Effect of Foreign Direct Investment on Nigerias Development

Effect of Foreign Direct Investment on Nigerias Development Chapter One 1.1 Introduction The drying up in the early 1980’s of commercial bank lending to developing economies made most countries eased restriction on foreign direct investment (FDI) and many aggressively offered tax incentives and subsidies to attract foreign capital (Aitken  and Harrison, 1999). Private capital flow to emerging market economies reached almost $200 billion in 2000. This is almost four times larger than the peak commercial bank lending years of the 1970’s and early 80’s. FDI now accounts for over sixty percent of private capital flow (Levine and  Carkovic, 2002). However, while the explosion of FDI flow remains unmistakable, the growth effect remains unclear. Foreign direct investment (FDI) has been a topic high on the policy agenda in emerging markets. This is due to the contributions FDI make to a country’s external financing and economic growth. The extent of regulation of FDI and other form of capital flow are also issues policymakers take a stand on and economic research has devoted a large effort to these issues. The experience of small number of fast-growing East Asian newly industrialized economies (NIEs), and recently china, has strengthened the belief that attracting FDI is needed to bridging the resource gap of low-income countries and avoiding further build-up of debt while directly tackling the cause of poverty (UNCTAD, 2005). Even though the Asian crisis sounded a cautionary note to premature financial liberalization the call for more accelerated pace of opening up FDI have intensified on the assumption that this will bring not only more stable capital inflow but also greater technological know-how, higher paying jobs, entrepreneurial and workplace skills and new export opportunities (Prasad  et  al., 2003). The increased importance of FDI has brought about international relationships, trade and policies materializing into export and imports between nations. This in turn results financial rewards to host countries. Policy makers across the region of Africa have hoped that attracting FDI with the bait of high tariff protection and generous incentives packages would provide the catalyst for a â€Å"late industrialization† drive (Thandika, 2001). The debt crises in the early 80’s and policies introduced by several countries in Africa also witnessed increased FDI as necessary for economic development. The pursuit of responsible macroeconomic policies combined with an accelerating pace of liberalization, deregulation and above all privatization were expected to attract FDI to Africa (WorldBank, 1997).  However, the record of the past two decades with respect to reducing poverty and attracting FDI as a result of policy changes has been disappointing at best (Ayanwale, 2007). The importance of FDI varies across different sector in the recipient countries. However, in all major country groups, the extractive sector accounts for a significant share of inflow of FDI: for example, Australia, Canada and Norway among developed countries; Botswana, Nigeria and South Africa in Africa; Bolivia, Chile, Ecuador and Venezuela in Latin America and the Caribbean; and Kazakhstan in South-East Europe and the  CIS  (UNCTAD, 2006a). The important of this sector is due to the fact that oil and gas are crucial to the contemporary global economy and their prices are key components of economic forecasts and performance. Crude oil and refined petroleum products constitute the largest single item in international trade, whether measured by volume or value (Steven, 2005). Thus, oil and gas are strategic resources in national, regional and global economies. Despite this significant and strategic influence, empirical evidence suggests that oil and gas abundant economies are among the least growing economies (Sachs and Warner, 1997,  Gelb, 1988, Stevens, 1991, Steven, 2005). This phenomenon is often conceived within the prisms of the â€Å"resource curse† and â€Å"Dutch disease†. Both of which are manifestations of inefficient utilization of resources rather than the inevitable outcome of the availability of oil and gas resources.  The impact of FDI on economic growth of recipient country has been one of varying opinions among authors. A huge literature exists concerning different effects of foreign investment on economic development in a recipient economy. Currently FDI sustains the most dynamic development in the world economy in comparison with other forms of foreign financing (De Gregorio, 1992). Most theoretical and empirical findings (see chapter 3) imply that FDI has a strong positive growth impact on the recipient economy. Within the African context, the Nigerian economy is a unique case, not because it is a developing economy and is quite large, but because during last 15 years the country has not managed to attract significant amounts of FDI (Asiedu, 2002). Typically investment risks are so high in Nigeria that only high profits in export oriented extractive industries (e.g. fuel industry) have attracted much foreign direct investment. This sector exerts a prominent influence on the economy as a key revenue earner. While oil and gas resources have very high revenue yields due to increasing international demand the question of aggregate FDI impact on economic growth remains an open question. This paper attempts to find some answers.   Over the last decade, the Atlantic Ocean off the coast of Western and Southern Africa has become one of the most promising oil exploration areas in the world with a convergence of interest between African governments, multinational oil companies, international Financial Institutions  (Jerome  et  al., 2007). Nigeria falls among the six countries which have become key players in the world of energy stake. However, the economic record and lived experience of mineral-exporting countries has generally been disappointing. The World Bank classification of Highly Indebted Poor Countries include: twelve of the world 25 most mineral dependent states and six most oil dependent. When taken as a group, all â€Å"petroleum rich† less developed countries has witnessed erosion in their living standards and many rank bottom one-third of United Nations Human Development Index. In addition to poor growth records and entrenched poverty, they are also characterized by high level of corruption and a low prevalence of democratization  (Jerome  et  al., 2007).† 1.2 FDI Defined Various classifications have been made of foreign direct investment. For instance, FDI has been described by the Balance of Payment Manual 5th  edition (BPM5) as a category of international investment that reflects the objective of a resident in one economy (the direct Investor) obtaining a lasting interest of a resident in another economy (the direct investment enterprise). The lasting interest implies the existence of a long-term relationship between the direct investor and the direct investment enterprise and a significant degree of influence by the investor on the management of the enterprise. A direct investment relationship is established when the direct investor has acquired 10 percent or more of the ordinary shares or voting power of an enterprise abroad (IMF, 1993). This comprises not only the initial transaction establishing the FDI relationship between the direct investor and the direct investment enterprise but all subsequent capital transactions between them and among affiliated enterprises resident in different economies (Patterson  et  al., 2004). Once a firm undertakes FDI, it becomes a  multinational enterprise  (MNEs). Policymakers believe that foreign direct investment produces positive effects on host economies. Some of these benefits are in the form of  externalities  and the adoption of foreign technology which could be in the form of licensing, agreements, imitation, employee training and the introduction of new processes by the foreign firms (Alfaro  et  al., 2004). Multinational enterprises are said to diffuse technology and management know-how to domestic firms (Tang  et  al., 2008). FDI is conventionally used as a proxy to measure the extent and direction of  MNE  activities (Jones, 1996). Like any other business,  MNEs  have a major objective of maximizing profit and reducing costs. Hence,  MNEs  consider regions with higher returns on investment and enabling environment for business success. This is one of the reasons for more FDI in some places than others. Accordingly  MNE  will invest higher in regions that provide the best mix of the traditional FDI determinants (Berg, 2003). The motivation for investment by multinationals in certain countries much more than others  is discussed elaborately in chapter three 1.3. Background The involvement of  MNEs  (through FDI) in extractive industries has had a chequered history. In the early twentieth century, these industries accounted for the largest share of FDI, reflecting the international expansion of firms from the colonial powers. With a growing number of former colonies gaining independence after the Second World War, and the creation of the Organization of the Petroleum Exporting Countries (OPEC) in 1960, the dominance of these  MNEs  s declined, as did the share of extractive industries in global FDI. From the mid-1970s, in particular, the share of oil, gas and metal mining in world FDI fell steadily as other sectors grew much faster. However, as a result of rising mineral prices, the share of extractive industries in global FDI has recently increased, although it is still much lower than those of services and manufacturing. It is therefore an opportune timeto revisit the impact of FDI into theextractive industries has on economic development. Measuring the effect of FDI on economic growth occupies a substantial body of economic literature. Many theoretical and empirical studies have identified several channels through which FDI may positively or negatively affect economic growth (Akinlo, 2003,  Mello, 1997). Not many studies have reported on the effects of FDI in Africa and most existing studies have concentrated on economies with high FDI in the manufacturing industries unlike economies with high FDI inflow in the extractive sector (as the case of Nigeria). Several factors suggest that the indirect benefits of FDI maybe less in extractive sector especially oil industries. Reasons given for this are that: firstly, the extractive sector (such as oil  sub-sector) is often an enclave sector with little linkages with the other sectors. Secondly, the knowledge and technology embedded in the sector is extremely capital intensive and so transfer of knowledge and technology maybe less. Also, the capital requirement and large economies of scale may not attract new entrants into the sector as in the manufacturing sector.  Furthermore, not all sector of the economy have the same potential to absorb foreign technology or create linkages with the rest of the economy (Hirschman, 1958).  