GJMMS July september 2015 issue

i

GLOBAL JOURNAL OF

MULTIDISCIPLINARY AND

MULTIDIMENSIONAL STUDIES

Dr. N.M.Lall B.com, M.A.(Eco), Ph.D.

FRAS (LONDON)

Patron

Dr. A.K.Jha M.A.(Eco), Ph.D., PGDM

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Dr. Suresh Sachdeva Dr. Brajesh Mishra M.A.(Eco), Ph.D., D.Lit., MBA MOT Prof. of Economics HOD (OT)

Govt. SLP College, Govt. SLP College Smt.K.P.P.I.P.O

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Editor Editor Editor

ISSN No.2394-8965

SHRUTAAYUSH PUBLICATION

GREATER NOIDA

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---------------------------------------- Dr.V. D. Sharma

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vii

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viii

GLOBAL JOURNAL OF MULTIDISCIPLINARY

AND MULTIDIMENSIONAL STUDIES

Vol. 1 Issue No. 3 July- September 2015

1. AN ANALYTICAL STUDY OF THE FDI I IN INDIA 1 DR. I .JANAKI

2. INFORMATION NEEDS AND INFORMATION 8

SHARING AMONG MANAGERS OF SMALL

AND MEDIUM SCALE ENTERPRISES IN

EKPOMA, ESAN WEST LOCAL GOVERNMENT

AREA, EDO STATE.

JAMES AFEBUAMEH AIYEBELEHIN

3. HEALTH AND ECONOMIC IMPLICATIONS OF 28

SOLID WASTE DUMPSITES: A CASE STUDY

HAZAR KHWANI DUMPSITE – PESHAWAR CITY

Huma Salma Gillani 4. AN ANALYTICAL STUDY OF THE RELATIONSHIP BETWEEN 43

GDP, INFLATION AND STOCK MARKET

Sudha Swaroop

5. GLOBAL WARMING IS MAJOR CONCERN FOR 48

ENVIRONMENT & ECOLOGY Dr. V. D. SHARMA

1 INFORMATION NEEDS AND INFORMATION SHARING AMONG

MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN

EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.

ISSN NO. 2394- 8965 GJMMS

Vol. – 1, Issue – 3, July-September - 2015

An analytical study of the FDI in India

Dr.I.Janaki

Associate professor

Department of Economics

Wollo university ethopia

ABSTRACT To attain accelerated economic growth domestic investment has to be complemented by

FDI. It increases employment opportunities, increases gross domestic product and

standards of living of people and population at large. There are inward and outward FDI and the difference will be the net inflow of FDI. Another differentiation in FDI is

horizontal and vertical. There are two routes under which an Indian company receives vertical FDI: automatic route and government route. The key advantage of FDI is

employment generation. More competition also leads to increased productivity and

greater efficiency in the host country. Make in India initiative also is resulting in more

FDI into different states in India. With regard to inflows and outflows we see fluctuations

during four year period. Most of the countries reduced outflows and increased inflows. Multilateral Investment Guarantee Agency of World Bank opined that macroeconomic

instability is the main reason for this decline.

Key words: Economic development, employment, inflows, outflows

Introduction

“It is the intent and objective of the Government of India to attract and promote

foreign direct investment in order to supplement domestic capital, technology and skills,

for accelerated economic growth.”1

The fundamental requisite of the present Indian Government is to promote

employment opportunities and increased income levels of the residents of its nation

through „Make in India‟ approach as can be clearly noticed in its objective with reference

to FDI. Foreign Investment Promotion Board (FIPB) was also constituted to facilitate

investments from NRIs and resident Indians. It contributes to the growth of economy‟s

GDP and in turn increases the per capita income. The GDP of a nation is considered as Y

=C+I+G+(X-M) in which C stands for national consumption level, I stands for national

investment level, G stands for national expenditure level and (X-M) stands for balance of

trade. FDI belongs to the national level investment I, i.e., the net inflows of investment

(inflow minus outflow). It is the sum of equity capital, other long-term

1 “Consolidated FDI Policy (Effective from May 12, 2015)”, Department of Industrial Policy

and Promotion, Ministry of Commerce and Industry Government of India, 2015, P.1

Dr.I.Janaki

2

capital, and short-term capital. It customarily involves participation in different levels of

management, joint ventures, transfer of technology and expertise etc.

Foreign capital inflow is considered as FDI only if the investment is made in equity

shares, fully and mandatorily convertible preference shares and fully and mandatorily

convertible debentures with the pricing being decided upfront as a figure or based on the

formula that is decided upfront.

Objectives To know the nature and kinds of FDI that operates in different countries.

To know why countries go for FDI

To know why countries deny FDI

To know India‟s stand on FDI and comparison between different conditions

Methodology The study relies on secondary data compiled from various published sources like, RBI

Bulletins, Ministry of Finance, Department of Economic Affairs, Economic Division,

National Accounts Statistics, Central Statistical Organization, Government of India;

Ministry of Commerce and Industry, India; research papers and journals etc.

Literature Review Foreign direct investment has a long history in India‟s economic record. Indian

kingdoms had enjoyed relations with Greek and Roman traders who visited India and

carried out business with them. In recent past also East India Company from the UK

carried out business and exercised authority almost all over India. India need not go

anywhere to attract but has to see that political and social conditions are stable and steady.

Dale R. Weigel, Neil F.Gregory, Dileep M.Wagle opine the same idea that the pace of

integration into the global economy is related to progress on creating and enabling policy

environment for FDI. Byung-Hwa Lee (2002) studied the Korean case which shows that

there is a large potential for other emerging economies to gain from FDI flows and that the

initial costs from lost internal investment are largely outweighed by the medium-term

benefits. Theodore H. Moran in his „Foreign Direct Investment and Development:

Launching a Second Generation of Policy Research: Avoiding the Mistakes of the First,

Reevaluating Policies for Developed and Developing Countries FDI is not a single

phenomenon‟, argued that FDI has such different impacts in the extractive sector,

infrastructure, manufacturing and assembly, and services and presents distinctive policy

challenges that each broad category of FDI must be treated on its own terms. Anthony

Bende Nabende focuses on the ongoing globalization process, which has ignited an

unprecedented worldwide debate. He seeks to provide a "one-stop centre" for unbiased

coverage of the theoretical, empirical and policy issues connecting globalization with

foreign direct investment, regional economic integration, sustainable development and

economic growth.

Types of FDI

Foreign Direct Investment (FDI) is a kind of investment that replicates the objective

of forming a long-lasting financial concern by a resident enterprise in one country (direct

entrepreneur) in an organization (direct enterprise) that is resident in another country. The

long-lasting financial concern denotes the presence of a long-term association between the

direct entrepreneur and the direct enterprise and a significant degree of control on the

http://www.piie.com/staff/author_bio.cfm?author_id=56




business administration of the enterprise. The direct or indirect ownership of 10% or more

of the voting power of an enterprise resident in one economy by an investor resident in

another economy is the statistical evidence of such a relationship.

There are two different types of FDI, namely inward and outward which results in a

Net FDI inflow which will be either positive or negative. The cumulative number for a

given period of time is known as „stock of foreign direct investment. It is an important

example for international factor movements.

There is another kind of differentiation in FDI.

1. Horizontal FDI: It takes place when a company replicates its parent country –

based activities at the same value chain stage in a host country by means of FDI. For

example, Wal-Mart opening retail chain in host countries.

2. Platform FDI: It originates from source country into another country for the

purpose of exporting to a third country. For example, some tobacco companies have their

European Headquarters and plants in Switzerland. The world famous Vinyl Chrolide

Mononer producer, Shinetsu Chemical has its plants in Portugal and supplies all European

countries from there.

3. Vertical FDI: When a company executes value addition activities phase by phase

in a upright manner in host country. For example capital imports to produce finished

products by companies like BHEL, HAL etc.

