The Economics of Distortions and the Problem of Measurability: Evidence from Nigeria

Abstract

The Nigerian economy has been characterized by various forms of distortions, mostly structural, arising from dysfunctional institutions and incentive systems. Distortions and imperfections generally mean any deviation from the assumptions of perfect competition. The degree to which a market or industry can be described as competitive depends in part on the ease with which new businesses can enter and exit a particular market in the long run. This paper therefore is burdened with the objective of examining the extent of this digression. Through a descriptive methodology, it provides a theoretical basis through which these distortions can be measured, and its findings establishes evidences of distortions in the Nigerian economy across various sectors including the power/energy, financial and the banking sectors. Specific and wider implications on the Nigerian as well as the world economy have been highlighted, namely the exportation of these distortionary tendencies to the rest of Africa and the world via the oil nexus.