Finally, sales in this sector are foreign market oriented and require fewer input of materials and intermediate goods from local suppliers. Hence will have less forward and backward linkages  (Akinlo, 2004). The  sensitivity of project to world commodity pric e also make it been view as a volatie sector (WorldBank, 2005) Given the pattern of foreign direct investment flow to Nigeria (mostly in oil and gas sector) and the angst-ridden as regards the benefits from the extractive FDI, it is apposite to examine empirically the situation in Nigeria. This constitutes the objective of this research. An analysis of this will be done for the period between 1980 and 2006 1.4  Overview of Foreign Direct Investment 1.5  Natural Resources and Economic Development Since the 1950’s, economists have been concerned that economies dominated by natural resources would somehow be disadvantaged in the drive for economic progress. In the 1950’s and 1960’s, this concern was based upon deteriorating terms of trade between the â€Å"centre† and â€Å"periphery† (Prebisch, 1964) coupled with concern over the limited economic linkages from primary product exports to the rest of the economy (Hirschman, 1958). In the 1970’s, it was driven by the impact of the oil shocks on the oil exporting countries (Wijnbergen  and Van, 1986,  Mabro  and Monroe, 1974). In the 1980’s, the phenomenon of â€Å"Dutch Disease† (the impact of an overvalued exchange rate on the non-resource traded sector) attracted attention (Corden, 1984). Finally in the 1990’s, it was the impact of revenues from oil, gas and mineral projects on government behaviour that dominated the discussion (Stevens, 1991,  Gelb, 1988). The common thread running through these concerns is that the development of natural resources should generate revenues to translate into economic growth and development. Thus the revenues accruing to the economies should provide capital in the form of foreign exchange overcoming what was seen as a key barrier to economic progress. This could be explained both in terms of common sense (more money means a better standard of life) and development theories the requirement for a â€Å"big-push† (Murphy  et  al., 1989), capital constraints (Lewis, 1955,  Rostow, 1960) and dual-gap analysis (Shibley  and  thirlwall, 1981). However, the reality appeared to be the reverse. Countries with abundant natural resources appeared to perform less well than their more poorly endowed neighbors. Thus the term â€Å"resource curse† began to enter the literature (Vanderlinde, 1994). More recently there has been a revival of interest in the phenomenon of â€Å"resource curse†. Furthermore, this has drawn the attention of a much wider audience than previously. Growing concern among a number of non-governmental organizations (NGO’s) regarding the negative effects of oil, gas and mineral projects on developing countries has had several effects. It has forced the World Bank group to consider their role in such projects. This has culminated in the creation of â€Å"the Extractive Industry Review† based in Jakarta to consider whether the World Bank Group should, as a matter of principle, have any involvement with such projects. Disagreement within and between the World Bank and the IMF have further fuelled the debate over how such revenues should be managed.   NGO  concern has also encouraged the more responsible petroleum and mineral corporations to consider the impact of their investment in such projects on the countries concerned. However, in the literature that has focused on â€Å"resource curse†, there are references to countries that allegedly managed to avoid a â€Å"curse† and instead received a â€Å"blessing†. For example, even the report produced by  Oxfam  America (Ross, 2001) which is strongly negative towards such projects, states †¦ â€Å"There are exceptions: some states with large extractive industries – like Botswana, Chile and Malaysia – have overcome many of the obstacles †¦ and implemented sound pro-poor strategies†. There are similar references elsewhere to â€Å"success† stories – Botswana (Hope, 1998, Love, 1994), Chile (Schurman, 1996), Indonesia (Usui, 1996), Malaysia (Rasiah  and Shari, 2001), and Norway (Wright and  Czelutsa, 2002). Nigeria is Africa’s most populous country with close to 132 million inhabitants. However, approximately 55% of the population lives on less than the value of one US dollar per day. The Nigerian economy depends heavily on the oil sector, which contributes 95% of export revenues, 76% of government revenues and about a third of gross domestic product. Before the establishment of democracy in 1999, the country was governed by military generals, under whose rule Nigeria’s economic performance had taken a beating for 15 consecutive years (Datamonitor, 2007). Nigeria has a dual economy with a modern segment dependent on oil earnings, overlaid by a traditional agricultural and trading economy. At independence in 1960 agriculture accounted for well over half of GDP, and was the main source of export earnings and public revenue. The oil sector, which emerged in the 1960s and was firmly established during the 1970s, is now of overwhelming importance to the point of over-dependence. Undoubtedly, Africa and indeed Nigeria is facing an economic crises situation featured by inadequate resources for long-term development, high poverty level, low capacity utilization, high level of unemployment and other Millennium Development Goals (MDGs) increasingly becoming difficult to achieve by 2020. Foreign direct investment has assumed prominent place in her strategy as a way of boosting economic rival and growth. It is also seen by policy makers at all levels as a way of bridging the resource gap of the country and avoiding further debt build-up (UNCTAD, 2005). This has brought about several changes in policy and regulations in order to encourage foreign investor to invest in the country. Other measures include – the liberalization of the foreign investment regime to allow major foreign ownership, lifting foreign exchange controls and the privatization of Nigeria’s public enterprises. This research is aimed to take an in-depth analysis of the major private capital flow foreign direct investment to a growing economy; Nigeria. This investment trend will be narrowed down to the extractive sector and in particular the oil and gas sector with the aim of investigating how investment in this sector translate to economic growth. 1.6 Research Gap During the last decade, a number of interesting studies in the role of foreign direct investment in stimulating economic growth has appeared. Several authors have observed that the major reason for increased effort in attracting more FDI has been stemmed from the belief that FDI has several positive effects (Levine and  Carkovic, 2002, Caves, 1996). In contributing to the importance of FDI, it has also been shown that FDI is three times more efficient than domestic investment (De-Gregorio, 2003). Available evidence for developed countries seems to support the idea that productivity of domestic firms is positively related to the presence of foreign firms (Globerman, 1979). The result for developing countries are not clear, with some finding positive spillover (Blomstrom, 1986,  Kokko, 1994), and others reporting limited evidence (Aitken  et  al., 1997). Earlier studies on FDI showed that target countries receive very few benefits and in most cases negative effect on economic growth (Singer, 1950;  Prebisch, 1968;  Saltz, 1992;  Bos  et  al., 1974 cited in (Katerina  et  al., 2004). A positive  effect is only contingent on the ‘absorptive capacity’ of the host country  (Durham, 2004).  Many research have shown that FDI stimulates economic growth (Borensztein  et  al., 1998, Amy Jocelyn and  Kamal, 1999) as seen in china’s economic growth (Dees, 1998 cited in (Ayanwale, 2007) and Latin American countries (Mello, 1997) showing that inflow of capital brings about increase in investment level. FDI has also been shown to have both a positive and negative effect on economic development depending on the variables[1]  that are used along side the test equation  (UNCTAD, 1998; 1999). Its effect has also been more positively acclaimed in countries with higher institutional capabilities (Olofsdotter, 1998) and economically less advanced countries (like Philippines and Thailand) but negatively on more economically advanced countries like Japan and Taiwan (Bende-Nabende  and Ford, 1998). In essence, the impact FDI has on growth of any economy may be country an period specific and as such there is a need for country specific studies. Several studies have shown varying relationship between FDI and economic growth in Nigeria. For example,  Odozi  (1995)  study showed that Structural Adjustment Policies (SAP hereafter) of Nigeria contributed to the FDI-growth relationship. He revealed that macro-policies before SAP discouraged foreign investors.  Ogiogo  (1995) reported a negative contribution of public investment to GDP growth for the reason of distortion. However, positive linkage effect of FDI-growth relationship was shown by  Aluko  (1961). Private domestic investment was also shown by  Ariyo  (1998)  to contribute positively to raising GDP-growth rate for the period 1970-1995. Oyinlola  (1995) using  Chenery  and Stout’s two-gap model found a positive relationship between FDI and economic growth.  Ekpo  (1995) using time series data revealed that political regime, real income per  capita, inflation rate, credit rating and debt service were key factors explaining variability  in FDI into Nigeria. Using unrelated regression model, FDI was shown to be pro-consumption and pro-import hence showing a negative relationship to domestic investment (Adelegan, 2000 cited in  Ayanwale, 2007) and statistically insignificant effect was shown for FDI-growth (Akinlo, 2004). More recent findings by  Ayanwale  (2007) revealed that FDI contributes positively to Nigeria’s economic growth with the communication sector accounting for the highest potential to grow that economy. He also opined that FDI in the manufacturing sector has a negative relationship with economic growth suggesting that the business climate is not healthy enough for the manufacturing sector to thrive and contribute to positive growth. Crude oil discovery and exploration has been said to have both positive and negative effect on Nigeria. The negative side is seen in term of the environmental degradation, deprived means of livelihood and other economic and social factors experienced by surrounding communities where the oil wells are exploited while the positive side is viewed from the large proceeds from domestic sale and export of petroleum products. However, its effect on the growth of the Nigerian economy as regards returns and productivity is still questionable (Odularu, 2007). This review shows that the debate on the impact of FDI on economic growth is far from being conclusive. The role of FDI can be country specific and its relationship with growth can either be positive, negative or insignificant depending on the macroeconomic dispensation (economic,  institutional  and  technological  conditions) in the recipient country (Zhang, 2001). Even though none of these studies controlled for the fact that must of the FDI was concentrated in the extractive industry, they did not specifically investigate the relationship between oil-FDI and economic growth. This is the focus of this study. 