Impact of Fixed Medium-Term National Development Plans and Structural Adjustment Program on Aggregate Economic Activity inNigeria

Abstract

Nigeria adopted and implemented four fixed medium-term national development plans between 1960 and 1985 with a view to ultimately achieving optimum societal wellbeing. However, due to the economic problems of the 1980s, an extensive structural adjustment program (SAP) was put in place in 1986. Among other things, SAP was meant to restructure and diversify the Nigerian economy. This paper empirically analyzes the impact of the four plans and the structural adjustment program on aggregate economic activity in Nigeria. The study employs a growth equation that contains major macroeconomic variables such as credit to private sector, foreign direct investment and foreign trade as well as dummy variables that capture eras of the four fixed medium-term national development plans and the structural adjustment program. Contemporary econometric techniques of co integration and autoregressive modeling form part of the methodology for this study. The study is based on annual time series data from 1960 to 2009 obtained from the Central Bank of Nigeria (CBN). The estimates of the study, among other things, reveal that the fixed medium-term national development plans in general had no significant impact on aggregate economic activity in Nigeria whereas the structural adjustment program had some significant positive impact on aggregate economic activity in the country. Thus there is need for optimum state planning in the country, especially if the planning is for fixed medium-term. In general, there is need for optimal management of the country’s economy.