The Quagmire of a Monotonous Economy

17 Jan


Over the years many nations have survived via their domestically generated incomes while others have increasingly relied on external sources of finance which adversely results in increased foreign debt. As rightly stated by Hameed et al(2008) , too much of external debt could dampen economic growth by hampering investment and productivity growth which is the resultant effect of the fall in exchange rate. Although foreign debt as a topic is not the focus of this work its necessary to understand its effect as earlier stated.
The term “Monotonous Economy” as used in this article defines an economy whose income source is strictly limited to a single major source. In other words it’s an economy were diversification is absent. Nigeria for instance has over the years relied on crude oil for the financing and running of the entire government ever since the late 1970s.According to Anyanwu (1986), the major problems of the economy such as external debt obligation, unemployment, inflation et cetra are symptoms of a structural weakness in the economy which is her over dependence on crude oil.
Its really despicable that the forces of demand and supply of a singular product determines the budget of a great nation as Nigeria which has so many sectors. This is true as a large chunk of the nation’s budget has yearly since the discovery of oil being based on the price of oil in the international market. The devastating aspect of this is that, it makes the economy unpredictable and susceptible to instability. This shows how problematic a monotonous economy can be especially when the financial source is one which the government has no direct control over the price. Aside from the the already mentioned demerits, its easier to have a higher level of poverty and a state of inequality in resource distribution in a monotonous economy than in other economies. Obviously the agitation by the original producers of such finance source will be for a preferential treatment in issues such as resource allocation and distribution(the Nigeria’s Niger delta agitations).
Unemployment is also another consistent problem common with the economy of most monotonous economies as its often at a hiking rate majorly because of the limited supply of job opportunities provided by the economy.
It will be assumptions to say the governments of the so many countries practicing monotonous economy are ignorant of the many ways of handling the issues of a monotonous economy however, for reasons best known and explained by them they have not being able to use those mediums.
Diversification for instance is a practical step towards handling the issues of a monotonous economy. This widens up the streams of income in an economy and boosts investment opportunities and inherently job opportunities and economic growth.
Promotion and support of domestic products is another critical approach for controlling and subsequently eliminating the adverse effects of a monotonous economy. But the overdependence on imported goods (capital and consumer goods) over the years has being alarming in so many monotonous economy.this is why it is quite difficult to diversify in such economies because all the basic needs seems to be in supply although at a higher price.
Creation of an enabling environment for production activities will also help in eliminating the effect of a monotonous economy.
All these approaches can best be put in place when the government has seen the need to eliminate a monotonies economy otherwise it remains a common theoretical information.

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Posted by on January 17, 2016 in Economy with Julius


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