1.7 Research Objectives and Questions Few research on FDI into Sub-Saharan Africa have shown empirical evidence of FDI and economic growth as ambiguous (Ayanwale, 2007). In theory FDI is believed to have several positive effects on the economy of host country (such as productivity gains, technology transfers, the introduction of new processes, managerial know-how and skills, employee training etc), promoting its growth and in general, a significant factor in modernizing the host country’s economy (Katerina  et  al., 2004). However, there is no clear understanding of its contribution to growth (Bora, 2002). This research was driven by the following questions: Has foreign direct investment into Nigerian oil and gas sector brought about economic development? What is the transmission mechanism through which FDI brings about growth 1.8 Methodology 1.9 Dissertation Outline The rest of the paper is organized as follows: Chapter Two: This chapter is the literature review and shall be discussed in three subsection. The first two sections shall seek to review the theories and motivation for Foreign direct investment and the third section deals with the theoretical and analytic review of literature on FDI Growth linkages. This shall seek to answer the question on the mechanism through which FDI result in economic growth. Chapter Three: This chapter discusses the case study Nigeria and reviews the contribution performance and challenges of the oil and gas sector in Nigeria. Also, the impact of this sector on economic growth is discussed. Chapter Four: The methodology and theoretical framework for the analysis is the objective of this chapter. This section discusses the research approach and data collection mode. The variables for analysis and the model for shall be derived. Chapter Five: Data Analysis of the result and findings shall be the aim of this chapter. Chapter Six: This chapter shall form the conclusion of the research and give a summary of the findings, suggestion for improving economic growth in Nigeria and recommendation for further study. Chapter Three Literature Review 3.0 Introduction Foreign direct investment is in general motivated by both â€Å"pull† and â€Å"push† factors. The push factors are external to developing countries and focuses majorly on growth and financial market conditions in industrial countries. On the other hand, the pull factors are dependent (on a lot of factors) domestic policies and characteristics of host countries. While the push factors determine the totality of available resources, the push factors determine its allocation between countries (Ajayi, 2004). The diversity of theoretical and empirical explanations for the impact and influence of FDI (and growth) is without doubt very rich. Many studies among others have emphasized conducive macroeconomic policy, increased liberalization of markets, large domestic markets, liberal trade regime, low labour cost, availability of natural resources, good infrastructure and investment in human capital (bring about an educative workforce) (Ajayi, 2003). This review therefore draws from many of these works with the particular aim of providing an understanding of the theoretical and empirical background, views and present thought on the relationship between FDI and economic growth. The discussion shall be presented in three sections. The first two sections shall discuss the theories and motivation for FDI and the third section involves theoretical and empirical review of the literature of FDI and economic growth from four perspectives: trade or export (openness), linkages and spillover effect, knowledge and technology transfer and human capital. 3.1 Theories of FDI FDI can take the form of a Greenfield investment in a new facility or an acquisition of or merger with an existing local firm. Majority of cross-border investment is in the form of merger and acquisition rather than Greenfield investments. According to estimates by United Nations, 40 to 80 percent of all FDI inflows between 1998 and 2005 were in the form of mergers and acquisition (Hill, 2009). However, FDI flows into developed nations are different from those of developing nations. For developing nations only about one- third of FDI is in the form of cross-border merger and acquisition. This may simply reflect the fact that there are fewer firms to acquire in developing nations (Hill, 2009). For the purpose of this research, I have concentrated on two theories of FDI which are relevant to the study. The first perspective explains why firms in the same industry often undertake FDI at the same time and why certain locations are favoured over others (i.e. the observed pattern of FDI). The second is known as the eclectic paradigm. This perspective is eclectic because it combines the best aspects of other theories into a single explanation. In proceeding with the discussion, we define some terms. When goods are produced at home and then shipped to the receiving country for sale, it is known as exporting. The process of granting a foreign entity (the licensee) rights to produce and sell the firm’s product in return for a royalty fee on every unit sold is known as Licensing. Foreign direct investment has been view as an expensive and risky venture compared to exporting and licensing. This is because firms bear the cost of establishing production facilities in a foreign country or acquiring a foreign enterprise and the risk of doing business in countries with different culture. In exporting, firms need not bear cost associated with FDI and risk can be reduced by the use of local sales agents. Similarly, under licensing, the licensee bears the cost and risks. However, it is worth noting in summary that firms will choose FDI over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive. Furthermore, firms will favor FDI over licensing (or franchising) when it wishes to maintain control of technological know-how or over its operations and business strategy or when firm’s capabilities are simply not amenable to licensing (Hill, 2009). 3.1.1 The Pattern of FDI 3.1.1.1 Strategic Behaviour The idea that FDI flow reflects strategic rivalry between firms in the global marketplace is the basis for one of the theories of FDI. In studying the relationship between FDI and rivalry in oligopolistic industries F. T. Knickerbocker proposed a variation to this argument. An oligopoly is an industry made up of a small number of large players (for example, an industry in which four firms control 80 percent of a domestic market). One key features of such market is the interdependence of major players: the action of one firm have immediate impact on the major competitors, forcing a response in kind. This interdependence leads to imitative behaviour; rivals are usually quick to imitate opponents in and oligopoly – â€Å"the bandwagon effect†. Imitative behaviour can take many forms in an oligopoly. Some good examples are price war and capacity increase. Rivals imitate lest they be left at a disadvantage in the future. F. T. Knickerbocker argued that the same kind of imitative behaviour characterizes FDI. Although Knickerbockers’ theory and its extensions can help to explain imitative FDI behaviour by firms in oligopolistic industry, it does not explain the choice and efficiency of FDI over exporting or licensing. This is explained by the internalization theory. 3.1.1.2 The Product Life Cycle Theory The product life cycle theory was proposed by Raymond Vernon in the mid-1960s and was based on the observation that for most of the 20th century, a very large proportion of the world’s new products had been developed by U.S. firms and sold first in the U.S. market (e.g. automobiles, photocopiers, televisions and semiconductor chips). Vernon opined that the wealth and size of the U.S. market gave U.S. firms a strong incentive to develop new consumer products and the high labour cost also gave firms in the U.S. an incentive to develop cost-saving process innovations. The theory went further to argue that early in the life cycle of a typical new product, while demand is starting to grow rapidly in the United States, demand in other advanced countries does not make it worth while for firms in those countries to start producing the new product, but it does necessitate some export from the United State to those countries. However, over time the demand for new product starts to grow in other advanced countries. As this happens, foreign producer begin to produce at home for their own market and growing demand causes U.S. firms to setup production facilities in those advanced countries. This limits the potential for export for the United States. Finally, at maturity product becomes standardized, cost consideration start to play a greater role in the competitive process and producer in advanced countries with lower labour cost than the U.S. might now begin to export to the United States. Under intense cost pressure, the cycle by which the United State lo st its advantage to other advanced countries might be repeated once more as developing countries begin to acquire a production advantage over advanced countries (Hill, 2009). The effect of these trends is that over time the United States switches form being an exporter of the product to an importer of the product as production becomes concentrated in lower-cost foreign locations. The product life cycle seems to be an accurate explanation of international trade patterns. However, the product l Effect of Foreign Direct Investment on Nigerias Development Effect of Foreign Direct Investment on Nigerias Development Chapter One 1.1 Introduction The drying up in the early 1980’s of commercial bank lending to developing economies made most countries eased restriction on foreign direct investment (FDI) and many aggressively offered tax incentives and subsidies to attract foreign capital (Aitken  and Harrison, 1999). Private capital flow to emerging market economies reached almost $200 billion in 2000. This is almost four times larger than the peak commercial bank lending years of the 1970’s and early 80’s. FDI now accounts for over sixty percent of private capital flow (Levine and  Carkovic, 2002). However, while the explosion of FDI flow remains unmistakable, the growth effect remains unclear. Foreign direct investment (FDI) has been a topic high on the policy agenda in emerging markets. This is due to the contributions FDI make to a country’s external financing and economic growth. The extent of regulation of FDI and other form of capital flow are also issues policymakers take a stand on and economic research has devoted a large effort to these issues. The experience of small number of fast-growing East Asian newly industrialized economies (NIEs), and recently china, has strengthened the belief that attracting FDI is needed to bridging the resource gap of low-income countries and avoiding further build-up of debt while directly tackling the cause of poverty (UNCTAD, 2005). Even though the Asian crisis sounded a cautionary note to premature financial liberalization the call for more accelerated pace of opening up FDI have intensified on the assumption that this will bring not only more stable capital inflow but also greater technological know-how, higher paying jobs, entrepreneurial and workplace skills and new export opportunities (Prasad  et  al., 2003). The increased importance of FDI has brought about international relationships, trade and policies materializing into export and imports between nations. This in turn results financial rewards to host countries. Policy makers across the region of Africa have hoped that attracting FDI with the bait of high tariff protection and generous incentives packages would provide the catalyst for a â€Å"late industrialization† drive (Thandika, 2001). The debt crises in the early 80’s and policies introduced by several countries in Africa also witnessed increased FDI as necessary for economic development. The pursuit of responsible macroeconomic policies combined with an accelerating pace of liberalization, deregulation and above all privatization were expected to attract FDI to Africa (WorldBank, 1997).  