POSTULATIONS AND IMPLICATIONS OF NEO- CLASSICAL THEORY ON NIGERIA’S ECONOMIC DEVELOPMENT

Abstract

Neo-classical theory of development came in reactions to the Keynesian theory propounded by John M. Keynes (1930s), otherwise, known as the theory of mixed economy. Drawing from the aftermaths of the second world war and its attendant negative consequences, is the great economic depression of 1930s. Most theories developed then were on how to get the world economies out of the depression. Keynes opined that the only surest way for government is to increase spending through the employment of long unemployed individuals that would be the trick to bringing the world economies out of recession”. Contrary to Keynesian theorists, neo- classical believes that economic growth is directly related to free trade and countries should follow policies of deregulation, privatization and liberalization in order to achieve desired economic growth. Nigeria being a former colonist of Great Britain inherited a political and economic models, the parliamentary system of government which was later changed to American styles presidential system anchored on the doctrines of economic liberalism. The system ushered in foreign trade and investment without border, private ownership and means of production, privatization and commercialization, and Nigeria became a capitalist economy. But despite that, the country is engulfed with the challenges of economic development, ranges from low and decayed infrastructures, under- production, dependency on foreign goods and services and the dominating activities of multinationals. The research obtained data from the secondary sources. However, in the course of this research, findings revealed that privatization and liberalization policies in Nigeria have course devastating effects on the economy taking into cognizance the effects of Structural adjustment programmed (SAP), on the country’s currency, the Naira devaluation, unequal exchange, trade and investment which has today resulting to capital flights, unemployment, poverty, high mortality rates and high cost of living face by millions of Nigerians today. Thus, the way out of this menace is total overhauling of the entire privatization processes in Nigeria, the strengthening of the Naira and strict protectionism.