4. There are two routes under which an Indian company may receive vertical

Foreign Direct Investment:

a. Automatic Route: FDI is allowed under the automatic route without prior

approval either of the Government or the Reserve Bank of India in all sectors as specified

in the consolidated FDI policy, issued by the Government of India from time to time.

b. Government Route: FDI in activities not covered under the automatic route

requires prior approval of the Government which are considered by the Foreign

Investment Promotion Board, Department of Economic Affairs, Ministry of Finance.

Advantages of FDI An increased inflow of FDI may cause improved economic growth due to the

increased technology, employment and income levels in the host country. In order to

augment the development process the host countries often make attempts to channelize

these FDI investments into new infrastructure and other projects. It encourages

investment in host country by providing new markets, demand for inputs like labor, new

technology, etc., employment generation is the key advantage of FDI.

Competition from multinational companies can lead to increased productivity and

greater efficiency in the host country. Furthermore, FDI also results in the transfer of

more advanced technology, job creation, skill development in host country.

It creates a sense of globalism and improves understanding between participating

countries and can lead to sustainable living conditions.

FDI in India It was first introduced into India during 1991 after the liberalization of business and

trade policies. But India disallowed overseas corporate bodies to invest. It imposes cap

Dr.I.Janaki

4

on equity holding by foreign investors in various sectors. FDI is prohibited under the

Government Route as well as the Automatic Route in the following sectors.

i. Atomic Energy

ii. Lottery Business

iii. Gambling and Betting

iv. Business of Chit Fund

v. Nidhi Company

vi. Agricultural and Plantations activities with some exceptions

vii. Housing and Real Estate Business with some exceptions

viii. Trading in Transferable Development Rights (TDRs)

ix. Manufacture of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco

substitutes.

Recent Policy Measures by the Government of India:

100% FDI allowed in medical appliances

FDI cap increased in insurance & sub-activities from 26% to 49%

100% FDI allowed in the telecom sector.

100% FDI in single-brand retail.

FDI in commodity exchanges, stock exchanges & depositories, power exchanges,

petroleum refining by PSUs, courier services under the government route has now been

brought under the automatic route.

Restrictions in tea plantation sector are removed.

FDI limit increased to 74% in credit information & 100% in asset reconstruction

companies.

FDI limit in defense sector increased from 26% to 49% in Government approval

route and Foreign Portfolio Investment up to 24% is permitted under automatic route.

Construction, operation and maintenance of specified activities of Railway sector opened

to 100% foreign direct investment.

India needs around $ 1 trillion between 2012-2013 and 2016-2017, in the 12th Five Year

Plan period to finance infrastructure development that include sectors such as ports,

airports, highways, and so on. In order to enter into Indian retail market, the foreign super

markets have to invest $50 million on infrastructure and logistics within a three year

periods. Also the investment must be in new back-end infrastructure, and not in existing

acquisitions. This includes cold chain, warehouses, processing plants and logistical

support and is critical for the smooth functioning of a retail firm.

FDI in Different States

Maharashtra was in first place to attract foreign in India during 2000 and 2014. The

National Capital Region (NCR) including some parts of UP and Haryana, received $45.77

billion FDI and counted 19% of India‟s total FDI. Tamil Nadu stood third highest in FDI

inflows worth $15.80 billion during the same period.

The highest FDI of USD 83.73 billion came from Mauritius, second by Singapore USD

29.19 billion, third the UK USD21.76 billion and fourth by the US USD 13.28 billion.

During the same period India received USD 236.46 billion foreign inflows. The

government is making efforts to attract FDI from all major investing nations. The FDI




policy is liberalized in several important sectors like insurance, defense, construction and

medical apparatus sectors.

To magnetize foreign investors the government is ardently engaging with states through

„Make in India‟ campaign to improve ease of doing business. After the launch of „Make

in India‟ initiative in September 2014 there is an increase in FDI equity inflows by 48

during October 2014 and April 2015.2

Different surveys and industry experts have revealed that India is amongst the top

destinations for investments across the globe. Following are some facts and figures

pertaining to the FDI developments in the world.

Key trends in 2014 • Africa attracted the largest inward investment, with $87bn of FDI announced in 2014.

• India, Malaysia, Vietnam and Japan were four of the rapidly growing target countries

for FDI in 2014.

• Inward investment into the area comprising Russia, the Commonwealth of Independent

States, and central, eastern and south-eastern Europe decreased by 24%, with $44bn of

FDI.

The apex supply country in 2014 was the US, and peak sector was real estate, top target

country was China. Total capital investment from FDI was $649 billion and total

emploment created in 2014 were 1,843,609. FDI projects into India increased by 47% in

2014 with 641 projects declared. Indian overseas FDI decreased by 19% to 226 projects in

the same year. The table shown in Appendix – I gives the percentage of FDI net inflows

and outflows in GDP of concerned countries namely, Australia, Brazil, China, France,

Germany, India, Italy, Japan, Russian Federation, Singapore, South Africa, Spain,

Switzerland, Sweden, the UK and the USA. Among these countries except Japan, South

Africa, the UK and the USA all other countries reduced their outflows of FDIs. As far as

inflows are concerned most of the countries are welcoming the investments from abroad.

The major causes of fluctuations in FDI flows

According to a World Bank study, the FDI to emerging markets is going to decline in

2015 because of demanding concerns about the global economy. The major reason for

this decline in investment in these markets over the next two to three years would be the

macroeconomic instability. This opinion is expressed by Multilateral Investment

Guarantee Agency (MIGA) of World Bank.

The unwavering global economic uncertainty seems to have infected the overall business

attitude, and the economic pessimism is reinforcing the stagnant FDI levels. As fuel to the

existing fire the IMF lowered its world growth estimates for the 6th

straight time in two

years, in October, 2014, cautioning a slow growth in the developing world.

According to MIGA study the overseas financing into developing countries is believed to

fall 4.5% next year after raising 2% in 2013. However, the FDI has increased four times

at around $600 billion a year, than the levels seen a decade ago. Growing investments into

sub-Saharan Africa and South Asia are a bright spot, although Europe and Central Asia

are noticing declines.

2 Nirmala Sitaraman, E-government report , web pages.

Dr.I.Janaki

6

But the MIGA said most of the 459 companies it surveyed about their activities in

emerging markets were not planning to withdraw or cancel existing investments. Though

income gap between developed countries particularly OECD countries and emerging

countries like India has continued to whither but still remains large. It mainly stems from

the ever increasing population and relatively declining resources. It results in productivity

shortfall and structural bottlenecks. The hurdles in foreign direct investment have been

lessened in particular in telecom, civil aviation, railways, defense, construction and multi-

brand retail. Financial reforms are gradually implemented and the Reserve Bank of India

has taken steps to increase competition in the banking sector as well as its efficiency but

more is needed to achieve a more efficient allocation of capital. Moderation in

administrative and regulatory burden on companies and encouraging infrastructure

development would encourage foreign investors to start business in India. To increase the

creation of formal jobs, shrink labor market duality and help the participation of women,

labor laws should be simplified and rigorous employment protection policies should be

reconsidered. Improved learning and training systems would promote the group of

qualified workers and augment labor productivity. Women workers should be given

special concern and job guarantee. Updating labor laws is vital to support employment

formalization and to trim down labor market segmentation, gender bias and income

inequality. Raising the quality of education and training systems would also promote the

economy‟s ability to respond to new market opportunities and thus job creation, thereby

reducing severe poverty and income inequalities.

Conclusion

Foreign Direct Investment fundamentally exploits the existing natural resources in the host

country. When it is used people have to keep in mind that sustainable ways of utilizing

the FDI will save the country from disappearance of natural resources. These ways

include the customs, traditions, culture, social needs, age of population etc. They are

developed in a region on the basis of geological and environmental conditions. The

customs, traditions, environment and weather conditions, social needs etc., of a desert area

are not same with that of a green or wintry regions. Hence one cannot apply the same

rules all over the world. It is always better to avoid esteem needs of the society because

they drive away the health of both people and the nature. To maintain balance is crucial

for sustainable development. Otherwise world has to face poultry growth in sustainability

of natural resources in the years to come.

