Economic Growth and Sustainable Development: Nigeria vs China Analysis

This essay provides a comparative analysis of economic growth and sustainable development between Nigeria (a poor country) and China (a rich country). It begins by presenting and comparing GDP data for both countries, followed by a theoretical overview explaining factors contributing to economic growth disparities, including capital (Solow model), population (Malthusian theory), quality of labor (education and health), technology (Endogenous Growth Theory), and governance. The essay applies these theoretical insights to analyze the differences in economic performance between Nigeria and China, highlighting the role of investment, population dynamics, education, healthcare, technological innovation, and governance quality. Finally, it concludes by offering policy recommendations for Nigeria to improve its economic growth and social welfare based on the analysis.

Running Head: ECONOMIC GROWTH AND SUSTAINABLE DEVELOPMENT1
Economic Growth and Sustainable Development
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Affiliation
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Introduction
The aim of this paper is to collect, compare and contrast economic data of two countries
(one rich and one poor). In this case, the selected countries include; Nigeria (poor country) and
China (rich country). Nigeria's Gross Domestic Product grew by 1.9 percent in 2018 as
compared to the previous years. Nigeria's GDP growth in 2018 was 11th to 10th as more than
that of 2017. In addition, the country's Gross Domestic Product figure was US$ 397,270 million
in 2018 (Onuba and Ifeanyi, 2015). This implies that the country's Gross Domestic Product rose
by US$20, 909 million in 2018 compared to 2017. Nigeria's Gross Domestic Product per capita
was US$ 2,081 in 2018 higher than in 2017 ($109). The high growth of the country's growth
interesting which requires reviewing other previous years like 2008 where the country's Gross
Domestic Product was US$ 2,234. On the other hand, China's GDP in 2017 was worth US$
12237.70 billion. The Gross Domestic Product of the country represents at least 19.7% of the
global economy. The average Gross Domestic Product of China was US$1970.49 billion since
1960. In 2017, the country's GDP increased up to US$ 122237.70 billion. As compared to the
past years, China's Gross Domestic Product grew by 1.4 percent (Onuba and Ifeanyi, 2015).
Figure one: Comparison of Nigeria's and China's GDP per capita (US Dollars)

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
0
2000
4000
6000
8000
10000
12000
GDP per capita
Nigeria China
Year
GDP per capita (US Dollars)
The line graph above compares the Gross Domestic Product per capita of Nigeria and
China from 2008 to 2018. The graph indicates that China’s GDP was higher as compared to
Nigeria. The graph indicates the variation in the countries’ GDP per capita in Us dollars.
2. Theory Format:
This section explains the various factors that may contribute to the economic growth and
difference in the Gross Domestic Product per Capita between China and Nigeria. The factors
include the following;
Capital, this factor can best be explained with the help of the Solow model which
indicates that economic growth results from increased capital that improves the factors of
production. In addition, the theory explains that the economic growth of a nation resulted from
investment and saving that lead to more accumulation of capital by the country. In addition,
increased capital is considered as a major factor for improving production by ensuring efficiency.
The model aims at illustrating the role played by Capital towards the economic growth of the

ECONOMIC GROWTH AND SUSTAINABLE DEVELOPMENT 4
country and leading to a difference in GDP per capita between China and Nigeria (Huang, &
Xie, 2013). The model assumes that "output is produced using a production function in which
output depends upon capital and labor inputs as well as a technological efficiency parameter."
However Slow Model also assumes that "there are diminishing marginal returns to capital
accumulation." In other words, the model indicates that increased capital provides a relatively
smaller increase in output (Irwin, 2016). Also, the model indicates that if any firm gets extra
capital, it will be in the position to obtain the increased output. However, the model assumes that
if the firm increases its capital minus increasing the number of workers, the increased output may
not be obtained. The model does not aim at modeling the decision of consumption-saving but it
assumes that people save a given normal fraction of their salary or income. Further, the model
illustrates that if savings are equal to the investment, the output is constant with investment.
Also, the model illustrates that MP of additional capital investment may decline in the long run
leading to a decline in the country's Gross Domestic Product. The model illustrates that the
economic growth of a country is obtained by adding more labor inputs and capital. Therefore,
this implies that if a given country invests in more capital as compared to the other, it will be in
the position to obtain a high GDP per capita as compared to another country. Also, the theory
implies that a country which invests in more capital attains economic growth as compared to
countries which are not in the position to make capital investments (Yao et al, 2013).

