all non-tariff barriers to trade

6. Active and effective participation in multilateral trade for a secure increased market access for Ghana's exports especially processed and semi-processed goods and to achieve stable, fair and remunerative prices for commodities of export interest in Ghana.

The composition of exports has progressed over the years, reflecting changes in the wider economy. At independence exports almost entirely comprised agricultural products and petroleum product oil and crude, but high Gold mining and increased it production by 2013 made up 80% of total exports. Manufactured manganese and of other exports are 20% so much so that aggregate real exports grew more (IMF, 2014). This was reinforced by the steady increase of service exports, such as agriculture. As figure 3.10 shows, gold still make up the majority of Ghana's exports, followed by petrol and minerals, cocoa beans and cocoa paste and food products. A large (and increasing) portion of other exports is taken up by services.

. Figure 3.9 Ghanaian exports.

While the diversity of exports has been improving, the diversity of export markets remains an issue. Various trading agreements have aided exports over the years, but they have also served to deepen a narrow range of trading relationships. The MFA encouraged trade with Europe, as did the more recent free-trade agreement (FTA) with the EU. Figure 3.11 demonstrates Ghana's heavy reliance on the European market for most of its goods exports. This will be the same to be true for a large portion of service exports. Efforts are underway to diversify markets through new bilateral and multilateral trading agreements particularly with other African nations (ADB, 2009).

Figure 3.11 Ghanaian Goods Exports by Destination, 2013 (OEC, 2013)

3.2.2.4 Finance and Investment

The government sought out the financial sector and encourage increased domestic financial savings, but as much of the existing savings belonged to foreigners in form of FDI. In Ghana, international banks provide a critical “gap-filling” role, offering the full range of corporate banking services required by foreign investors in handling international transactions. The presence of foreign banks in Ghana also encourages the entry of other foreign companies in ways that go beyond providing international financial services in terms of advice, information and facilitation to potential investors. They improve the products and services available to domestic customers by offering a range and quality not otherwise available, and their presence of local banks to upgrade their existing facilities.

Some of the foreign banks have integrated more deeply with the local economy, with local offices, taking local deposits and employing Ghanaian staff. However, financial laws in Ghana prohibit foreign banks from offering mortgages; while the credit side of the business may be local; lending is primarily with other foreign firms. The trend of foreign firms borrowing domestically means that they have an even greater need of the facilities that an international bank can provide; for example, a foreign firm that finances its investments in cedi needs to be sure that dollar-denominated trade credit is always available. It also has the side effect of tightening the domestic credit market as local enterprises compete alongside foreign ones for capital. As the banking sector grew and private domestic savings increased. The government actively promoted national saving, but this was limited by negative real interest rates. Financial liberalization under the SAP had a positive impact on savings, and savings now stand at around 11% of gross national disposable income and only 1 percentage points below investment in 2013. Investment by foreign firms in mining, agribusiness, telecommunications and financial services has helped contribute to employment, exports, foreign exchange receipts, tax receipts and other features of the domestic economy. FDI has played a key role in improving quality and access to services and utilities, and through demonstration effects and dissemination of experience, it has had spin-off effects on other private sector undertakings. Ghana has attracted TNCs from diverse sources in Europe, Asia and North America. Specific targeted promotion initiatives in Asia have been particularly successful. FDI is therefore more significant in the Ghanaian economy than it appears to be when one looks only at the macroeconomic indicators. The national market in Ghana is not large enough to warrant a huge influx of FDI; the country has therefore pursued access to markets through various bilateral, regional and multilateral trade agreements. The Gateway strategy has targeted export-oriented FDI, which has played a lead role in developing exports of non-traditional products, albeit from low levels. But Ghana has not fully reaped the benefits of export-led growth because of several constraints faced by exporters.

The private sector has had to function in conditions of unstable macroeconomic management, inadequate technology, poor infrastructure and lack of credit facilities. The lack of domestic capital and capabilities has proved to be an indirect but substantial obstacle to attracting FDI in export-oriented manufacturing. Recent efforts to restore greater macroeconomic stability should benefit FDI, but there is also a range of constraints affecting the business sector that need to be tackled.

Ghanaian fiscal policy has been much more prudent, and although the current economic downturn has reduced tax revenue and led to an increase in the budget deficit, the overall level of public debt remains manageably below 50% of GDP (OECD, 2014).