Referrences:

1. http://self.gutenberg.org/articles/foreign_direct_investment web pages

2. FDI http://self.gutenberg.org/articles/foreign_direct_investment

3. Tadashi ITO, „Export Platform Foreign Direct Investment: Theory and

Evidence‟,http://www.ide.go.jp/English/Publish/Download/Dp/pdf/378.pdf

4. ARUN KUMAR, „Walmart to buy 49% in holding company of Bharti Retail,

Cedar Support for Rs 455.8 cr‟, ET Bureau 9th

May, 2013

5. World Bank Report, 2013

6. http://economictimes.indiatimes.com/articleshow/20319850.cms?_source=content

ofinterest&utm_medium=text&utm_campaign=cppst web pages

7. http://finmin.nic.in/stats_data/nsdp_sdds/index.html web page

http://self.gutenberg.org/articles/foreign_direct_investment

http://self.gutenberg.org/articles/foreign_direct_investment

http://www.ide/

http://economictimes.indiatimes.com/articleshow/20319850.cms?_source=contentofinterest&utm_medium=text&utm_campaign=cppst

http://economictimes.indiatimes.com/articleshow/20319850.cms?_source=contentofinterest&utm_medium=text&utm_campaign=cppst

http://finmin.nic.in/stats_data/nsdp_sdds/index.html




8. Dale R. Weigel, Neil F.Gregory, Dileep M.Wagle, Lessons of Experience – FDI,

International Finance Corporation and Foreign Investment Advisory Service, Washington,

D.C. USA 1997.

9. Byung-Hwa Lee, FDI from Developing Countries: A vector for Trade and

Development, OECD ilibrary.org. EBooks.

10. Anthony Bende Nabende, „Globalization, Fdi, Regional Integration and

Sustainable Development: Theory, Evidence and Policy, ISBN-13 EBook.

APPENDIX - I

FDI – Outflows and Inflows

Count

ry

Percentage in GDP

Country

Percentage in GDP

2009 2010 2011 2012 2009 2010 `2011 2012

X Y X Y X Y X Y X Y X Y X Y X Y

Austra

lia

3.

1

1.

8

3.

1

2.

4

4.

8

1.

2

N.

A

1.

0

Russian

Federati

on

3.0 3.5 2.8 3.5 2.9 3.5 2.6

2.4

Brazil

1.

9

0.

3 2.

5

0.

8 2.

9

0.

2 3.4

0.

4

Singapo

re

12.

8

12.

4

24.

7

11.

7

22.

8

10.

7

20.

6

8.4

China

2.

6

1.

6 4.

1

1.

5 3.

8

1.

4 3.0

1.

4

South

Africa

1.9 0.5 0.3 0 1.5 0 N.

A

1.1

Franc

e

1.

0

4.

2 1.

5

2.

7 1.

6

2.

3 2.5

1.

5 Spain

1.3 1.5 3.3 3.1 2.2 2.9 2.7 0.4

Germ

any

1.

1

2.

5 0.

9

2.

8

1.

2

1.

3 0.8

2.

6 Switzerl

and

2.1 0.2 3.7 0.1 2.4 N.

A

N.

A

N.

A

India

2.

6

1.

2 1.

5

0.

9 1.

7

0.

8 N.

A

N

.

A

Sweden

2.2 6.3 0.4 5.0 0.5 3.9 0.7 4.1

Italy 1.

9

2.

1

-

0.

3

0

.

9

1.

3

2.

2

0.

4

1.

4 UK

0.

2

1.

2

2.

7

1.

7

1.

5

3.

8

2.

3

2.

9

Japan 0.

3

1.

6 0

1

.

1

0

1.

9

N.

A

2.

1

USA

1.

0

2.

3

1.

9

2.

5

1.

7

2.

9

1.

3

2.

7

Source: World Bank Report 2013. = Outflows; Y=Inflows


8



INFORMATION NEEDS AND INFORMATION SHARING AMONG MANAGERS

OF SMALL AND MEDIUM SCALE ENTERPRISES IN EKPOMA, ESAN WEST

LOCAL GOVERNMENT AREA, EDO STATE.


(B.SC, M.LIS, CLN)

Lecturer, Department Of Library And Information Science,

Ambrose Alli University, Ekopma-Nigeria

ABSTRACT

This study surveyed the information needs and information sharing among managers of

SMEs. The descriptive survey research design was used. The instrument used for data

collection was questionnaire. Descriptive statistics was used to analyze the data collected.

The population of this study consisted of all SME managers within Ekpoma, Esan West L.

G. A. However a sample size of 200 SME managers were randomly selected and used for

this study. It was found that SME managers require more customers' information and their

customers were viewed as the most essential sources of information. SME managers

possess SSCE as their highest educational qualification and their highest annual income

ranges from N 51,000-N100, 000. It was also found that SME managers have positive

attitude towards information sharing. However, SME managers were cautious about the

nature of information they share. Physical/verbal communication was found as the major

channel of sharing information. The recommendations were that; SME managers should

maintain cordial relationship with their customer, and SME managers should equally build

a positive attitude among their colleagues to enhance information sharing. Workshops,

seminars, conferences should be organized by Government and Non-Governmental

organizations to prepare SME managers for a competitive environment.

Words count: 193

Keywords: SME, Managers, Information need, Information Sharing.

INTRODUCTION

Information has remained a veritable tool to man just as air of life he breathes for healthy

growth. This simply means that information serves as the major basic need in a man's life.

It is imperative to note that man has need of wide range of information in other to run

daily activities most effectively in his life time. The need to find what has to be, people

utilize information in various ways. Thus information is a resource that must be acquired

and used in other to make informed decisions. Every individual whether literate or non

literate, self employed or civil servant need information for decision making.

According to Utor (2000), information is understood in terms of books, journals,

magazines, public and private sector, documents of all kind of whether published for mass

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INFORMATION NEEDS AND INFORMATION SHARING AMONG MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES IN EKPOMA, ESAN WEST LOCAL GOVERNMENT AREA, EDO STATE.

circulation or unpublished and of restricted or confident nature, results or research efforts

which are made available to colleagues in form of reports, books articles and non print

materials.Traditionally, information has been stored in people's mind and it has been

updated and modified through social contact, learning and communication. As society has

grown and become more complex, a large quantity of information has been required.

However, increasingly numbers of people have been deprived access to information

through poverty, illiteracy or lack of knowledge and the disadvantage have been suffering

from increased information deprivation.

There is no universally accepted definition of Small and Medium Scale Enterprise

as a term, many scholars and researchers have defined the term small and medium scale

enterprise from different angles and perspective. The definition even change with time

depending on the level of development of the country (Akinbinu, 2003).

Under the venture of Capital Trust Fund Act 2004 (ACT 680) small and

medium scale enterprise (SME) is characterized as an industry, project, undertaking or

economic activity whose asset base excluding land and building does not exceed the cedi

equivalent of U.S one million dollars in value (Aregbeyen, 1999 CBN: 1996). The small

and medium industries and Equity Investment Scheme (SMIEIS) defines small and

medium enterprise as any enterprise with a maximum asset base of two hundred (200)

million naira excluding land and working capital and with the number of staff employed

not less than ten (10) or more than three hundred (300). Small and medium enterprise

have been defined along a broad range of size and type in terms of size, measures

used to classify SMEs include employment assets and revenue.

The definition of medium- sized industries may vary among different countries. There are

majorly two keys and ways to define the size of a business:

- The number of revenue,

- The number of employees.

Some industries are a lot more labour intensive and the definition of "small" may include a

large number of employees, other industries especially those that rely on technology or

specific skills of an individual may reach only a low employee number before being

bumped into the next size category.

