JOURNAL OF RESEARCH IN NATIONAL DEVELOPMENT VOLUME 5 NO 2, DECEMBER, 2005
THE LIMITATIONS OF MARKET FORCES AS PRINCIPAL CO-ORDINATOR OF ECONOMIC ACTIVITIES IN A DEVELOPING ECONOMY – NIGERIA
UZOH A. BEN
PART-TIME LECTURER (ECONOMICS UNIT) SCHOOL OF GENERAL STUDIES, FEDERAL POLYTECHNIC – NEKEDE, OWERRI
Economics the world over assume in their economic theories that the market forces are the major means of allocating resources in any economy. They generally, assume that production and consumption decisions, as well as methods of allocation of commodities are done better by the forces of demand and supply in the market.
In addition, the orthodox economists opine that the price mechanism through the “invisible hands” of Adam Smith is the best co-ordinator in the determination of economic activities in all economies including the developing countries like Nigeria and Africa in diaspora.
This research work has found out that this policy that worked in the advanced/developed countries, cannot work effectively as principal co-ordinator of economic activities in a developing economy as ours. It is via the role of governments in economic activities that resources can be allocated justly, equitably and fairly. If the government fails to intervene, the majority who are financially handicapped will be marginalized by the few rich who will control what is produced and consumed. There is no gainsaying the fact that the market forces determine principally what is produced based on the profit margin which is the motivating force in business, to the detriment of the public desires. If the market mechanism only considers what are produced, consumed, distributed and exchanged, then the welfare of the public with respect to basic needs is never taken care of. This research posits that the government which is the public sector is the best co-ordinator of economic activities, while the private sector supplements the role. Hence, the government should be the role model or facilitator, which the developing economies have found indispensable in economic development.
Systematic planning, government intervention vis-à-vis private sector directed by the government instead of the market forces, are the acceptable principal co-ordinators of economic activities in the developing countries like Nigeria.
The fact that the market forces allocate resources fairly in the advanced economic does not follow that the same fairness could be achieved in developing economies because these economies operate differently under distinct socio-cultural backgrounds.
Development economists have proved with facts that most of the orthodox theories and principles are not workable in developing economies are non-economic, which cannot be overlooked in our development studies.
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