Relationship Between Savings and Investment in the Nigerian Economy

Introduction Interests in the study of scotchal harvest-feast and development have been on the increase curiously since the middle of the cave in century. Economic growing results in the expansion of a countrys yield possibility curve such(prenominal) that the potential take of the country is increased beyond the previous levels. Thus growth is often delineate in terms of a sustained increase in the historical per capita income of a country.Simon Kuznets in (Todaro, 1885), defined a countrys frugal growth as a long term rise in the dexterity to supply increasingly diverse economic goods to its population, this growing capacity based on advanced technology and the institutional and ideological adjustments that it demands. evolution is in that locationfore measurable and objective. It pulls expansion in capital, in the labour force, in come onput, income, consumption e. t. c.It should be noted that economic growth is mosttimes utilize interchangeably with economic dev elopment. A distinction of the two was however make by (Jhingan, 1976) where he defined economic development as the non-quantifiable quantify of the growing economy i. e. the economic, cordial and other changes that lead to growth such as changes in techniques of production, social attitudes and institutions e. t. c. No matter the distinction what is strategic in the words of (Iyoha, 1996) is that there is no development without growth.One point that essential be mentioned however is that in practice, economic growth is used to describe the process of growth in advanced industrialized countries time economic development is used to describe the dynamics of growth in gloomy income non-industrialized countries. This locate is buttressed by (Romer, 2001), where he posited that over the past hardly a(prenominal) centuries, standard of living in industrialized countries has reached levels almost unimaginable to their ancestors.He confirm that although comparisons are difficult, t he best available evidence suggests that average real income right away in the United States and Western Europe are between 10 and 30 times larger than a century ago, and between 50 and 300 times larger than two centuries ago. Following from the above, Kuznets identified six-spot characteristics of modern economic growth. These are High rate of growth of per capita output and population. High rate of increase in total factor productivity, especi in ally labour. High rate of structural transformation of the economy. High rate of social and ideological transformation. Outward expansion of the developed economies i. e. the ability to reach out to the rest of the world for raw materials and markets. The international flow of men, goods and capita. It then follows that for all these to be achieved especially for a developing economy like Nigeria some economic variables within the context of the features of the Nigerian economy must be marked upon to achieve these status mentioned above.Statement of research problem So legion(predicate) blurred visions about the projection of Nigerian economy have been seen by the operators of the Nigerian economy. In the days of Abacha administration between 1993 and 1997, it was vision 2010 as led by former Head of State, Ernest Shonekan. 2010 is around the corner and nada seems to have changed the last 15years. Another journey is being embarked upon by Yaradua and his economic team. The mission of making Nigeria one of the biggest 20 economies in the world by 2020, vision 2020-20.Whether this is achievable or not is best left for fight for scholars of economics. But if one must follow the position of Robert Solow (1956), the Ramsey-Cass-Koopman model (1928, 1965, 1965) and the infield model (1965), achieving the above is a function of thorough understanding of production function of a given economy. Nigeria like most countries is blessed with teeming human and natural resources, yet the economy is still groping with p roblems.Evidence is palpable that apart from income from sales of crude oil, the nation is close to zero in terms of technological advancement. The reason for this is no other than that the much involve enthronisation to motivate technological advancement and industrialization is not forthcoming. The position of the government immediately after independence to embark upon import heterotaxy as an industrialization strategy did not equally help matter.If investment is a catalyst for industrialization and hence economic growth, investment is make possible by another catalyst in savings. Over the years, there has not been any synergy between savings and investment in Nigeria. This problem is because of little emphasis partakers in the running of the economy are giving financial intermediation. It is in a country like Nigeria where the borrowers run supreme at the expense of the lender.The deposit rates to the supplier of bills from the surplus building blocks are not only meager but pittance, magic spell the lending rates collected from the users of fund in the deficit unit is astronomical. So it is the issue of cutting the depositors with knifes edge spot cutting the borrower with razors edge. Savings is not encouraged while investment is discouraged. Economic activities slowed down, productivity neglected while economic growth in the real sense of it is stagnant.