The central Bank of Nigeria defines small and medium scale enterprise in Nigeria

according to asset base and number of staffs employed. The criteria are an asset base

between five (5) million and five hundred (500) million naira and staff strength between

eleven (11) and three hundred (300) employees.

Whatever definition it takes, SMEs are important to socio-economic

transformation and it is estimated that SMEs employ 22% of the adult population in

developing countries (Daniels and Ngwira, 2003). Apart from the number of employees,

there are other key factors that characterize the SMEs and these are related to the

management and the nature of operations. The SMEs may be managed by their owners

who are often assisted by family members (Okello-obura….. et al, 2009) in this regard,

the decision making system is quite flexible, informal and dependent on the personal

drive of one or more executives. By their vary nature of operating, the SMEs have a


10

narrow range of products/services and a relatively simple and unsophisticated

management structure with a narrow tolerance of risks. Individual SMEs experience

difficulties in achieving economics of scale in the purchase of inputs and one often

unable to take advantage of market opportunities that requires large production quantities

homogenous standards and regular supply. Above all, SMEs are confronted with

situations where decisions are made haphazardly and not based on accurate information.

In information science literature, information is understood as the need and

demand necessary to life's success and fulfillment.

Apart from Land, Labour, Capital and entrepreneur which happens to be four (4)

factor of production in business , Nwalo (2009)noted that information is at present

believed to be a fifth factors of production which is by no means inferior to the four

factor of production. This is to say that information is of paramount importance to both

small and medium scale enterprise. Tamiyu (2002) cited by Odunewo and Omagbemi

(2008), noted

that at all levels of human needs, individual would require information about the nature

and extent of their needs and about the resources they can harness to meet these needs.

Information is crucial not only to an individual need but as well as handling

managerial processes of business. Aiyebelehin (2011) citing Buckland (1991) defines

information as a process which occurs in the mind when a problem is united with data that

can solve it. Information is a part of a process of converting messages received into

knowledge. Within a business organization like small and medium scale enterprise, this

information must be gathered in the form of data and appropriately processed by the

information managers before it can be utilized.

Vividly, information needs and information sharing habits are seldomly used

because they are different in terms of analysis, while information need in nature is the

findings of that which is to fill a conscious or unconscious gap, information sharing habit

on the other hand tends to display the way and manner one pass out his or her findings

after the search of a valuable information. According to Jorosi, Holland (2000) supports

the sharing of information and ideas for effective product development. Sharing

information appropriately and securely is a vital step in helping organizations work

together to deliver better services to the public. Information sharing is important in

business in helping to promptly meet customers and clients needs.

To Wilson (2008) information is an individual or groups desire to locate and

obtain information to satisfy a conscious or unconscious need. Information is desirable in

human life; information is not an opportunity cost i.e. To say information cannot be

forgone for another as it (information) is inevitable.

Information needs can also be defined as that which may be vocal or written and

made known to the library or to some other information system. Therefore the need and

sharing habit of information has to be expressed in a particular form either orally,

verbally, by asking or questioning for it in writing.

Information need and sharing habit of managers of small and medium scale

enterprise varies according to various factors responsible in perpetuating its functions. The

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factors maybe background qualification of the manager's, job affiliation, individual's

employment has a great effort on his information need and sharing habit.

The need for the production of value added goods and services may put pressure on the

managers in business organization to seek for relevant information to improve their

information. Hwang (2011) reported that employees in a large insurance company in

Korea are motivated to use information effectively to make better decisions and seek for

information and share information to increase their productivity. When information is

appropriately managed, it goes a long way to enhance decision making, information is

paramount within the walls of an establishment, and information is a continuous process.

De Alwis and Higgins (2011) established that managers in Singapore used information to

prepare reports, strategic plan and executive summary. Information is necessary to make

plans, without good information an establishment will be stagnant.

The business environment is constantly changing and evolving. Business

themselves change over time and as they grow and develop, the information needs of the

managers change as well, the information system needed to support growth and

development will also need to change (Vakola and Wilson, 2004). It is therefore

important to review those information needs so as to continue to adjust business

operations with changing market needs. Information needs of managers varies from

manager to managers, the information needs of SMEs managers may range from accessing

finance/capital, developing managerial skills bench marking, business trends, new

technologies, government services available to business e.t.c.

Many managers do too much information seeking and less information sharing

and this often leads to information silo. Information silos exist because management

does not believe there to be enough benefit from sharing information and because

information might not be useful to personnel in other systems.

To ensure survival in today's competitive business world, small and medium

enterprise requires access to accurate and relevant information both at the start up

stage and during their day-today operations. small and medium enterprise generally

tend to be information intensive, this various interventions maybe required on the part of

the management to ensure that information needs and resources of the enterprise are met

and well managed through the use of information, top managers of firms are able to

reactively and pro-actively adapt their organizations environmental changes in order to

survive and prosper. Opara (2004) noted that the flow of information or data in an

organization is a continuous record of the status of the pertinent elements that affects the

survival and growth of the organization. Managers of SMEs need to have access to

adequate information to enhance productivity and to facilitate market access. The

establishment of an active SMEs sector and the effective utilization of quality business

information has been identified as crucial in attaining long-term and sustainable

economic growth for developed and developing countries alike (Corps, 2005). The

SMEs need tailor made information solutions i.e business information services that assess,


12

verify and apply information to a specific business problem (okello-Obura ….. et al,

2008). Human beings are continuously engaged in some activity or other in order to satisfy

their unlimited wants. Everyday, we come across the word "business" or "businessman"

directly or indirectly. Business has become essential part of modern world. Business is an

economic activity which is related with continuous and regular production and distribution

of goods and services for satisfying human wants.

The etymologies of 'business' stem from the state of being busy and imply

commercially viable and profitable work. Olagunju (2008) defines business as an

enterprise that engages in the production of goods and services that provide satisfaction for

consumer's i.e to say that apart from the objective of earning profit in establishing a

business enterprise, consumers satisfaction is also another objective. A business is a

concern, an enterprise or organization set up by an individual or group of individuals or

group of individuals for purpose of making profit.

STATEMENTS OF THE PROBLEM

Several studies on various aspects of information needs have been carried out in

the field of social science, humanities, science and technology, a number of reviews and

bibliography covers various aspects of information needs, however not many studies have

attempted to investigate information needs and sharing habit of small and medium scale

enterprise managers. Most previous literature are focused on information needs and

seeking behaviors, hence, not much has been done so far to cover the aspect of

information needs as well as information sharing habits in Nigeria.

Information is an essential resource for development. Small and medium scales

enterprise managers generally need information to enable them various duties in their

fields of endeavours.

Considering that the world and the rural areas in particular function on the flow of

information and that information itself is a prime resource, this study sought

to determine the characteristics that impact upon the manner in which information is

sought, used and shared by small and medium scale enterprise managers and the study

will cover all phrases of their information needs and sharing habits as opposed to previous

literature that focused on a particular aspect of information need and seeking behaviour.

This study is therefore designed to study the information needs and sharing habits of small

and medium scale enterprise managers.

OBJECTIVES OF THE STUDY The general objective of this study is to survey the information needs and sharing

habits of managers of small and medium scale enterprise.

The specific objective of this research studies are:

1. To find out the information needs of managers of small and medium enterprise.

2. To identify their various sources of information.

3. To examine the attitudes of small and medium enterprise managers towards

information sharing.

4. To unveil how information sharing among managers of small and medium

enterprise is done.

5. To examine the type of information managers of SMEs are willing to share.

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6. To discover the problems encountered by small and medium scale enterprise

managers when sharing information

RESEARCH QUESTION

1. What are the information needs of managers of small and medium enterprise

when carrying out their duties?

2. What are the various sources available to managers of SME when consulting

information?

3. What are the attitudes of SME managers towards information sharing?

4. How is information sharing carried out within small and medium enterprise?

5. What are the types of information managers of SMEs are willing to share?

6. What are problem encountered by SME managers in the course of information

sharing?