However, the record of the past two decades with respect to reducing poverty and attracting FDI as a result of policy changes has been disappointing at best (Ayanwale, 2007). The importance of FDI varies across different sector in the recipient countries. However, in all major country groups, the extractive sector accounts for a significant share of inflow of FDI: for example, Australia, Canada and Norway among developed countries; Botswana, Nigeria and South Africa in Africa; Bolivia, Chile, Ecuador and Venezuela in Latin America and the Caribbean; and Kazakhstan in South-East Europe and the  CIS  (UNCTAD, 2006a). The important of this sector is due to the fact that oil and gas are crucial to the contemporary global economy and their prices are key components of economic forecasts and performance. Crude oil and refined petroleum products constitute the largest single item in international trade, whether measured by volume or value (Steven, 2005). Thus, oil and gas are strategic resources in national, regional and global economies. Despite this significant and strategic influence, empirical evidence suggests that oil and gas abundant economies are among the least growing economies (Sachs and Warner, 1997,  Gelb, 1988, Stevens, 1991, Steven, 2005). This phenomenon is often conceived within the prisms of the â€Å"resource curse† and â€Å"Dutch disease†. Both of which are manifestations of inefficient utilization of resources rather than the inevitable outcome of the availability of oil and gas resources.  The impact of FDI on economic growth of recipient country has been one of varying opinions among authors. A huge literature exists concerning different effects of foreign investment on economic development in a recipient economy. Currently FDI sustains the most dynamic development in the world economy in comparison with other forms of foreign financing (De Gregorio, 1992). Most theoretical and empirical findings (see chapter 3) imply that FDI has a strong positive growth impact on the recipient economy. Within the African context, the Nigerian economy is a unique case, not because it is a developing economy and is quite large, but because during last 15 years the country has not managed to attract significant amounts of FDI (Asiedu, 2002). Typically investment risks are so high in Nigeria that only high profits in export oriented extractive industries (e.g. fuel industry) have attracted much foreign direct investment. This sector exerts a prominent influence on the economy as a key revenue earner. While oil and gas resources have very high revenue yields due to increasing international demand the question of aggregate FDI impact on economic growth remains an open question. This paper attempts to find some answers.   Over the last decade, the Atlantic Ocean off the coast of Western and Southern Africa has become one of the most promising oil exploration areas in the world with a convergence of interest between African governments, multinational oil companies, international Financial Institutions  (Jerome  et  al., 2007). Nigeria falls among the six countries which have become key players in the world of energy stake. However, the economic record and lived experience of mineral-exporting countries has generally been disappointing. The World Bank classification of Highly Indebted Poor Countries include: twelve of the world 25 most mineral dependent states and six most oil dependent. When taken as a group, all â€Å"petroleum rich† less developed countries has witnessed erosion in their living standards and many rank bottom one-third of United Nations Human Development Index. In addition to poor growth records and entrenched poverty, they are also characterized by high level of corruption and a low prevalence of democratization  (Jerome  et  al., 2007).† 1.2 FDI Defined Various classifications have been made of foreign direct investment. For instance, FDI has been described by the Balance of Payment Manual 5th  edition (BPM5) as a category of international investment that reflects the objective of a resident in one economy (the direct Investor) obtaining a lasting interest of a resident in another economy (the direct investment enterprise). The lasting interest implies the existence of a long-term relationship between the direct investor and the direct investment enterprise and a significant degree of influence by the investor on the management of the enterprise. A direct investment relationship is established when the direct investor has acquired 10 percent or more of the ordinary shares or voting power of an enterprise abroad (IMF, 1993). This comprises not only the initial transaction establishing the FDI relationship between the direct investor and the direct investment enterprise but all subsequent capital transactions between them and among affiliated enterprises resident in different economies (Patterson  et  al., 2004). Once a firm undertakes FDI, it becomes a  multinational enterprise  (MNEs). Policymakers believe that foreign direct investment produces positive effects on host economies. Some of these benefits are in the form of  externalities  and the adoption of foreign technology which could be in the form of licensing, agreements, imitation, employee training and the introduction of new processes by the foreign firms (Alfaro  et  al., 2004). Multinational enterprises are said to diffuse technology and management know-how to domestic firms (Tang  et  al., 2008). FDI is conventionally used as a proxy to measure the extent and direction of  MNE  activities (Jones, 1996). Like any other business,  MNEs  have a major objective of maximizing profit and reducing costs. Hence,  MNEs  consider regions with higher returns on investment and enabling environment for business success. This is one of the reasons for more FDI in some places than others. Accordingly  MNE  will invest higher in regions that provide the best mix of the traditional FDI determinants (Berg, 2003). The motivation for investment by multinationals in certain countries much more than others  is discussed elaborately in chapter three 1.3. Background The involvement of  MNEs  (through FDI) in extractive industries has had a chequered history. In the early twentieth century, these industries accounted for the largest share of FDI, reflecting the international expansion of firms from the colonial powers. With a growing number of former colonies gaining independence after the Second World War, and the creation of the Organization of the Petroleum Exporting Countries (OPEC) in 1960, the dominance of these  MNEs  s declined, as did the share of extractive industries in global FDI. From the mid-1970s, in particular, the share of oil, gas and metal mining in world FDI fell steadily as other sectors grew much faster. However, as a result of rising mineral prices, the share of extractive industries in global FDI has recently increased, although it is still much lower than those of services and manufacturing. It is therefore an opportune timeto revisit the impact of FDI into theextractive industries has on economic development. Measuring the effect of FDI on economic growth occupies a substantial body of economic literature. Many theoretical and empirical studies have identified several channels through which FDI may positively or negatively affect economic growth (Akinlo, 2003,  Mello, 1997). Not many studies have reported on the effects of FDI in Africa and most existing studies have concentrated on economies with high FDI in the manufacturing industries unlike economies with high FDI inflow in the extractive sector (as the case of Nigeria). Several factors suggest that the indirect benefits of FDI maybe less in extractive sector especially oil industries. Reasons given for this are that: firstly, the extractive sector (such as oil  sub-sector) is often an enclave sector with little linkages with the other sectors. Secondly, the knowledge and technology embedded in the sector is extremely capital intensive and so transfer of knowledge and technology maybe less. Also, the capital requirement and large economies of scale may not attract new entrants into the sector as in the manufacturing sector.  Furthermore, not all sector of the economy have the same potential to absorb foreign technology or create linkages with the rest of the economy (Hirschman, 1958).  Finally, sales in this sector are foreign market oriented and require fewer input of materials and intermediate goods from local suppliers. Hence will have less forward and backward linkages  (Akinlo, 2004). The  sensitivity of project to world commodity pric e also make it been view as a volatie sector (WorldBank, 2005) Given the pattern of foreign direct investment flow to Nigeria (mostly in oil and gas sector) and the angst-ridden as regards the benefits from the extractive FDI, it is apposite to examine empirically the situation in Nigeria. This constitutes the objective of this research. An analysis of this will be done for the period between 1980 and 2006 1.4  Overview of Foreign Direct Investment 1.5  Natural Resources and Economic Development Since the 1950’s, economists have been concerned that economies dominated by natural resources would somehow be disadvantaged in the drive for economic progress. In the 1950’s and 1960’s, this concern was based upon deteriorating terms of trade between the â€Å"centre† and â€Å"periphery† (Prebisch, 1964) coupled with concern over the limited economic linkages from primary product exports to the rest of the economy (Hirschman, 1958). In the 1970’s, it was driven by the impact of the oil shocks on the oil exporting countries (Wijnbergen  and Van, 1986,  Mabro  and Monroe, 1974). In the 1980’s, the phenomenon of â€Å"Dutch Disease† (the impact of an overvalued exchange rate on the non-resource traded sector) attracted attention (Corden, 1984). Finally in the 1990’s, it was the impact of revenues from oil, gas and mineral projects on government behaviour that dominated the discussion (Stevens, 1991,  Gelb, 1988). The common thread running through these concerns is that the development of natural resources should generate revenues to translate into economic growth and development. Thus the revenues accruing to the economies should provide capital in the form of foreign exchange overcoming what was seen as a key barrier to economic progress. This could be explained both in terms of common sense (more money means a better standard of life) and development theories the requirement for a â€Å"big-push† (Murphy  et  al., 1989), capital constraints (Lewis, 1955,  Rostow, 1960) and dual-gap analysis (Shibley  and  thirlwall, 1981). However, the reality appeared to be the reverse. Countries with abundant natural resources appeared to perform less well than their more poorly endowed neighbors. Thus the term â€Å"resource curse† began to enter the literature (Vanderlinde, 1994). More recently there has been a revival of interest in the phenomenon of â€Å"resource curse†. Furthermore, this has drawn the attention of a much wider audience than previously. Growing concern among a number of non-governmental organizations (NGO’s) regarding the negative effects of oil, gas and mineral projects on developing countries has had several effects. It has forced the World Bank group to consider their role in such projects. This has culminated in the creation of â€Å"the Extractive Industry Review† based in Jakarta to consider whether the World Bank Group should, as a matter of principle, have any involvement with such projects. Disagreement within and between the World Bank and the IMF have further fuelled the debate over how such revenues should be managed.   