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Figure two: Solow model of Output and capital
Source: http://www.karlwhelan.com/Macro2/Notes9.pdf
Explanation: the figure above indicates that investment an increase in the capital leads to
a shift in the level of investment. In addition, the figure indicates capital is associated with more
investment leading to the shift in the investment curve upwards from sy (green) line to Y (red)
line. From the current capital level k1, capital investment exceeds depreciation. This implies that
the country's capital stock begins to increase. This proceeds until capital marks to new
equilibrium rates of k2.
Population, these factors can be explained or analyzed with the help of the Malthusian
Theory. The theory is important for exponential growth relative to the idea of on which a given
function grows. The model is always used in the population ecology theory as the major
principle of "population dynamics." The theory was published by 'Thomas Robert Malthus' who
thought that by using positive checks and preventive checks, the population of a given country

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would be in the position to control the balance of food supply according to the level of
population. Thomas Malthus indicated that population grows in "geometric progression." The
model also indicates that before the emergence of the industrial revolution, people's standards of
living differed over a given period of time across various countries. Also, the theory indicates
that after the industrial revolution, the per capita income of different countries grew among rich
countries. This implies that there is a positive correlation between population and investment
across the countries. Therefore, countries with a low population face a problem of reduced labor
force hence hindering the growth of Gross Domestic Product per capita of such countries. This
implies that the countries have a negative relation between the output of the workers and the
population growth across poor countries. The theory also indicates that an advance in technology
will increase a nation's population without changes in the standards of living of the people. As a
result of increased population growth, the country's GDP per capita grows. The theory also
indicates that if the population grows, consumption increases leading to economic development
(Kerr et al, 2016).
Figure three: Malthusian model

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Source: http://www.pitt.edu/~sewonhur/teaching/1720/lecture7.pdf
Explanation: The figure above indicates that in the case of Z increases, it will lead to an
upwards shift of the production function per-worker. In addition, the figure indicates that
population increases at the point where the county's per capita of consumption returns to the
original level in the long run.
Quality of labor (education and health), a country's economic growth is basically
determined by the increase in the productivity of workers which indicates how best activities are
performed. In other words, the quality of labor means how efficient the nation is with its workes
and time. Notably, the productivity of labor is an employee's value that he or she creates
according to the input of an individual. Also, the quality of labor aims at estimating how
productive an individual is towards the performance of a given workload. For the purpose of this
paper, we shall make an analysis of two major factors on how they contribute towards the
economic growth and difference in GDP per capita between countries. In this case, the quality of
education provided to the citizens is a major factor that development. In most cases, it is always

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very had for a country to achieve economic growth without investing in human capital such as
education. Education is a vital factor that enriches the understanding of people and the world.
Also, education improves the lives of people leading to increased social benefits to society and
individuals (Mason, 2014). In addition, education plays an important role in raising the creativity
and productivity of people and promote technological and entrepreneurship advances hence
leading to economic growth. In addition, good quality education plays a crucial role in ensuring
social progress and economic security. By improving the social security of a nation, people will
be in the position to perform their activities effectively leading to increased production which
results in economic growth. Also, good quality education helps in improving income distribution
among the people in a given nation. In most cases, poor countries (Nigeria) fail to provide good
quality education leading to reduced GDP per capita for such countries. On the other hand, rich
countries such as China always aim at providing a good quality education because they consider
it to be a major contributor to a country's economic growth. Also, the quality of health provided
to the people in a country determines economic growth. In this case, if a country fails to provide
good quality health to its citizens, the quality of labor will also be poor leading to low production
hence reduced economic growth. However if a country provides good quality health to its
citizens, productivity will high hence increased economic growth. Therefore, the differences in
the GDP per capita between China and Nigeria is as a result of different quality of education and
health provided to the citizens (Mason, 2014).
Technology, this is a big factor to economic growth and GDP per capita within different
countries. According to the Engogenous growth theory, a country's rate of economic growth is
strongly determined or fostered by technological innovations and human capital. The theory
illustrates that if workers have greater education, training, and knowledge, they will be in the

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position to increase the rate of technological innovation. Further, the theory illustrates that
governments should actively rcourage different firms to consider technological innovation so as
to improve production. By improving technological innovation, firms will be in the position to
produce more goods with reduced costs of production such as labor costs. This will help in
increasing the income of such firms hence contributing to the economic growth of a country. By
increasing productivity, the country will be in the position to attain high Gross Domestic Product
per capita as compared to nations which don't emphasis technological advancement. In addition,
if a government fails to encourage technological innovation, production will reduce leading to
declining in the economic growth of such a country. In this case, the differences in GDP per
capita between Nigeria and China may happen if Nigeria fails to implement technological
innovations. Therefore, if the government of China emphasizes technological innovation
production will raise hence increasing the country's GDP per capita (Piketty, 2014).
Governance, the quality of a country's governance plays a vital task in ensuring economic
growth and alleviating poverty for poor or developing nations. International Monetary Fund
illustrates that "promoting good governance in all its aspects, including ensuring the rule of law
improving the efficiency and accountability of the public sector, and tackling corruption can
make economies prospers." In addition, good governance helps in achieving increased
investment which results in economic growth. This is through the creation of sound business
atmosphere. Also, good governance would help in minimizing the existence of bad policies.
According to the United Nations Development Programme, governance is referred to as "the
exercise of economic, political, and administrative authority to manage a country's affairs at all
levels. It comprises mechanisms, processes, and institutions, through which citizens and groups
articulate their interests, exercise their legal rights, meet their obligations, and mediate their

