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Economy

Erhunse Confidence

Implication of Big-push theory on Nigerian
economic development

Seminar paper

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2
INTRODUCTION
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3
Concept of Economic Development
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6
Indivisibility in the Production Function
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Indivisibility in the Supply of Savings
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7
Implications of Big-Push theory on Nigerian Economic Development
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9
REFERENCES
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The theory provided an explanation of how developing countries can industrialize through
broad-based investment and coordination
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It was concluded that
developing countries like Nigeria generally lack the capital required to provide this big push in
investments
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Keywords: Big-Push theory, economic and development
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The theory of the big push asserts that underdeveloped countries require large amounts
of investments to come out of the problem of backwardness and launch policies for economic
development
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Policies designed to encourage the development of the Nigerian economy will need to be
guided by the big-push theory
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As earlier economic
theories on development were silent on issues of post-World War II, classic political
economists, from Ricardo to Marx, viewed that similar problems on economic development
were being addressed despite the fact that the word ‘development’ was not used
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Development in England in the nineteenth century as argued by Cowen & Shenton (1996) was
all about remedies for the shortcomings and maladies of progress that rest on population and
urban squalor
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Diseases,
malnourishment and death happen in the everyday lives of those people from the developing
countries than that of developed countries
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Modern development economics came after colonial economics, which was partly controlled
by chartered companies engaging in plantations and mining activities
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The objectives of colonial
economics were to make the colonies cost effective and then to manage economic resources
with a view to national independence
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A clear distinction has to be made between growth and development
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An upward movement
(increase) over time in a country`s real output of goods and services (GNP) or real output per
capita income is often termed to be economic growth while economic development usually
implies an upward movement of the entire social system in terms of income, savings and
investment along with progressive changes in socioeconomic structure of country
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(e
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HDI-Human Development
Index; gender-related index; Human poverty index; infant mortality; literacy rate; etc
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g
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A country that is perpetually underdeveloped is often caught in a vicious circle, which is
referred to as poverty trap
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They assert
that there are qualitative dimensions in the development process which may be missing in the
growth of a given economy expressed in terms of an increase in the national product or the
product per capita
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Development goals must be defined in terms
of progressive reduction and eventual elimination of malnutrition, disease, illiteracy, squalor,
unemployment, and inequalities
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The traditional approach defines development strictly in
economic terms
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Policy measures suggested in this case are those which
induce industrialization at the expense of agricultural development
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5 

Theory of the Big Push to Economic Development
The big push model is a concept in development economics or welfare economics that
emphasizes that a firm's decision whether to industrialize or not depends on its expectation of
what other firms will do
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The originator of this theory was Paul
Rosenstein-Rodan in 1943
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Indivisibility in the production function;
2
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Indivisibility in the supply of savings (Misra & Puri,2010)
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This is achievable in
developing nations meanwhile at minimum optimal measure firm can be established in many
industries
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The capital requirements for social overhead cannot be possibly imported from nations
elsewhere making provision for about 30 to 40% of total investment undertaken by
underdeveloped countries needs to be made in social overhead capital (Collier, 2004; Graham
& Temple, 2004)
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This encourages expansion of markets for industrial goods
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Indivisibility in the Supply of Savings
Rodan argues that substantial investment in a number of industries requires a high enough level
of savings
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The logic behind Rodan’s theory of the big push is that it brings into focus the need for a
massive effort on the part of the underdeveloped countries to industrialize if they are serious
about economic development
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Assumptions of Big Push Theory
• One factor of production: labour
• Two economic sectors: traditional vs
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A program that is not done
wholly will not have any significant impact on the process of growth and will only lead to
dissipation of resources
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These difficulties are likely to
create serious obstacles in the implementation of programmes of large-scale industrialization
as suggested by the big push theory
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This is because the federal government of Nigeria would
find it difficult to think of economic development in the primarily agricultural and labour
surplus economies by neglecting agriculture
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It would becomes difficult to meet the food requirements of the people engaged in the new
industries, and in the long run, the size of the market would fail to expand significantly
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Lastly, since Nigeria is a mixed economy system which provides for the co-existence of both
private and public sectors and these sectors also are competitive in nature, there are likely to
be serious difficulties in actual implementation of the big push strategy of development
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Hence, the big push hypothesis became the justification for foreign aid and
other external financing channels
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9 

REFERENCES
Cowen, M
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, & Shenton, R
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(1996)
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https://www
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com/Doctrines-Development-M-PCowen/dp/0415125162 on Monday November 27, 2016
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I
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Introduction to Economic Growth
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New York: W
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Mahbubul, H
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“Employment and Income Distribution in the 1970s: A New
Perspective,” Pakistan Economic and Social Review, June-December
Misra, S
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& Puri, V
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(2003)
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Mumbai: Himalaya Publishing
House
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K
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K
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Economics of development and planning: Theory And Practice
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217-222
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N
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www
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com/sites/default
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pdf
Rosenstein-Rodan, Paul
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“Problems of Industrialization of Eastern and Southeastern
Europe
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Stiglitz, J
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More instruments and broader goals: Moving toward the post-Washington
consensus
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