NGO  concern has also encouraged the more responsible petroleum and mineral corporations to consider the impact of their investment in such projects on the countries concerned. However, in the literature that has focused on â€Å"resource curse†, there are references to countries that allegedly managed to avoid a â€Å"curse† and instead received a â€Å"blessing†. For example, even the report produced by  Oxfam  America (Ross, 2001) which is strongly negative towards such projects, states †¦ â€Å"There are exceptions: some states with large extractive industries – like Botswana, Chile and Malaysia – have overcome many of the obstacles †¦ and implemented sound pro-poor strategies†. There are similar references elsewhere to â€Å"success† stories – Botswana (Hope, 1998, Love, 1994), Chile (Schurman, 1996), Indonesia (Usui, 1996), Malaysia (Rasiah  and Shari, 2001), and Norway (Wright and  Czelutsa, 2002). Nigeria is Africa’s most populous country with close to 132 million inhabitants. However, approximately 55% of the population lives on less than the value of one US dollar per day. The Nigerian economy depends heavily on the oil sector, which contributes 95% of export revenues, 76% of government revenues and about a third of gross domestic product. Before the establishment of democracy in 1999, the country was governed by military generals, under whose rule Nigeria’s economic performance had taken a beating for 15 consecutive years (Datamonitor, 2007). Nigeria has a dual economy with a modern segment dependent on oil earnings, overlaid by a traditional agricultural and trading economy. At independence in 1960 agriculture accounted for well over half of GDP, and was the main source of export earnings and public revenue. The oil sector, which emerged in the 1960s and was firmly established during the 1970s, is now of overwhelming importance to the point of over-dependence. Undoubtedly, Africa and indeed Nigeria is facing an economic crises situation featured by inadequate resources for long-term development, high poverty level, low capacity utilization, high level of unemployment and other Millennium Development Goals (MDGs) increasingly becoming difficult to achieve by 2020. Foreign direct investment has assumed prominent place in her strategy as a way of boosting economic rival and growth. It is also seen by policy makers at all levels as a way of bridging the resource gap of the country and avoiding further debt build-up (UNCTAD, 2005). This has brought about several changes in policy and regulations in order to encourage foreign investor to invest in the country. Other measures include – the liberalization of the foreign investment regime to allow major foreign ownership, lifting foreign exchange controls and the privatization of Nigeria’s public enterprises. This research is aimed to take an in-depth analysis of the major private capital flow foreign direct investment to a growing economy; Nigeria. This investment trend will be narrowed down to the extractive sector and in particular the oil and gas sector with the aim of investigating how investment in this sector translate to economic growth. 1.6 Research Gap During the last decade, a number of interesting studies in the role of foreign direct investment in stimulating economic growth has appeared. Several authors have observed that the major reason for increased effort in attracting more FDI has been stemmed from the belief that FDI has several positive effects (Levine and  Carkovic, 2002, Caves, 1996). In contributing to the importance of FDI, it has also been shown that FDI is three times more efficient than domestic investment (De-Gregorio, 2003). Available evidence for developed countries seems to support the idea that productivity of domestic firms is positively related to the presence of foreign firms (Globerman, 1979). The result for developing countries are not clear, with some finding positive spillover (Blomstrom, 1986,  Kokko, 1994), and others reporting limited evidence (Aitken  et  al., 1997). Earlier studies on FDI showed that target countries receive very few benefits and in most cases negative effect on economic growth (Singer, 1950;  Prebisch, 1968;  Saltz, 1992;  Bos  et  al., 1974 cited in (Katerina  et  al., 2004). A positive  effect is only contingent on the ‘absorptive capacity’ of the host country  (Durham, 2004).  Many research have shown that FDI stimulates economic growth (Borensztein  et  al., 1998, Amy Jocelyn and  Kamal, 1999) as seen in china’s economic growth (Dees, 1998 cited in (Ayanwale, 2007) and Latin American countries (Mello, 1997) showing that inflow of capital brings about increase in investment level. FDI has also been shown to have both a positive and negative effect on economic development depending on the variables[1]  that are used along side the test equation  (UNCTAD, 1998; 1999). Its effect has also been more positively acclaimed in countries with higher institutional capabilities (Olofsdotter, 1998) and economically less advanced countries (like Philippines and Thailand) but negatively on more economically advanced countries like Japan and Taiwan (Bende-Nabende  and Ford, 1998). In essence, the impact FDI has on growth of any economy may be country an period specific and as such there is a need for country specific studies. Several studies have shown varying relationship between FDI and economic growth in Nigeria. For example,  Odozi  (1995)  study showed that Structural Adjustment Policies (SAP hereafter) of Nigeria contributed to the FDI-growth relationship. He revealed that macro-policies before SAP discouraged foreign investors.  Ogiogo  (1995) reported a negative contribution of public investment to GDP growth for the reason of distortion. However, positive linkage effect of FDI-growth relationship was shown by  Aluko  (1961). Private domestic investment was also shown by  Ariyo  (1998)  to contribute positively to raising GDP-growth rate for the period 1970-1995. Oyinlola  (1995) using  Chenery  and Stout’s two-gap model found a positive relationship between FDI and economic growth.  Ekpo  (1995) using time series data revealed that political regime, real income per  capita, inflation rate, credit rating and debt service were key factors explaining variability  in FDI into Nigeria. Using unrelated regression model, FDI was shown to be pro-consumption and pro-import hence showing a negative relationship to domestic investment (Adelegan, 2000 cited in  Ayanwale, 2007) and statistically insignificant effect was shown for FDI-growth (Akinlo, 2004). More recent findings by  Ayanwale  (2007) revealed that FDI contributes positively to Nigeria’s economic growth with the communication sector accounting for the highest potential to grow that economy. He also opined that FDI in the manufacturing sector has a negative relationship with economic growth suggesting that the business climate is not healthy enough for the manufacturing sector to thrive and contribute to positive growth. Crude oil discovery and exploration has been said to have both positive and negative effect on Nigeria. The negative side is seen in term of the environmental degradation, deprived means of livelihood and other economic and social factors experienced by surrounding communities where the oil wells are exploited while the positive side is viewed from the large proceeds from domestic sale and export of petroleum products. However, its effect on the growth of the Nigerian economy as regards returns and productivity is still questionable (Odularu, 2007). This review shows that the debate on the impact of FDI on economic growth is far from being conclusive. The role of FDI can be country specific and its relationship with growth can either be positive, negative or insignificant depending on the macroeconomic dispensation (economic,  institutional  and  technological  conditions) in the recipient country (Zhang, 2001). Even though none of these studies controlled for the fact that must of the FDI was concentrated in the extractive industry, they did not specifically investigate the relationship between oil-FDI and economic growth. This is the focus of this study. 1.7 Research Objectives and Questions Few research on FDI into Sub-Saharan Africa have shown empirical evidence of FDI and economic growth as ambiguous (Ayanwale, 2007). In theory FDI is believed to have several positive effects on the economy of host country (such as productivity gains, technology transfers, the introduction of new processes, managerial know-how and skills, employee training etc), promoting its growth and in general, a significant factor in modernizing the host country’s economy (Katerina  et  al., 2004). However, there is no clear understanding of its contribution to growth (Bora, 2002). This research was driven by the following questions: Has foreign direct investment into Nigerian oil and gas sector brought about economic development? What is the transmission mechanism through which FDI brings about growth 1.8 Methodology 1.9 Dissertation Outline The rest of the paper is organized as follows: Chapter Two: This chapter is the literature review and shall be discussed in three subsection. The first two sections shall seek to review the theories and motivation for Foreign direct investment and the third section deals with the theoretical and analytic review of literature on FDI Growth linkages. This shall seek to answer the question on the mechanism through which FDI result in economic growth. Chapter Three: This chapter discusses the case study Nigeria and reviews the contribution performance and challenges of the oil and gas sector in Nigeria. Also, the impact of this sector on economic growth is discussed. Chapter Four: The methodology and theoretical framework for the analysis is the objective of this chapter. This section discusses the research approach and data collection mode. The variables for analysis and the model for shall be derived. Chapter Five: Data Analysis of the result and findings shall be the aim of this chapter. Chapter Six: This chapter shall form the conclusion of the research and give a summary of the findings, suggestion for improving economic growth in Nigeria and recommendation for further study. Chapter Three Literature Review 3.0 Introduction Foreign direct investment is in general motivated by both â€Å"pull† and â€Å"push† factors. The push factors are external to developing countries and focuses majorly on growth and financial market conditions in industrial countries. On the other hand, the pull factors are dependent (on a lot of factors) domestic policies and characteristics of host countries. While the push factors determine the totality of available resources, the push factors determine its allocation between countries (Ajayi, 2004). The diversity of theoretical and empirical explanations for the impact and influence of FDI (and growth) is without doubt very rich. Many studies among others have emphasized conducive macroeconomic policy, increased liberalization of markets, large domestic markets, liberal trade regime, low labour cost, availability of natural resources, good infrastructure and investment in human capital (bring about an educative workforce) (Ajayi, 2003). This review therefore draws from many of these works with the particular aim of providing an understanding of the theoretical and empirical background, views and present thought on the relationship between FDI and economic growth. The discussion shall be presented in three sections. The first two sections shall discuss the theories and motivation for FDI and the third section involves theoretical and empirical review of the literature of FDI and economic growth from four perspectives: trade or export (openness), linkages and spillover effect, knowledge and technology transfer and human capital. 