I spent a good part of Wednesday reading Development Economics by Professor Debraj Ray. Debraj Ray is one of the few scholars focusing on development economics. And development economics is the aspect of economics that analyses how developing countries are different and how they can achieve sustainable economic development that will catapult them into the developed countries category.
His book was a huge eye opening for me on why Nigeria is where it is today and what are the most important issues for us to tackle if we want to transition from a low-income developing country into a high-income developed country status.
He carefully explained that the biggest problems developing countries have are weak systems -- political, market and infrastructural. That this lack of systems set off a vicious cycle that create inefficiencies and a wide gap between the have's and have not's.
That the absence of a strong independent legal system put justice out of reach of the common man and undermines the police system. People would rather sort out their issues in crude ways than let the police and legal systems be involved.
That the absence of credit markets, developed insurance markets and commodity markets create an inefficient agricultural sector where there is a very wide gap between what farmers make and what consumers pay at the final consumption end. This limits the transitioning of the subsistence farmer to a bigger and mechanized farmer as he is left with barely enough profit to cater for his family let alone acquire more land and high-tech equipment.
And the pattern continues through the health sector, financial sector, education sector and other critical sectors of the economy.
Without strong systems developing nations get stuck.