LITERATURE REVIEW

INFORMATION AND INFORMATION USE BY SME MANAGERS

Information is universally accepted as important resources. In any organization,

information is prerequisite for effective decision making. Consequently, the position or

handiness or awareness and use of right timely information ensure organizational

effectiveness. Information has been subjected to various definitions due to the increase

growth in the use of the term.

Aina (2004) opined that information means many things to different people. To

some people, information means news, while others refer to information as facts and yet

others view information as data. To the telecommunication engineer, information is

associated with bits and data, the philosophers identify it with recorded facts, with the

context or content or with the experience stored in the human mind, the microbiologist

consider information as the genres in DNA which are transmitted from one generation to

another and to the librarian, information is associated with recorded knowledge.

Information can be viewed as a "data that have been put into meaning and communicated

to a recipient who used it make decisions". Information is knowledge and wisdom that

contribute to the cultural, economic, educational, political and well being of a society or

nation. Afolabi (2003) identified setbacks to the flow of information like social, economic,

environmental, occupational and infrastructural setbacks. If these setbacks were not

removed, it would be difficult for any free flow of information from the sources through

media to the users.

Uhegbu (2001) saw information as power by which an individual or group can

get it's own ways in a social relationship. Information as powers confer unequal

opportunities on people as those who get it gets things done faster and easier while

those who do not have it are left out right in the scheme of opportunities. Information is

knowledge when it is performing the role of impacting knowledge on to an individual

where it reduces uncertainty. Information is intangible; it becomes tangible when it is a

thing, that is to say a physical object such as data or documents.

Austin (2007) is of the view that information starts whenever a message is conveyed from one person to another. It starts from our room when instructions are passed

from one member of the household to another. It continues in the class when ideas are


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passed across from the lecturers to the student, it is equally passed within subordinates in

an organization. Information is passed in different forms and has classification. In other

words, every individual or an organization needs a classified information on peculiar

information in order to function and achieve it's desired goals.

Afolabi (2003) argued that information is indispensable, an ingredient for social,

economic, industrial, political and technological advancement as it is apparent in every

facet of human endeavors. Burch and Grudinitski (2002) further viewed information as a

message of and reception of intelligence and knowledge which "appraise and notifies ,

surprises, reduce uncertainty, records additional alternative or help eliminates

individuals and stimulates them to action". Thus, information is not an end in itself but a

means to an end and so the origin of the need which can be intellectual, social and

cultural. Fosekette et al (2000) point out that "information is an explicit ingredient of

knowledge, but only when a human mind get to work on it becomes knowledge of itself.

Nwakwo (2004) perceives information to include "a wide range and variety of things

ranging from oral and printed words, figure, statements, files and documents to such

intangible elements as to needs, signals, rays or colour and waves". In the light of all the

definitions, it can be inferred that information is not a discipline like chemistry but it is

the bedrock of every discipline and every development. Without information, human

being will be wallowing in ignorance and thriving in chaos.

Information is the raw materials of managerial work. A large part of the

manager's information comes from or concerns the environment external to the

organization. Customer preference, competitor strategies, technological advancements,

government regulations and social and economic conditions are all in a constant state of

flux. Traditionally, management research has always recognized the important role of

information in managerial work. Managers use information in managerial decisions. The

work of managers is information intensive, managers are exposed to a huge amount of

information from a wide range of sources and selectively use the information to make

day to day decisions and to formulate longer term strategies.

The classic conceptualization of managerial work by Mintzberg (1999) clearly

articulates how the acquisition, dissemination and use of information lie at the heart of

managerial work. Mintzberg divides the work of mangers into three set of interlocking

roles.

- Interpersonal

- Informational and

- Decisional roles

By virtue of the formal authority vested in the position, the manager performs three

interpersonal roles:

- As figure head, the manager represent the organization in informal matters

- As leader the manger defines relationship with subordinates

- Finally, as liaison, the manager interacts with external persons to gain information

and favours.

Interpersonal roles give the manager access to many internal and external sources of

information and so enable three informational roles:

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- As monitor, the managers continually seek and receive information from a variety

of sources in order to develop thorough understanding of the organization and its

environment.

- As disseminator, the manager transmits special information into the

organization's information out to the environment. The unique access to information

combined with the authority empowers the managers to use information he has to

discharge four decisional roles:

- As an entrepreneur, the manager initiates "improvement project" that exploits an

opportunity or solve problem.

- As disturbance handler, the manager deals with unexpected but important events.

- As resource allocator, the manager controls the distribution of all forms of

organizational resources.

- Finally, as negotiator, the manager engages in major negotiations with other

organizations or individuals. The three set of ten managerial roles meld into a portrait of a

manager as an "information processing system".

In essence, the manager is an input output system in which authority and status give rise to

interpersonal relationships that lead to inputs (information) and these in turn leads to

outputs (information and decision) one cannot artibitrarily remove one role and expect the

rest to remain intact (Mintzberg, 1999) in fact, "it is the manager's informational roles that

tie all managerial work together linking status and the interpersonal roles with the

decisional roles" (Mintzberg, 1999).

Managers in business organizations may seek for and use information for

problem solving, decision making, business planning, social competence, creativity and

innovation, conflict resolution, market research and improved productivity all of which

have direct impact on business performance of an organization. Information seeking by

managers includes searching, locating selecting, comparing or differentiating, acquiring,

consulting, trail and error and even environmental scanning. Environmental scanning is

defined as the acquisitions of external environment, the knowledge of which would assist

management in planning the organization's future course of action (Choo and Auster,

1999).

Aguilar (1997) defines environmental scanning as "scanning for information

about events and relationships in a company's outside environment, the knowledge of

which would assist top management in its task of charting the company's future course of

action" certainly not all of the information from scanning may be actually used in making

strategic decisions, yet an piece of such information whether it is obtained with or

without a purpose could have an impact on managerial decision making.

Research on environmental scanning began in the 1960s with path findings

studies by Aguilar (1967) and Keegan (1968) since then most of the studies have revolved

around a few research themes: the effect of perceived environmental uncertainly on

scanning; the focus of scanning; information sources used and scanning methods. In each

of these areas it is possible to discern a consistent picture of how managers scan. With

regard to environmental uncertainty, most studies found that managers who perceive

greater environmental uncertainty tend to do more scanning (Auster and Choo, 1993. The


16

focus of scanning is on market related sector of the external environment, with

information on customer's competitors and supplies being the most important (Jain, 2002).

SOURCES OF INFORMATION OF SME MANAGERS

Sources of information are those medium through which information seekers get

relevant information. There are two (2) broad sources of information: formal and informal

sources in the view of Efe (2006) information sources are divided into four (4) types

which include people, organization literature and information services. Efe (2006) further

referred to those sources of information as those who are highly knowledgeable in a

particular field of study, also referred to as resources, persons, they provide authentic of

first hand information, facts ideas and data on any issue, events, subject topic e.t.c. people

as a source of information are used when the required information cannot be found in

literature of publications or when the people are ignorant of how to sought for information

in the case of SME managers, newspapers, television broadcast, co-workers e.t.c. are

sources of information other activities that serves as information source includes, seminar,

workshops, conference, meetings e.t.c.

The third source of information as out together or introduced by Efe (2006) is

literature. They are either primary or secondary in nature; the primary literature consists

materials which are original in nature and represents new knowledge. Information in

primary literature has not been modified. Examples include research report, thesis and

dissertations, conferences, proceedings. The secondary literature originates from the

filtering of primary sources through modification or re-arrangement. They include

textbooks, encyclopedia, abstract and indexes, dictionaries e.tc. Which SME managers

can use in meeting their information needs.

Dua (2000), studying Chinese SMEs using face to face interviews concludes that

some managers mostly used personal sources of information and rarely used formal

information services. Mc Lachlan (2003) through telephone interviews investigated

various aspects associated with the information needs of small business executives.

