CHAPTER ONE

CONCEPTUALIZATION OF ECONOMIC POLICY AND THE NIGERIA SITUATION

1.0  INTRODUCTION 

Policy means a plan action agreed or chosen by government, a business or organization. It is a principle of behavior or belief that influences how one behave. It can also be defined as government programmes of action, which is what government intend to do and how they intend to do or achieve it.1

Economic policy can be seen as a set of Economic measures conceptualized formulated, enacted and executed by government as a deliberate effort to speed up the process of Economic development in such society. It is the deliberate measures or programs taken by governments or their agents an order to accelerate the pace of development for the socio-Economic well-being of its citizenry. No country whether big or small, would leave its economy to invisible hand of market forces without any kind of moderation. It has been argued by some scholars in the economic field that in modern world, no country’s economic and social development are free from some form of deliberate efforts by government or its agent, to speed up the process of economic development.

Government plays a vigorous role in shaping, designing and moderating economic developments in each of their respective states or countries. While in some states, the role of the governments is pervasive, directly, and extensively interfering with the lives of the people- as typical of socialist or communist oriented countries, in others that are capitalist oriented the influence of governments is limited to policy measures with which economic and others actions take lace and this provide the stimulus to economic growth and development.

One of the most important purpose or programs of a constituted government is the formulation of economic policy. The relevance of the formulation of such economic policy in the act of governance cannot be over emphasized considering the implication of a weak economy for the survival of a nation:- The strength of a nation rests on a viable economy. A nation with a viable economy enjoys political stability, high standard of living for its citizenry and a good diplomatic relation with other nations of the world. Therefore it can be safe for us to argue that the economic strength of a nation is a major determinant of the political power of that nation and its respectability in the international system or environment. In order to pursue economic statecraft effectively, states and indeed governments need to have a strong economic base. Such financial strength is usually an important element in the power equation of states in the international system.

The growth rate of the economy, the inflation rate, the international/foreign reserves (holding of foreign currency and gold), the balance of payment, budget surplus or deficit of the central bank of states, are crucial factors in determining the performance of states in the international environment.

For instance, according to IMF and World Bank sources (1996), Japan had a moderate growth rate and low inflation. Her international reserve was substantial. She had a positive balance of payment and a small deficit. Russia by contrast, was in financial shambles, her GDP had declined and inflation had run rampant; it had scant international reserves and a substantial balance of payment deficit. Given this scenario, Japan though smaller by size is more likely to play a more dominant role in the international political economy than Russia. Similarly, with the 1994 GDP of 6.6 trillion dollar, the U.S.A is an economic titan that could use its economic power to produce other types of relationship. The U.S has the ability, for instance to influence other countries by offering trade benefits or threatening trade sanctions. For this reason, the U.S. has continue to play a dominant and vigorous role in international economic relations and in world politics. Since every nation strives to achieve those goals; economic policy becomes an important economic tool used in promoting economic growth.

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