Solution to the Problem of National Development will be discussed in this article. This will tackle the development problem in Nigeria.
Read Also: Solutions to Poverty in Nigeria
When there is a change in technological and institutional factors which causes a shift in labor from agriculture to modern manufacturing, shift from of the nation’s wealth from low productivity to the modern industrial and services sectors having higher levels of productivity in labor and services sectors which generates nation-sustaining growth of output, there is said to be National development.
Along with this change in the distribution of the nation’s labor force, there occurs a change in the composition of national income in which percentage contribution of agriculture to national income declines, percentage contributions to the national income of industrial and services sectors increase.
This occurs due to the change in the pattern of consumption of the people as the economy grows and people’s income increases as well as due to the changes in levels of productivity in the different sectors of the economy.
A major solution to the problem of National development is breaking the vicious circle of poverty. In any nation where the rate of saving has been very low, it shows that the nation saves a very small proportion of its current national income.
When the level of saving is low compared to their level of national income and per capita income, it shows that much of the income is consumed and little is left for investment purposes.
In order to break the vicious circle of poverty and bring about National Development, an important thing to be noted is that the nation’s rate of saving and investment can be increased without the reduction in consumption.
With a given rate of saving and investment, some rate of economic growth, and as a result, some increment in income must be occurring in this nation.
If out of this in income proportionately greater part is saved, the rate of saving of the economy will rise.
The sum and substance of the argument are that in any nation in order to maintain national development, the rate of investment and capital formation can be stepped up even without a reduction in the consumption of the people, provided the marginal rate of saving is kept higher than the average rate of saving even though the current average rate of saving is low.
Read Also: Solutions to Economic Recession in Nigeria
To break the vicious circle of poverty as a solution to National development, if the investment is made in only one particular nation, it is likely to fail to owe to low income and low purchasing power of the people.
This is because investment in a particular country does not raise the income of other nations outside that nation. If the income of the nation outside, does not raise the demand for the product of the other nation, therefore the productive capacity of that nation in which allocation is not made will not be fully utilized.
As a result of this, larger investment in it may not be profitable in due time and this will have an adverse effect on national development.
Conversely, if the investment is made in several nations simultaneously, then the nation will become consumers of each other’s products, and will thus create demand for the other.
National development can be solved further with high per-capita income, less dependence on agriculture, sufficient capital and high rate of capital formation, reduced population growth nationally, the supply of a natural resource, and technological progress which boosts national development.