Results suggested that:

- Business managers relied more on magazines and to a lesser degree on trade

show, workshops, suppliers, seminars and professional organizations were the most

frequently cited sources of oral information.

- Market and economic conditions were the most frequently cited sources of oral

information. In a national study of over 200 CEOs in the Canadian publishing and

telecommunication industries, Auster and Choo (2003) found that the most frequently

reported sources were internal and personal.

Chalmers (1999) undertook a qualitative study on the needs for and uses of published and

personal information by managers in New Zealand. Among the findings was that:

- Most respondents did not systematically seek information from secondary

published sources to assist them in decision making and

- Environmental scanning usually involved the use of primary sources and where

published sources used, in most cases, they were supplements to personal sources.

SME managers rarely use formal sources when seeking for information as they mainly

sought information via personal sources.

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Bournois and Romani (2000) in their study of environmental scanning of firms in

France found that eight percent of the firms sourced their needed information form

databases and only five percent of them using competitive intelligence tools.

Popoola (2011) citing Jorosi (2005) reported that the managers in small and

medium enterprises in Botswana spent their time seeking for competition information,

customer information, economic information, technical organizations work in information

rich environment and they often faced with the problem of information overload. It must

be noted that managers are socialized to depend on an accurate, objective and generally

sufficient source of information, maybe to improve their creative and innovate efforts.

According to Popoola (2011) citing Rosewell (1997) asserted that company

information is commonly sought throughout industry and sources of business information

include information brokers, financial data, company accounts, financial news,

shareholders, stock brokers, internet, report, newspapers and magazines, broadcast media

(radio and television) textbooks e.t.c. similarly, Houtari and Wilson (2001) posited that

sources of business information are direct contact, printed information materials and

electronic information services. Business managers prefer to seek and obtained needed

information from the available sources that are current, relevant comprehensive and

reliable.

INFORMATION NEED AND SHARING HABITS OF SME MANAGERS

Line (2001) defined information need as what an individuals ought to have for his

or her work, his or her research, his or her edification, his or creation e.t.c. information

therefore is a necessity for substantial growth in all ramification of an individual's life.

Adewunmi (2003) also reported that information needs vary with users, time purpose,

location and alternatives. Hernon and Chen (2004) submit that information needs occur

whenever people find themselves in situation that required some form of knowledge

resolution.

Kumar (1998) also viewed that the identification of information needs maybe

expressed as an input process – output model the basic component of the systems are:

- Problems (Existing solution)

- Problem (Solving process) and

- Solution

With the afore-mentioned ideas by the investigators, information need is focused on an

individuals' best interest, when a problem exist, the most appropriate solution is needed,

and the solution hence is the information need. The concept of information need have been

proved intractable by Wilson (2000) by the simple reason that need is a subjective

experience which is not directly accessible to an observer. Information needs are those

innate desire or quest for relevant facts to be processed and used to settle life's option. The

information need of SME managers is determined by the type of information sought for,

the source of the information and the rate at which the information is being communicated

or transferred. Young (2002) found that information needs often reflect the age and

changing socio-economic, health, family and personal circumstances of people and are

therefore not permanent but ever-changing. Belkin et al (2004) describes information need

as an anomalous state of knowledge. It is pertinent to note that everybody needs


18

information to reach his or potential conscious activity under taken by human being is

directed towards the satisfaction of need. The more information available to a system

about itself and about it's environment, the more reliable it becomes and the greater its

chance of survivals (Ihenyen, 2010).

Mchombu's (2000) small explanatory study probed the information needs of

women in small business in Botswana in order to establish how these needs arose and

factors which create information sharing habits. The study employed structured

interviews as the main data gathering tool. Among the key findings, it was found that

respondents' information needs centred on business management, sources of financial

assistance, business diversification and legal information. Shokane (2003) investigated the

extent to which small and medium – sized enterprise in Acornhoek, (South Africa) make

use of business information for sustainable competitive advantage. The study utilized a

pre-structured questionnaire to gather data. The study's finding revealed that:

- Many business managers lacked information in managing their business.

- Many were not aware of their information needs and how business information

devices could support and advance their business activities when sharing information.

- Business managers still relied on informal sources for managing their business

enterprise consequently, the findings of a study conducted in one geographical and social

context have limited applicability in another context because of the significant differences

in the context, likewise, the information sharing habits of mangers in a developing country

context should not be generalized to a developing country or vise versa.

As a result, we know very little about sharing manager's information needs and sharing

habit. The net result of this limitation is a gap in the empirical literature that needs to be

filled.

RESEARCH METHOD In order to achieve a comprehensive result, this research work was

carried out using the descriptive method because it involves a systematic and

comprehensive collection of data or information about the opinions, attitude, feelings and

behaviors of people. Utsoko (2002) reaffirmed this when he said that the descriptive

research is used to collect data from a relatively large number of classes at a particular

time in order to foster the current status of particular population. The data intended for this

study was collected through application of questionnaires.

The population of this study comprised of all small and medium scale enterprises

in Esan West Local Government Area, Ekpoma. Presently, there is no official data on the

exact number of small and medium scale enterprise in Esan West L.G.A., but empirical

evidence shows that there are hundreds of them scattered around the local government

with many of them situated at Ekpoma, the Local Government headquarter.

Considering the nature of this study, a sample of two hundred (200) SME managers were

randomly selected from the available managers of small and medium scale enterprise in

Esan West L.G.A., Ekpoma. The method of data analysis that was used in this project was

the simple percentage (%) and frequency tables. The essence of this was to help the

researcher to see the similarities and relationship of the data.

DATA ANALYSIS AND PRESENTATION OF RESULTS

QUESTIONNAIRE ADMINISTRATION AND RESPONSE RATE

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A total of two hundred (200) questionnaires were administered. One hundred and

fifty eight (158) copies were successfully retrieved, representing 79% response rate and

these were found usable for analysis.

Table 1:

Demographic Profile of Respondents

Variables Frequency Percentage (%)

Gender Male

Female

57

107

36.1

63.9

Marital status Single

Married

Divorce

99

58

1

62.7

36.7

0.6

Highest Educational Qualification Primary Cert.

Junior

SSCE

Diploma

Degree

Post graduate

7

9

61

41

37

3

4.4

5.8

38.6

25.9

23.4

1.9

Income per annum 10,000- 50,000

51,000-100,000

100,000 & Above

31

68

59

19.6

43.1

37.3

Table 1 shows the results of the demographic profile of the respondents. From the table,

we can see that females were more than males with 101(36.9%) and (36.1%) respectively.

Among the managers, those that were single dominated the respondents with 99(66.7%) as

against those that were married with 58(36.7%) and divorce 1(0.6%) respectively. For the

highest education qualification of the managers, 61(38.6%) has SSCE, 41(25.9%)

diploma, degree 37(23.4%), post graduate 3(1.9%), Junior Certificate 6(5.8%) and primary

school certificate with 7(4.4%) respectively.

Finally, on the income per annum, managers that receive between 51,000-100,000

dominated the respondents with 68(43%) as against 10,000-50,000 with frequency of

31(19.6%) and 100,000 above with frequency of 59(37.3%).

Table 2:

What Information Do You Need?

S/N Items SA A D SD

1 Where to get goods 79

(50%)

70

(44.3%)

3

(1.9%)

6

(3.8%)

2 How to attract

customers

94

(59.5%)

51

(32.3%)

11

(6.9%)

2

(1.3%)

3 Taxes 26

(16.5%)

54

(34.2%)

65

(41.1%)

13

(8.2%)


20

4 Government

Regulations

20

(12.7%)

59

(37.3%)

65

(41.1%)

14

(8.9%)

5 Social-cultural issues 17

(10.8%)

59

(37.3%)

62

(39.2%)

20

(12.7%)

6 Festive seasons 53

(33.5%)

61

(38.6%)

33

(20.9%)

11

(7%)

7 Business management 54

(34.1%)

88

(55.7%)

14

(8.9%)

2

(1.3%)

8 Customer's retention 72

(45.5%)

70

(44.3%)

14

(8.9%)

2

(1.3%)

9 Customers information 63

(39.8%)

77

(48.8%)

14

(8.9%)

4

(2.5%)

Table 2 revealed that the most paramount information need of SME managers is on how

to attract customers with a total of 91.8% strongly agreed and agreed and the information

of less concern to SME managers is on social cultural issues as 51.9% Disagreed to the

need of this information.