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differences." For any country to attain economic growth, it should be corruption free. For any
weak governance, it creates distortions in the implemented policies hence the creation of a
corrupt environment. This is always common in case, the country lacks clear demarcations
between private and public spheres a lack of proper regulations. In case weak governance
persists, the capacity of the state to conduct its functions that is to say market regulations,
provision of public goods will not be considered to be important. In most cases, corruption
affects developing and less developed nations. In addition, corruption distorts the country's
economic systems and causes "social; disintegration" leading to injustice and discrimination. In
addition, corruption is regarded as a major factor that leads to the failure of an institution more
especially that is in charge of enforcement, investigation, and prosecution. Therefore, countries
which have failed to mitigate corruption are at a high risk of failing to attain economic growth as
compared to countries which have designed measures of eliminating corruption. For developed
countries such as (China), the rate of corruption is always low leading to high GDP per capita as
compared to the poor nations such as Nigeria. This implies that less developed countries such as
Nigeria have a weak government which cannot be in the position to mitigate corruption resulting
into reduced GDP per capita of such countries (Prettner, & Prskawetz, 2010).
Openness/ New economic geography, in most cases, countries tend to ignore space,
transport and distance costs. Most of the theories leave out these factors. However, the distance
between nations is vital in making an analysis of a country's international trade. According to the
"Theory of Interregional and International Trade" by Berlin Ohlim, he analyzed that the costs of
transportation affect specialization and trade. In addition, International thoery can also be well
understood with the help of "general location theory." In this case, new economic geography is
concerned about various questions such as, "which factors have influenced and continue to

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influence the geographical distribution of economic activity?" In addition, it addresses why a
given nation concentrated in a given region. In regards to geography, some regions enjoy the
advantage of other nations such as superior countries enjoying transportation facilities and
natural sources of less developed countries. This explains why some Nations particularly focus
on certain economic activities (Onuba, & Ifeanyi, 2015). In addition, "the new economic
geography" is regarded as a theory of "the emergence of large agglomerations" which depends
on increased transportation costs and concentrates on linkages between suppliers and firms as
well as consumers and firms. The new economic geography also implies that most of the
country's economic activities or services are geographically concentrated. Yet not all the people
live in major cities neither do most governments concentrate their production of goods in a given
location. In most cases, developing countries tend to concentrate their markets in various areas
which enables people to easily get access to goods, unlike less developed countries which focus
on cities only leading to reduced economic growth. In addition, the concentration of industries in
various places in the country gives a chance to the people in the region to get employment
opportunities hence fostering production and improving their standards of living. Also, a local
concentration of different economic activities helps in creating more external economies.
Therefore, poor countries like Nigeria tend to ignore establishing industries in local areas leading
to reduced economic growth which is not the case with developed countries like China. In this
case, the differences in GDP per capita between China and Nigeria may arise as a result of the
geographical concentration of industries such as local areas and urban areas. This implies that a
difference in the concentration of industries results in economic differences between countries
(Prettner, & Prskawetz, 2010).
3. Applications:

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Capital
According to the proxy variables of the World Bank, Nigeria has a continuous growth of
cities Capital in 2028 of around US$ 6,303.63 million. This indicates that the country
experienced a 59.4% increase in its capital as compared to the previous years. Studies indicate
that an increase in the inflow of capital in Nigeria was as a result of Portfolio investment which
contributed US$ 3,477.53 million the previous year. In 2018, the Foreign Direct Investment of
Nigeria dropped by 34.83 percent as compared to the previous statistics of 2017. This indicates
that the country faced a decline in its economic growth in 2018 because the level of investment
was very low. As a result of limited capital, Nigeria was not in the position to attain increased
Gross Domestic Product per capita in 2018 as compared to other Countries. On the other hand,
China's capital investment was US$ 6.325 Trillion in 2018. This im0lies that China had a high
Gross Domestic Product per capita in 2018 as compared to Nigeria. As a result of increased
capital, China was in the position to make increased investments and saving leading to economic
growth. The increased capital of China fostered production hence increased output. Also, the
increased capital of China indicated that more laborers were hired industries to perform various
industrial activities hence increasing production. This implies that an increase in the capital flow
of China was as a result of increased investment and saving. Therefore, Nigeria has a small
Gross Domestic Product per capita as compared to China because of its low level of investment
that leads to reduced capital (Prettner, & Prskawetz, 2010).
Figure four: Market capitalization to GDP