3.1 Theories of FDI FDI can take the form of a Greenfield investment in a new facility or an acquisition of or merger with an existing local firm. Majority of cross-border investment is in the form of merger and acquisition rather than Greenfield investments. According to estimates by United Nations, 40 to 80 percent of all FDI inflows between 1998 and 2005 were in the form of mergers and acquisition (Hill, 2009). However, FDI flows into developed nations are different from those of developing nations. For developing nations only about one- third of FDI is in the form of cross-border merger and acquisition. This may simply reflect the fact that there are fewer firms to acquire in developing nations (Hill, 2009). For the purpose of this research, I have concentrated on two theories of FDI which are relevant to the study. The first perspective explains why firms in the same industry often undertake FDI at the same time and why certain locations are favoured over others (i.e. the observed pattern of FDI). The second is known as the eclectic paradigm. This perspective is eclectic because it combines the best aspects of other theories into a single explanation. In proceeding with the discussion, we define some terms. When goods are produced at home and then shipped to the receiving country for sale, it is known as exporting. The process of granting a foreign entity (the licensee) rights to produce and sell the firm’s product in return for a royalty fee on every unit sold is known as Licensing. Foreign direct investment has been view as an expensive and risky venture compared to exporting and licensing. This is because firms bear the cost of establishing production facilities in a foreign country or acquiring a foreign enterprise and the risk of doing business in countries with different culture. In exporting, firms need not bear cost associated with FDI and risk can be reduced by the use of local sales agents. Similarly, under licensing, the licensee bears the cost and risks. However, it is worth noting in summary that firms will choose FDI over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive. Furthermore, firms will favor FDI over licensing (or franchising) when it wishes to maintain control of technological know-how or over its operations and business strategy or when firm’s capabilities are simply not amenable to licensing (Hill, 2009). 3.1.1 The Pattern of FDI 3.1.1.1 Strategic Behaviour The idea that FDI flow reflects strategic rivalry between firms in the global marketplace is the basis for one of the theories of FDI. In studying the relationship between FDI and rivalry in oligopolistic industries F. T. Knickerbocker proposed a variation to this argument. An oligopoly is an industry made up of a small number of large players (for example, an industry in which four firms control 80 percent of a domestic market). One key features of such market is the interdependence of major players: the action of one firm have immediate impact on the major competitors, forcing a response in kind. This interdependence leads to imitative behaviour; rivals are usually quick to imitate opponents in and oligopoly – â€Å"the bandwagon effect†. Imitative behaviour can take many forms in an oligopoly. Some good examples are price war and capacity increase. Rivals imitate lest they be left at a disadvantage in the future. F. T. Knickerbocker argued that the same kind of imitative behaviour characterizes FDI. Although Knickerbockers’ theory and its extensions can help to explain imitative FDI behaviour by firms in oligopolistic industry, it does not explain the choice and efficiency of FDI over exporting or licensing. This is explained by the internalization theory. 3.1.1.2 The Product Life Cycle Theory The product life cycle theory was proposed by Raymond Vernon in the mid-1960s and was based on the observation that for most of the 20th century, a very large proportion of the world’s new products had been developed by U.S. firms and sold first in the U.S. market (e.g. automobiles, photocopiers, televisions and semiconductor chips). Vernon opined that the wealth and size of the U.S. market gave U.S. firms a strong incentive to develop new consumer products and the high labour cost also gave firms in the U.S. an incentive to develop cost-saving process innovations. The theory went further to argue that early in the life cycle of a typical new product, while demand is starting to grow rapidly in the United States, demand in other advanced countries does not make it worth while for firms in those countries to start producing the new product, but it does necessitate some export from the United State to those countries. However, over time the demand for new product starts to grow in other advanced countries. As this happens, foreign producer begin to produce at home for their own market and growing demand causes U.S. firms to setup production facilities in those advanced countries. This limits the potential for export for the United States. Finally, at maturity product becomes standardized, cost consideration start to play a greater role in the competitive process and producer in advanced countries with lower labour cost than the U.S. might now begin to export to the United States. Under intense cost pressure, the cycle by which the United State lo st its advantage to other advanced countries might be repeated once more as developing countries begin to acquire a production advantage over advanced countries (Hill, 2009). The effect of these trends is that over time the United States switches form being an exporter of the product to an importer of the product as production becomes concentrated in lower-cost foreign locations. The product life cycle seems to be an accurate explanation of international trade patterns. However, the product l

Technology :: essays research papers

Technology Recently while having a get together with some friends we were relating some experiences that seem quite pertinent to the subject of how communication is or will change. David the son of my friend Jackie was at a loss when told to call home. It seems our young guest had never had to use a rotary telephone. Confronted with this icon of past technology, David went away with a new experience to tell his friend about. Another guest, upon hearing of David's story told of a similar experience she'd had. It seems that Loretta had given her son a watch for Christmas. This wristwatch, complete with hands and a face was foreign to her son Tommy who has had the time electronically flashed at him in numeric form for all of his life without the need to know how to tell time conventionally. So it seems in this day and age, that the old continues to be replaced by the newer and faster technology. We in turn have a need to learn newer and faster ways of dealing with these new technologies. Technology grows and the more it grows the faster it grows. Yet with this technology we can learn how to decrease our work time while increasing our productivity. We have definitely come a long way from the pony express and telegraph. With current technological advancements it is now possible to communicate across the planet instantaneously, thanks to things like fiber optics, e-mail, and satellites all of which make this possible. With the invention of the printing press and the first book in print came the birth of the information age. Accompanying the birth of the information age was an explosion of new technological advances designed to improve how we communicate. With the birth of the twentieth century we've seen a drastic growth in the way we communicate with each other. With cellular telephones, personal computers, palm pilots, and online shopping. These advancements have all been designed to save us time, and help us communicate with one another. These are the tools of the "wired world", which in turn encourages our interaction and participation. And in fact make our lives much easier. While the next generation will without a doubt, find themselves lost without these technological wonders, we at the other end find it a little unsettling.

Nina

childrens needs February 2012 | | |Assignment 1: | |Explain what constitutes the physical and psychological needs of a three year old child. Explain how you would ensure that these physical and | |psychological needs can ideally be met in a setting/nursery which the 3 year old child attends from 8 am to 6 pm, 5 days a week. Reading for your assignment. Though we provide some recommended books and chapters, (see below) you need to read around the subject as much as possible and not limit yourself to just the recommended readings. Recommended reading from your prescribed text books:- Macleod-Brudenell, I,& Kay, J (2008, Second Ed) Advanced Early Years for Foundation Degrees & Level 4/5 Harlow: Heinemann Chapters 4, 5 and 9 Montessori Centre International (MCI) (undated a) Module 2 Child Development London: MCI Chapters 1 and 3 (pg 39 – 42) Montessori Centre International (MCI) (undated b) Module 4 Contemporary Issues London: MCIChapters 1, 3, 4 and 5 Montessori Centre Internat ional (MCI) (undated c) Module 5 Childcare and Health London: MCI Additional reading to consider for this assignment:- Montessori International (Issue 94, January – March) (Various articles in this issue of the magazine are relevant) Unicef (2008) Convention on the Rights of the Child, available from http://www. unicef. org/crc/ This assignment focuses on the importance of supporting the child’s well-being. Although, you will be given guidelines and additional reading material to assist you in the writing of this assignment, it is important for you to read as widely as you can.You will also need to consider the specific requirements within your own country. In these tutorial guidelines, the assignment question will be broken down into sections, giving you some pointers to consider when preparing your answer for submission. In order to enable you to focus on the different aspects of the questions, each has been given a weighting. These are the maximum marks that can be awarded for this part of the answer. The other 25% of the marks cover structure, expression and presentation (Take note of the marking table on the assessment sheet that you have received). WORKING ON THIS ASSIGNMENTBegin by:- †¢ Work through the recommended chapters listed above, making notes as you did for your Study Skills assignment. Please note that you are not limited to these chapters – You may also find it useful to do some independent research in your local library or on the internet. Be careful to limit your reading to academically sound sources – Wikipedia is not a safe site to use and should be avoided. (Remember to keep a record of the source document for later referencing and bibliography). †¢ Go through the extended guidelines below, and begin to gather information for your answer. Make note of any questions you have regarding this assignment and send them through to me. These questions and their answers will then form the second half of this f irst tutorial (the Q&A) which will be emailed to you so that you can take the information into consideration before finalising your essay for submission. Start to work on your answer:- 0 Study skills recap – †¢ Organise your information and thoughts into a logical, structured argument, addressing each of the important / main bullet points. Ensure that there is an overall flow to the