Jumping Trees
Brilliant Citizen: Happy New Year dear Economist. I know January has ended 😁😁. How is it going?
Economist: Hello dear Brilliant Citizen. All is good here. I am back to work and doing awesome.
Brilliant Citizen: Good to note. I am also doing good. The year has started on a good note with the government postponing the proposed subsidy removal for 18 months. I don’t know how myself and many other Nigerians would have coped!
Economist: Hmmm, this subsidy removal, how long do we want to postpone it? Subsidy accounts for a large percentage of government spending. It is not sustainable to continue to spend heavily on subsidy.
Brilliant Citizen: I hear you Economist. They know what to do if they want to stop it. They need to repair the refineries, why do we still have to import petrol when we produce it here. We have dead refineries that cost us money without refining nothing! Please let them fix them.
Economist: I agree with you. We should not be importing fuel as a top producer of crude oil. Then again, the world is moving towards clean energy with climate change advocacy and reality hitting us. We need to have more options than petrol as a nation
Brilliant Citizen: You are correct, I have been hearing a lot on clean energy. Are we ready for it? If other nations stop importing our crude oil, we will be in trouble. “Abi”, doesn’t crude make up over 80% of our export revenue?
Economist: Let us look at the data on the components of our exports.
Nigeria’s export profile
Brilliant Citizen: Just look at this. We are in trouble if countries refuse to import our crude oil. What do we need to do?
Economist: We need to jump trees!
Brilliant Citizen: Jump trees “ke”? What does that even mean?
Economist: Jumping trees is an interesting concept I learnt at the Harvard Kennedy School. It is an ideology that countries are in a forest and they expand their production/ export goods by jumping from one tree to another. This is what the forest looks like (shows him the map sample below). You can produce chemicals, machineries, metals, minerals, stones, electronics, vehicles, agriculture and textiles. Note, it does not account for services though.
Product Map Sample
Brilliant Citizen: (takes some time to look at the map to understand the colours) Interesting analogy on product map. So do countries produce all of these. Our dear country does not ooo
Economist: No, it’s different across countries. Let us have a look at Nigeria’s product map.
Nigeria’s Product Map
Brilliant Citizen: Why is everything grey like this? This does not make sense to me.
Economist: Remember, the product space indicates what countries are producing and exporting to other countries. Nigeria is mainly exporting petroleum oil and gases (in brown), some agricultural products (in yellow) and very few minerals. That’s all, we are not exporting any textiles, metals, vehicles, electronics or chemicals.
Brilliant Citizen: Wow! I see your point. Nigeria, my country.
Economist: If you look at the product map of developed countries, like you will guess, they are beautifully colored.
Brilliant Citizen: I can imagine, not grey like our own. Nigeria’s map reminds me of black and white TV we used to watch when we were very young.
Economist: Also, for developed countries, many focus more on more complex products like electronics, machineries, vehicles and others.
Brilliant Citizen: Hmm, why is that?
Economist: It is because you earn more from more complex goods. You do not earn as much from Agricultural and crude products. You earn from more complex goods because they are not produced by many countries and they are more valuable.
Brilliant Citizen: So how do we get there?
Economist: You jump trees! Typically, we have seen countries jump from agricultural goods to textile and then to machineries. This takes a lot of intentional and committed work. So, a country needs to decide to jump the trees — design policies that promotes the jump
Brilliant Citizen: Interesting, what else is required?
Economist: You need the right resources to make the jump. It could take years of building and getting the right skill set for the work. You need to attract investments (people with the skill sets, machineries, and finance) in the selected sectors. You may need to build free zones towards promoting production in the selected trees (sectors).you want to jump to.
Brilliant Citizen: This jumping trees is not as easy as I thought.
Economist: You are correct. Jumping trees is hard work and lots of investment. However, it pays in the long run.
Brilliant Citizen: How does it pay?
Economist: Firstly, the country won’t need to import many of the things it currently imports or its citizens travel to get the services from other countries. So, the pressure on the foreign exchange is less. Secondly, you begin to export these items to countries that need them hence earning revenue for Nigeria. This means instead of paying for subsidy; you will be getting foreign currency from other countries to grow the country.
Brilliant Citizen: This sounds like a sustainable path. I like it.
Economist: Then, let us all work towards getting there. See you later dear brilliant citizen.
Special thanks to Wale Olusi & Abraham Afariogun for their contribution to this article.
You can view the maps via:
https://atlas.cid.harvard.edu/countries/159/product-space
To find out more about the Leading Economic Growth program:
