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 Periodical article |
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| Title: | Substituting for the State: Institutions and Industrial Development in Eastern Nigeria |
| Author: | Bräutigam, Deborah A. |
| Year: | 1997 |
| Periodical: | World Development |
| Volume: | 25 |
| Issue: | 7 |
| Period: | July |
| Pages: | 1063-1080 |
| Language: | English |
| Geographic term: | Nigeria |
| Subjects: | industry industrial development Development and Technology Economics and Trade Politics and Government |
| External link: | https://doi.org/10.1016/S0305-750X(97)00016-8 |
| Abstract: | Since 1980, global recession, regional economic crisis and the widespread imposition of austerity policies have made the environment for industrial development in most of sub-Saharan Africa quite bleak. Yet during the same period, in the eastern region of Nigeria, an industrial boom was under way. In the rural town of Nnewi, located some 15 miles southeast of Onitsha, 23 medium to large-sized factories and engineering shops went into production during 1983-1994, creating more than 2,700 new jobs. This paper, which is based on surveys and fieldwork in Nnewi in 1991 and 1994, uses some of the insights from institutional economics to explain this case of regional industrial development. The paper argues that this cluster of capitalists in eastern Nigeria has 'substituted for the State', i.e. they have successfully filled the gaps left by failures of both the market and the State. In particular, through embeddedness - personal relations and culturally grounded institutions that act as sophisticated networks, reduce information uncertainties and agency problems, and enhance trust - they have reduced the high transaction costs typically faced by African entrepreneurs seeking to enter industry. This embeddedness has both local and international dimensions. Bibliogr., notes, ref., sum. |