information, and that each section links back to the question posed. Begin with an introduction that will state what you are going to cover in the main body of the essay. The introduction should be  ± 5-10% of the total length of the essay. Draw your argument to a conclusion at the end. †¢ Reference each time you paraphrase ideas you have read during your research for the essay, as well as the first time you include specific terminology in any one essay. In this essay you should ensure that you are quoting from academically sound sources. †¢ Find three or four relevant quotes that will support your argument.Use MCI protocol when referencing and quoting. CONTENT GUIDELINES FOR THIS ASSIGNMENT Identify and define the specific physical needs of a three year old child – including exercise and rest, diet, health and safety. (10) †¢ Briefly define what is meant by physical needs, including exercise and rest, diet, health and safety . †¢ Identify the specific physical needs of a three year old. Give a full explanation of how these physical needs should ideally be met by an early years setting/nursery which offers care from 8am to 6pm five days a week. (17. ) – Consider for example, how you could provide for gross and fine motor skills. Also think about safety issues (such as appropriate clothing for specific weather conditions), access to fresh air and ventilation in the classrooms, opportunities for rest, etc. – Give practical examples of what a setting would do to ensure the child’s well being as an essential pre-requisite to effective learning. Identify and define the psychological needs of a three year old child – focus on emotional and social needs. (10) †¢ Briefly define what is meant by psychological needs, focus on emotional and social needs.Your definition should briefly consider the needs for survival, participation and belonging. †¢ Identify the specific psychological needs of a three year old. Give a full explanation of how the psychological needs should ideally be met in an early years setting/nursery which offers care from 8am to 6pm five days a week. (17. 5) – Explain how the three year old’s emotional and social needs can be met. Here you should be looking at consistency, predictability and availability of care. – Explain how the children’s well-being and sense of belonging are promoted. Focus on settling in procedures and transitions, availability of a key person and liaison with parents. – Give practical examples of how you could make a three year old comfortable, settled, at ease and ready to actively participate in the daily life of the nursery. Having discussed the physical and psychological needs of a three year old relate these to relevant articles in the UNCRC (United Nations Convention on the Rights of the Child) which inform the statutory requirements for best practice in early years settings/nurseries in your country (20) –Briefly explore the general underlying principles (especially that of survival, protection and participation) which underpin the relevant articles of the UNCRC. (supplied with this tutorial) – Link these principles to the child’s needs. 0 Study skills recap – †¢ Your conclusion should summarise what you have said, without adding or introducing anything new. †¢ The word count includes references and quotes, but excludes bibliography †¢ Remember to use double line spacing and to number the pages of your document Finalising your answer:- †¢ R ead through your essay, checking your spelling, grammar and referencing format. Make sure your argument has a logical flow, and that you have answered each aspect of the question fully, in your own words. †¢ Fill in the cover sheet, including all necessary details. Check that your word count is within the accepted limit. †¢ Compile or finalise your bibliography using the correct format. (Follow the MCI protocol as outlined in your Student Handbook. ) 0 Study skills recap – Your bibliography must include full entries for all sources that you have referred to in your essay, as well as other books, articles, websites etc that you have read or consulted in preparation for this assignment.Bibliography:- Macleod-Brudenell, I, & Kay, J (2008, Second Ed) Advanced Early Years for Foundation Degrees & Level 4/5 Harlow: Heinemann Montessori Centre International (MCI) (undated a) Module 2 Child Development London: MCI Montessori Centre International (MCI) (undated b) Module 4 C ontemporary Issues London: MCI Montessori Centre International (MCI) (undated c) Module 5 Childcare and Health London: MCI

A Story Review from the 16th Century Essay

CHARACTERS: THE KING THE EARL OF CORNWALL SIR HUGH LACY, Earl of Lincoln. ROWLAND LACY, otherwise disguised as HANS, nephew of Sir Hugh Lacy ASKEW, another nephew of Sir Hugh Lacy SIR ROGER OATELEY, Lord Mayor of London. Master HAMMON, Master WARNER and Master SCOTT: Citizens of London. SIMON EYRE, the Shoemaker. ROGER, commonly called Hodge, a Journeyman of Simon Eyre FIRK, another journeyman of Simon Eyre RALPH, another Journeyman of Simon Eyre LOVELL, a courtier. DODGER, servant to The Earl of Lincoln A DUTCH SKIPPER. A BOY. ROSE, daughter of Sir Roger, the love interest of Rowland Lacy SYBIL, the maid of Rose MARGERY, wife of Simon Eyre JANE, wife of Ralph SETTING: London and Old Ford, England, as it happened in the 16th century PLOT DEVELOPMENT: With the different sub-plots evolving in The Shoemaker’s Holiday, the central plot is about the desperate love between Rowland Lacy and Rose Oateley.     And they defied the odds:   Rowland did not obey his uncle the Earl of Lincoln to go to war and Rose rejected the arranged marriage with Master Hammon, who is of wealth and nobility from London.     Sir Roger thought Rowland went to war.   Instead, Rowland apparently went to study shoemaking in Germany. He eventually went back to London; disguised himself as Hans a Dutch shoemaker and worked for Simon Eyre, a shoe shop owner and a real shoemaker.   Rowland and Rose went through the maze of re-discovering each other; plotting ways and means to be secretly married; and surmounting the ire and the vehemence of their respectively opposing families.   With the backdrop of the rise of Simon Eyre from being a simple man to achieving success and wealth, such paved the way for eventual happy conclusion of the fulfillment of the love of Rowland and Rose. SYMBOLISM: The Shoemaker’s Holiday generally illustrated basic features of the paradoxes in life:   unrequited love vis-à  -vis the determination to achieve its fulfillment; difference in social standing vis-à  -vis sustaining integrity of an individual inspite of any variance; applying duplicity and deceit to achieve a noble objective; how success can come and test humanness. In analyzing the various plots of The Shoemaker’s Holiday, Conover (1969) said:   â€Å"Achievement, promotion, advancement of all kinds are pictured in the play. For several of the characters in the play Simon Eyre is instrumental to success. The shoemakers, too, rise up the social scale – and Eyre tells them that opportunity is open to all.   Simon Eyre is, of course, the central example of the opportunities for success.   As he rises from shoemaker to Alderman, rich man, Sheriff, and Lord Mayor†¦Ã¢â‚¬ ¦.[though the] â€Å"main plot has to do with the love of young Lacy and the mayor’s daughter†, most critics consider the Eyre action to be central in the play.† With such positive characteristic of the play, it is interesting to note that the author Thomas Dekker conversely led a nearly unknown life of deprivation.   He was constantly in debt and was in and out of prison for his inability to meet his obligations. As reviewed by The Harvard Classics:   â€Å"The play is full of an atmosphere of pleasant mirth, varied with characteristic touches of pathos; and it contains in the figure of Simon Eyre a creation of marked individuality and hilarious humor. It is striking that the most high-spirited picture of London life in the time of Elizabeth should come from the pen of the author who seems to have been more hardly treated by fortune than any of his contemporaries.†Ã‚   (Eliot, 1909) Indeed the tenor of the story is honest and realistic.   All the struggles that came by have been met with acceptance and resolve:   to surpass and emerge as victorious.   The need to bridge differences and misunderstanding were sought.   The overall intention of the theme of the story is allowing the truth of love and dignity of individuality its own due course. In a review of the Early Modern Theatre of the Theatre Studies Department of Duke University, it was noted that:   â€Å"Fantasy and reality blur, giving the plot a surreal quality that would be appealing as a holiday play: wishes come true and hopes are fulfilled.   However, realities do not completely disappear in this drama, ‘they keep returning, unexpectedly, to interrupt, trouble, and question any easy reading that would entertain by way of ignorance or innocence the real cost of social mobility and fluidity that is necessary in a class-ridden society’†¦..Thomas Dekker wrote a drama for the citizens of London, and incorporated social issues and ideas that citizens would be interested in.† (Duke University, undated) HOW THE STORY REFLECTED THE ASPECTS OF THE 16TH CENTURY† It has been described that:   â€Å"Literary development in the earlier part of the 16th century was weakened by the diversion of intellectual energies to the polemics of the religious struggle †¦Ã¢â‚¬ ¦. The English part in the European movement known as humanism also belongs to this time. Humanism encouraged greater care in the study of the literature of classical antiquity and reformed education in such a way as to make literary expression of paramount importance for the cultured person. Literary style, in part modeled on that of the ancients, soon became a self-conscious preoccupation of English poets and prose writers. Thus, the richness and metaphorical profusion of style at the end of the century indirectly owed much to the educational force of this movement. The most immediate effect of humanism lay, however, in the dissemination of the cultivated, clear, and sensible attitude of its classically educated adherents, who rejected medieval theological misteaching and superstition.   The school of thought known as humanism, promoted the revival of Greek and Roman artistic and philosophical models that celebrated the worth of the individual.† (MSN Encarta, 2007). Because of a re-invention of the literary style at that time, the common pursuits for greatness and distinctiveness surfaced amongst the writers of that time.   â€Å"The Elizabethan Era is the period associated with the reign of Queen Elizabeth I (1558–1603) and is often considered to be a golden age in English history. It was the height of the English Renaissance, and saw the flowering of English literature and poetry. This was also the time during which Elizabethan theatre flourished and William Shakespeare, among others, composed plays that broke away from England’s past style of plays and theatre.† (Elizabethan Era, http://www.answers.com/topic/elizabethan-era) With such overall characteristics that prevailed during the 16th century, the aura of prosperity and practical domination and excellence in every aspect of life is exemplified in The Shoemaker’s Holiday.  Ã‚  Ã‚   â€Å"London in the 16th century underwent a transformation. Its population grew 400% during the 1500s, swelling to nearly 200,000 people in the city proper and outlying region by the time an immigrant from Stratford came to town. A rising merchant middle class carved out a productive livelihood, and the economy boomed.