3.3 Key Similarities and Differences

This discussion has brought to light a number of similarities and differences in the growth and development experiences of Nigeria and Ghana, and it is worth explicitly highlighting some of these before moving on. It is apparent that despite their common African and regional roots, their historical backgrounds are quite different. Both governments had distinct issues to address upon independence, yet both were able to achieve remarkable economic growth and development over the following decades. As the literature clearly shows, both made a strong impression on the international scene in terms of their overall success. Table 3.1 and figure 3.13, below, help to put these two countries in perspective.

Nigeria Ghana

Real GDP per capita growth 2013 annual(%)a

2.6 4.8

Real GDP per capita (2013, $USD)b

3,203 1,443

Rate of population Rural and Urban growth annual (%)c

5.89 4.07

Urban population growth (%)c

4.68 3.37

Openness (trade as a % of GDP)d

31 89

Sources: a) Calculated using data from the world bank (2015a). b) As at 20013. IMF (2015). c) For 2005-2010. IMF (2015) d) As at 2013. Some values not included in the datasets.

As this demonstrates, both nations experienced rapid growth and declined in real per capita incomes. Ghana started from a significantly lower position than Nigeria, but slightly faster growth overall reduced the gap somewhat. Although the GDP growth experienced some volatility in both countries over the period, but was relatively more stable in Ghana than Nigeria. In general, this reflects the macroeconomic situation as well. Ghana had a bumpy road to success, while the Nigerian economy managed to avoid major macroeconomic imbalances barring the one period during the late 1980s. Overall growth rates were very similar in both countries, though slightly more steady in Ghana. But Nigeria situation have a very rapid growth rate and decline respectively.

Structural transformation was remarkably similar in both countries each was based largely on agriculture at beginning, but soon moved into petroleum products (with an emphasis on Crude oil) followed by followed by mining Gold in Ghana. There were differences, but overall both countries gradually diversified their economies into emerging sectors through the successful re-investment of gains. The public sector played an important facilitating role in both countries, but had a much more direct role in investments in Ghana than in Nigeria because private savings and investment were relatively more important. The benefits of foreign investment have been emphasized more for Nigeria, and the country seemed to shift its focus to key sectors slightly ahead of Ghana. It is not clear why this is the case, although in the early years the government's attempt to appease its more socialist stakeholders certainly impeded the pursuit of more liberal development policies.

Great-fully given that it is the focus of this study trade seems to have played a very important role in the economic growth and development of both countries. As table 3.1 shows, the relative volume of trade is much higher in Nigeria, something which this study would expect given the above discussion. It seems obvious that the export sectors of both countries contributed increasingly to the structural diversification, growth and development of the countries, directly or indirectly, but exports appear to have played a more central role in Nigeria. Ghana did not really encourage development of the export sector until into the 1970s, by which time the Nigerian EPZ had already started to gain some momentum. Trade was in some respects easier for centrally-located Ghana, but, as this study have described, it seemed to be one aspect of an overall development strategy where more funding and focus was given to other areas particularly in the earlier years. Although not exceptional in terms of trade volume, the export and import sectors in Nigeria are key from the outset and remained the central aspect of its developmental strategy. The relatively much smaller size of the Nigerian economy may have driven this reliance on foreign trade

Finally, a comparison of the governance and institutional arrangements in each country is particularly interesting. In both cases it is apparent that a strong institutional environment was central to long-term success, but the overarching governmental framework could not have been more different. Nigeria developed strong institutions in the face of authoritarianism before the democracy come to place in 1999; Ghana did it in parallel with democracy,

yet the Global Competitiveness Report ranks Ghana's public institutional quality as 68th out of 144 countries while Nigeria comes in at 132nd (WEF, 2015). Institutions have clearly been important for both countries, and while this study is not able to test directly for the impact of governance in our empirical section, this context is critical to an understanding of the true nature of the exports-growth relationship. Where does this leave us as this study move into the empirical section of the paper? Both the literature review and this detailed discussion of the two economies have illustrated the centrality of exports in the development strategies of Nigeria and Ghana.

However, this chapter has underlined that while export policies are credited with much of the economic success of these two countries, it is important to understand the wider context in which they were implemented. No export strategy is an island, as it were. Export policies were only successful given the favorable environment in which they were initiated and developed, and they seem to have been more central to the Nigerian experience than in Ghana, where other policies as those relating to had greater scope to contribute to growth. As this research turn to the empirical tests, therefore, this study has good reason to expect a positive and significant relationship between exports and growth, particularly in Nigeria. Although our econometric analysis is more narrow in scope and will not shed any more light on the importance of these other factors (such governance) it is important that this study bear the findings of this qualitative analysis in mind.

    

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