Table 3:

Sources of information

S/N Where do you get

business information

from?

SA A D SD

1 From my customers 80

(50.6%)

50

(31.6%)

20

(12.7%)

8

(5.1%)

2 From my business

associates

54

(34.2%)

75

(47.4%)

24 (15.2%) 5

(3.2%)

3 Government officials 17

(10.8%)

36

(22.7)

85

(53.8%)

20

(12.7%)

4 Newspapers 32

(9.5%)

55 (23.4%) 55

(51.9%)

16

(15.2%)

5 Government

publications

15

(9.5%)

37

(23.4%)

82

(51.9%

24

(15.2%)

6 Union/Associations 25

(15.8%)

49

(31.1%)

68

(43%)

16

(10.1%)

7 Internet 36

(22.8%)

65

(41.1%)

41

(26%)

16

(10.1%)

8 Library 18

(11.4%)

38

(24.1%)

68

(43%)

34

(21.5%)

9 Television/Radio 30

(19%)

63

(39.9%)

41

(26%)

24

(15.1%)

10 Watching competitors 35

(22.2%)

72

(45.6%)

28

(17.7%)

23

(14.5%)

21


Table 3 revealed that the major source of information to SME managers is their customers

constituting a response rate of 82.2% strongly agreed and Agreed. The library was

however viewed as the least consulted information sources with a response rate of 64.5%

Disagreed and strongly Disagreed.

Table 4:

Reason for preferred source(s) of information

S/N Why Do You Prefer The Source

(s)?

SA A D SD

1 It is reliable 43

(27.2%)

64

(40.5%)

27

(17.1%)

24

(15.2%)

2 It is accessible 50

(31.6%)

74

(46.8%)

20

(12.7%)

14

(8.9%)

3 It is always current 55

(34.8%)

68

(43%)

23

(14.6%)

12

(7.6%)

4 It is easy to use 67

(42.4%)

54

(34.2%)

18

(11.4%)

19

(12%)

Table 4 revealed accessibility as the major reason why SME managers prefers their

consulted information sources. Accessibility superseded all other preferred sources with a

total of 78.4% responses on strongly agreed and Agreed. A close look at the table equally

shows that SME managers pay attention to reliability (67.7%), currency (77.8%) and ease

use (76.6%) while selecting a source of information.

Table 5:

Attitude towards information sharing

S/

N

What is Your Attitude towards

Information Sharing?

SA A D SD

1 To me, sharing information with my

workers is harmful

15

(9.5%)

42

(26.6%)

83

(52.5%)

18

(11.4%)

2 To me, sharing information with

workers is pleasant

14

(8.9%)

83

(52.5%)

51

(32.3%)

10

(6.3%)

3 To me, sharing information with my

workers is worthless

10

(6.3%)

22

(13.9%)

98

(62%)

28

(17.7%)

4 To me, sharing with my workers is

wise

26

(16.5%)

77

(58.7%)

43

(27.2%)

12

(7.6%)

5 I love sharing ideas with my

colleagues

22

(13.9%)

73

(46.2%)

55

(34.8%)

8

(5.1%)

6 I don‟t like sharing vital information

with competitors

53

(33.5%)

61

(38.6%)

29

(18.4%)

15

(9.5%)

7 I don't believe in hoarding vital

information as long as it won't affect

my salary

24

(15.2%)

70

(44.3%)

50

(31.6%)

14

(8.9%)


22

Table 5 Revealed that SME managers have a positive attitude towards information

sharing as 75.2% respondent perceive information sharing with workers to be wise.

However, the responses show that SME managers exercise great caution with regards to

the nature of information they give as 72.1% of managers are not willing to share vital

information.

Table 6:

Types of information SME managers are share

S/N What Type Of Information Are

You Willing To Share?

SA A D SD

1 Profit making 21

(13.3%)

23

(14.6%)

78

(49.4%)

26

(16.5%)

2 Information of products 30

(19%)

84

(53.2%)

35

(22.1%)

9

(5.7%)

3 Information on know-how 25

(15.8%)

81

(51.3%)

39

(24.7%)

5

(3.2%)

4 Customer retention 22

(13.9%)

73

(46.2%)

52

(32.9%)

11

(7%)

5 Price of goods 23

(14.6%)

64

(40.5%)

64

(40.5%)

7

(4.4%)

6 Personal management 20

(12.6%)

52

(32.9%)

75

(47.5%)

11

(7%)

7 Business management 21

(13.3%)

74

(46.8%)

51

(32.3%)

12

(7.6%)

8 Best business location 21

(13.3%)

74

(46.8%)

47

(29.8%)

16

(10.1%)

9 Wages/salary issues 15

(9.5%)

43

(27.2%)

72

(45.6%)

28

(17.7%)

Table 6 revealed that SME managers to a large extent relent in sharing information on

profit making with 65.9% total response rate of Disagreed and strongly. However, they are

willing to share information on information of product (72.2%), information on know-how

(67.1%), and business management (60.1%) respectively.

Table 7:

How SME managers share information

S/N How Is The Information

shared?

SA A D SD

1 Through phone calls 53

(33.5%)

64

(40.5%)

30

(19%)

11

(7%)

2 Physical/ verbal

communications

50

(31.7%)

80

(50.6%)

10

(6.3%)

18

(11.4%)

3 E-mail 59

(37.3%)

62

(39.2%)

17

(10.8%)

20

(12.7%)

23


4 Social networks (whatsapp,

facebook, 2go e.t.c.

47

(29.8%)

54

(34.2%)

32

(20.3%)

25

(15.8%)

5 Union/association meetings 46

(29.1%)

63

(39.9%)

24

(15.2%)

25

(15.8%)

Table 7 Revealed physical/ verbal communication to be the major channel/medium for

sharing information among managers with 82.3% total response for both strongly

Agreed and Agreed. The table equally revealed that Union/Association (69%) is the lease

likely medium of sharing information among managers

Table 8:

Challenges of information sharing

Table 8: revealed poor attitude of SME manager's colleagues to be the major problem

encountered by managers in the cause of information sharing with a total of 83.5%

agreed and strongly agreed.

DISCUSSION OF FINDINGS

Majority of the SME managers were found to be females (63.9%) while the males

accounted for (36.1%). This is similar to Jorosi (2000) findings on the information needs

and information seeking behaviour of SME managers in Botswana. It was found that there

were more females SME managers than males in Botswana.

Majority of the SME managers were found to be single (62.7%) and possess

SSCE as their highest educational qualification. This is also similar to Jorosi research

where it was found that SME managers in Botswana possess SSCE as their highest

educational qualification.

The findings revealed that information on how to attract customers with a total of

(91.8%) is the most paramount information need for SME managers. This finding is

equally similar to Olagunju (2008) findings that claims customers attraction and satisfaction is the main objective of a business apart from the objective of earning profit.

S/N What Are The Problems

Encountered When Sharing

Information?

SA A D SD

1 Network failure 43

(27.2%)

34

(21.5%)

28

(17.7%)

53

(33.5%)

2 Poor attitudes of my colleagues 78

(49.3%)

54

(34.2%)

17

(10.8%)

9

(5.7%)

3 Lack of trust 63

(39.9%)

74

(46.8%)

10

(6.3%)

11

(7%)

4 Fear of losing customers 73

(46.2%)

66

(41.8%)

9

(5.7%)

10

(6.3%)

5 Poor power supply 29

(18.4%)

58

(36.7%)

41

(25.9%)

30

(19%)


24

The findings revealed that the major source of information to SME managers is their

customers (82.2%), similarly Shokane (2003) affirmed in his investigation to the extent to

which small and medium sized enterprise in Acornhoek (South Africa) make use of

business information for sustainable advantage, it was found that managers still relied

enormously on informal sources of information, customers being one of the informal

sources. Chalmers (1999) in this regard also found out that SME managers rarely use

formal sources when seeking information as they mainly sought for information via

personal sources.