†Ã‚   (Shakespeare Resource Center, 2008) The Shoemaker’s Holiday indeed encapsulated everything that is real and positive abounding in that period where new leaps in perspective about life and identity emerged. References: 16th Century Literary History.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   http://classiclit.about.com/od/16thcenturyinliterature/16th_Century_AD_Literary_History.htm Bellinger, M.F. (1927). â€Å"A Short History of the Drama† www.theatredatabase.com/17th_century/shoemakers_holiday.html Conover, J.H. (1969). The Shoemaker’s Holiday:   A Critical Commentary.   Ã‚  Ã‚  Ã‚  Ã‚   http://www.geocities.com/magdamun/dekkerconover.html Early Modern Theatre, Theatre Studies Department, Duke University,   www.duke.edu/web/emt/student_projects/prentice/shoemakersholiday.html Eliot, C.W. (1909-14). The Harvard Classics. www.bartleby.com/47/1/. â€Å"Elizabethan England†.   2008.   Shakespeare Resource Centre   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   http://www.bardweb.net/england.html â€Å"Elizabethan Era†. http://www.answers.com/topic/elizabethan-era) â€Å"English Literature,† Microsoft ® Encarta ® Online Encyclopedia 2007 http://encarta.msn.com  © 1997-2007 Microsoft Corporation. All Rights Reserved. â€Å"French Literature,† Microsoft ® Encarta ® Online Encyclopedia 2007 http://encarta.msn.com  © 1997-2007 Microsoft Corporation. All Rights Reserved. The Shoemaker’s Holiday:   A Synopsis www.theatredatabase.com/17th_century/shoemakers_holiday.html An Abstract: Rowland Lacy, the nephew of Sir Hugh Lacy, the Earl of Lincoln, and Rose, the daughter of Sir Roger Oateley, the Lord Mayor of London – are in love, but their families do not approve.     To separate them, Sir Roger sends Rose to the country, in Old Ford.   Sir Hugh sends Rowland to war in France.   Rowland disobeyed Sir Hugh and instead went to Germany and study shoemaking.   Rowland returns to London.   Disguised as a Dutch shoemaker, Rowland went to Simon Eyre, a shoe shop owner, for work and introduced himself as Hans.   Rowland and Simon sealed a very good friendship because when a cargo shipment at a very good price came up for sale, Rowland gave his war gift money to Simon to purchase the cargo.   This made Simon very wealthy.   Sir Hugh learned that Rowland is not in the war in France.   Meantime, Sir Roger was already arranging the marriage of Rose to Master Hammon, rich nobleman from London.   Rose vehemently refuses to marry Master Hammon. Meanwhile, Simon becomes the Sheriff of London and Sir Roger threw a party celebration for Simon in his house in Old Ford.   Simon and his shoemakers were invited.   During the dancing and merrymaking, Rose suspects that Hans is Rowland – inspite of Rowland talking in gibberish English to safeguard his disguise.   After the celebration, Rose and Sybil went to London.   Sybil asked Hans to take the shoe size of Rose and make a new pair of shoes. While Rowland and Rose are struggling for their love in the story, Simon has a journeyman named Ralph who was also sent to war.   Ralph is married to Jane.   Jane thought Ralph was killed in the war.   So she left off and no one knows of her whereabouts. Jane met Master Hammon – not knowing that a failed marriage arrangement transpired between Master Hammon and Rose.   So, Master Hammon was besotted to Jane and asked her to marry him.   Believing that Ralph is dead, Jane agreed and they were set to marry in St. Faith Church in London.   However, Jane wants the last gift of Ralph, a pair of shoes specially made for her, be duplicated to a brand new one to become her wedding shoes.   Master Hammon obliged and went to the shoe shop of Simon Eyre and ordered the duplication.   Meanwhile, Ralph returned to London because he was hurt in the war and was discharged.   Ralph returned to work with Simon and sadly learned that his wife left him for nowhere.    On that day that the shoe duplication for Jane was ordered, Ralph saw it and was therefore sure that it will lead her to his wife Jane.   Going back to the time when Rowland was taking the shoe size of Rose, Rowland had the chance to quietly and secretly instruct Rose to go to the house of Simon Eyre.   At this time, Simon became the new Mayor of London.   And as such, Simon could marry Rose and Rowland.   Eventually, Rose did so and they finally got married.   Sybil revealed the treachery of Rose and Rowland to Sir Roger and Sir Hugh.   But Sir Roger and Sir Hugh was told that the wedding will take place in the St. Faith Church. Whilst Sir Roger and Sir Hugh were on their way to St. Faith Church to take Rose from Rowland (as Hans), Ralph and with his shoemaker friends are already waiting in the church to take Jane from Master Hammon.  Ã‚   When Sir Roger and Sir Hugh arrived, it was a moment that Jane lovingly recognized her husband Ralph and apologized to Master Hammon for the cancellation of the wedding as she is still in love with Ralph.   Sir Roger and Sir Hugh were disgusted that they were seemingly duped because it was a different wedding that was suppose to transpire that moment.    Sir Hugh and Sir Roger nevertheless learned that Rowland and Rose are already married.   Sir Hugh and Sir Roger appealed to the King to nullify the marriage.   But King who has been enamoured with the antics and humanness of Simon as he treats his shoemaker workers fairly; he remains humble inspite of his wealth – worked out a solution to the enmity between the parents of Rowland and Rose and them.   The King divorced Rowland and Rose and re-married them and declared Rowland a knight just so the issue of differences in social standing come to an end.

The Voice of a Writer Essays

The Voice of a Writer Essays The Voice of a Writer Essay The Voice of a Writer Essay My style of writing is a depiction of my thought process. When reading something Vive wrote, while it may take you awhile to get through it all, contains limpness of my life, sarcastic comments, and generally a lengthy beginning. All of these aspects bring a little of myself into my writing, which creates an overall genuine tone that ties everything together. My family is super goofy, cracking Jokes day and night. That environment growing up shaped my personality, hence, influences my style of writing. I make use of sarcasm to not only put some of myself into my writing, but also to give a personal feel to the words, making them more relatable and believable. As Allan Sloan said, l talk that way, so I write that way. Although, my sarcasm may not transfer as well on paper as it would in person, I try to keep everything I type on the keyboard, or scribble down on a piece of paper with the intention of the reader thinking, MIPS, thats something Emily would say. Reading a paper of my mine is the equivalent of having a face to face conversation with me, because who I am as a writer is the same as who am I as a human being. Basically, I like to have a sense of life in what I write, and these lifelike characteristics create the genuine tone, essential for a good work of writing. Personal touches in a piece of writing, to me, are one of the key components to making a successful representation of your thoughts, no matter the effect youre trying to achieve. Persuasive, informative, reflectiv e, all need feeling to be successful in grabbing the readers attention. Whether youre trying to persuade your mom to let you go to the movies or get a man walking down the street to stop and read your article about politics, you need a level of pathos, appeal to the readers emotions, to truly gain their interest and win them over. The quote, My ideas usually come not at my desk writing but in the midst of living. As told by Nanas In is a metaphorical representation of how I use my life experience to Justify my thoughts. When you can appeal to someones emotions, you create a level of better understanding for the reader. When you read my writing, youll notice Ill reference past experiences, people I know, personal decisions, etc. All because it creates a conversational tone. Its like a glimpse into my life that others can read and think about a similar situation that has occurred to them. When you can relate to someone, it makes the task of being assured the reader understands your points much easier. Even if the reader doesnt agree with what youre saying, they can respect your thoughts. I view my writing as a creative process, one in which I usually experience as I go. Joan Doing said it best in his quote l write entirely to find out what Im thinking, what Im looking at, what I see and what it nearness. which is a clear explanation of myself while writing. My writing is my Test way AT putting my tongues together, ten majority AT want I write Is a pretty accurate representation of my thought process. A lot of times, I write an entire piece before I go through and read it. I write before I even give myself the chance to think about it because if I do, I will lose the thought and be back to square one. As Im writing this now, I dont know if it makes sense, is relevant to what I should be describing, or if it even has a type-o. My thoughts are composed through my writing, and my creation is the result of finding what my meaning is. The two above images go hand in hand, but in a way that they both represent different portions of my writing process. Going back to the idea that my writing is a mirror of my thoughts, my mind while Im writing is constantly throwing ideas, words, ND sentences to me which I write down so, in turn, my writing tends to get pretty lengthy. While length of an essay is an important component, I believe that quantity is not to be confused with quality. My mind gets so wrapped up sometimes on one particular subject that sometimes I spend too much time on one topic and do a poorer Job on other points I want to get across. Timed essays are probably one of my biggest challenges, the typical style youll see is long, descriptive first few paragraphs, but the last paragraph may be only a few sentences, sometimes its as bad as to not even have a conclusion. This is one of the flaws my writing possesses, and these pictures depict that: my attitude at the beginning of writing is like that of the first picture, but my expression as time runs short and I rush Just to finish, well Im sure you can gather from the ladder. To fully understand anything requires a level of evaluation, sometimes even going as deep as to self-analysis. Before I typed up this conclusion, I went back through and read the three some-odd pages I had schemed up, analyzing my analysis of myself. And what I concluded is all too shocking: I have proceeded to categorize myself as a writer. Vive always considered writing my best subject, and in doing this paper, Vive come to understand the fundamentals of the subject I personally excel at, making the future works that much better because pointing out the key components demonstrate what makes my writing truly mine, and ultimately myself as a person. The overall theme of my writing is personality: my unique qualities being portrayed through words sometimes carelessly thrown on a page while containing specific stylistic qualities, such as long descriptive beginnings followed by short and choppy conclusions (other than this one of course).

REFLECTIVE EASSY Essay Example | Topics and Well Written Essays - 250 words

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Psychology - personality and values Essay Example | Topics and Well Written Essays - 250 words

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