The findings revealed that accessibility is the major reason why managers of SME

prefer informal sources of information with (78.4%) total response to accessibility

preference. This is also similar to Jorosi (2000) findings which saw accessibility as the

highest frequency of information sources preference.

The findings revealed that SME managers have a positive attitude towards

information sharing as 75.2% respondent attest to this. Similarly, Holland (2000) in his

research found out that most business personnel love to share information but however, on

some occasion they relent for fear of been retarded. This is slightly different from

Shokane (2003) investigation that found out most business were not aware of how

information devices could support and advance their business activities when sharing

information and as such, they relent in sharing information. Consequently, the findings of

a study conducted in one geographical and social context have limited applicability in

another context because of the significance differences in the context, likewise, the

information sharing habits of manager in a developing country context should not be

generalized to a developing country or vice versa. The findings also revealed that the

major channel/medium for sharing information is physical/verbal communication (82.3%)

and poor attitude of SME managers colleagues was revealed as the major problem

encountered by managers in the cause of information sharing with (83.5%) as affirmed in

Belkin (2004) study which revealed fear of been outshined in an enterprise as the major

reason why managers refuse to share information.

RECOMMENDATION Based on the findings of the study it has been that SME managers should maintain cordial

relationship with their customer. Also SME managers should build a positive attitude

among their colleagues to enhance information sharing. Workshops, seminars,

conferences should be organized by Government and Non-Governmental organizations to

prepare SME managers for a competitive environment. This research generates a number

of potentially meaningful directions for further research, the researchers therefore

recommend that further research be conducted to explore different setting in order to

unveil what drives human information sharing habits in different environmental contexts.

CONCLUSION

As business environment becomes intensely competitive, firms are confronted

with challenges to adapt, survive and prosper. Numerous decisions on the source and

allocation of resources are necessary and executives need an abundance of information. In

fact, managers want a familiarity with the supply of resources and market conditions, an

25


awareness of these problems and potentials and a store of up-to-date facts, opinions and

insights which will facilitate their negotiation and decision making activities.

The information needs and sharing habit of SMEs has received little or no

attention from researchers in Esan West Local Government Area, despites the fact that an

understanding of this phenomenon is considered crucial to the growth and long-term

survival of these firms. This study is one of the few systematic probes into the information

needs and sharing habit SME managers in Esan West a developing Local Government

Area context as district from a developed L.G.A. context because of environmental

munificence. As such the study fills an apparent gap in the empirical literature and

broadens and enriches our understanding of the information sharing habit research by

presenting evidence from an environment that prior research has tended to neglect.

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Huma Salma Gillani

28



Health and Economic Implications of Solid Waste Dumpsites:

A Case Study Hazar Khwani Dumpsite - Peshawar City

Huma Salma Gillani

Department of Economics,

Institute of Management Sciences,

Peshawar - Pakistan

Abstract

This study evaluates the economic burden of diseases associated to the inappropriate

disposal of solid waste at dumpsite located at the Hazar Khwani, Peshawar provincial

headquarters of Khyber Pukhtoon Khawah Province of Pakistan. A sample of 200

respondents was selected from 5% of the total population residing in the target area based

on two-stage sampling technique. The sample data was regressed with the help of Tobit &

Poisson models for estimation of mitigation costs and work days lost. Poisson & Tobit

model estimates suggest an inverse and significant association between the distances and

work days lost and mitigation costs, respectively. Annualized monetary benefit of one

representative individual in Pakistani Rupees is from 186,612,897.66 to 192,559,787.244

for residential proximity within 4km radius of the dumpsite. Therefore, the study

recommends adoption of an alternate solid waste management solution, such as

composting or sanitary landfill, or providing the populace of the target area comprising of

residential facilities at a considerable distance from the dumpsite.

Keywords: Municipal Solid Waste; Dumpsite; Environmental Economics; Cost of Illness

I. INTRODUCTION

Waste also referred as rubbish, garbage or refuse is the by-product of the human

economic activities. The solid wastes have adverse impact on the environments as well as

public health, and are major source of water, land and air contamination. Municipal Solid

Waste Management (MSW) is a much bigger problem of developing economies as

compare to developed nations. The South Asian region, specifically Pakistan is no

different from the rest of the world and is faced with the challenge of providing scientific

SWM solution to its population. The lack of awareness and implementation of existing

faulty framework add to the problem of defective SWM.

The civic facilities managers of major cities in Pakistan in-spite of serious and

continuous efforts are unable to cope with the menace of municipal waste management.

The road sides and empty open areas overflow with filthy unhygienic heaps of wastes

portraying a sorry state of affair all over the country. This uncollected waste a cause of

environmental degradation and is a source of many life threatening diseases and economic

cost of huge magnitude to the general public. The waste management is the centre of

attention of the municipal authorities around globe because of increased pollution which

29



leads to environmental hazards and economic costs due to non-existent or inappropriate

wastes management. The term waste management covers the collection, segregation,

handling and disposal of wastes in an environment- friendly manner. (A. A. Khan, Ahmed,

& Siddiqui, 2012; J. A. Khan, 2006; Mahar et al., 2007)

Study Area and Statement of the Problem

Peshawar lies between 33° 44′ and 34° 15′ north latitude and 71° 22′ and 71° 42′

east longitude covering an area of 1257 sq. km. According to a UNFPA report, the city’s

population has crossed 2.5 million3. District Peshawar is the provincial capital of K-P

consisting of 92 union councils.

The Municipal Corporation (MC) is responsible for managing the solid waste of

urban as well as rural areas; the Peshawar Development authority (PDA) is responsible for

the management of Hayatabad and Regi Lalmah whereas the Cantontment is being

independenly supervised by the Cantonment Development authority (CDA).(J. A. Khan,

2006; Pak-EPA/OECC, 2007)

Peshawar Municipal Corporation is still utilizing old fashioned and discarded

waste management techniques of open dumping and burning. There are two dumping sites

on the outskirts of the city which have also become a part of the city due to population

explosion and city extension. These dumpsite situated at Hazar Khwani and Lundi Akhune

Ahmed employ the same techniques or open dumping and burning or burying along the

roadsides (J. A. Khan, 2006).

The dumpsite at Hazar Khwani is located at Ring Road about 7 km from the city

centre. The problems addressed by the study are; the inappropriate waste disposal methods

and costs evaluation of ill-planned and mis-managed waste. Dumping, burning and

burying of wastes in open spaces though reduce the quantities of wastes are no more a

desirable waste management solution. Resultantly, it impacts the health of the residents in

adjacent localities through spreading skin and respiratory tract infections, stomach and

chest related problems, malaria, dengue and other chronic diseases, psychological

disorders, gastrointestinal problems, and allergies. It is also worth mentioning that these

dumping sites have a very high economic and social cost not yet estimated. (Salam, 2010;

UNEP, 2007)

Various studies have proved that economic cost of illness to the people living

near dumpsite is much higher than to those living in a cleaner environment (Folefack,

2008). Therefore, the aim of this paper is also to estimate the costs of illness of the

residents residing near the Hazar Khwani dump site (the largest in-operation dumping

ground).

II.MATERIALS AND METHODS

A structured questionnaire was administered by three trained enumerators from the

targeted respondent households, living within the 4km radius of the Hazar Khuwani

1 Article published in Express Tribune: “Bane or boon: Urbanization, displacement pushes

Peshawar’s population over 2.5m” Posted By Irfan.Shaikh On Nov 5, 2013

Huma Salma Gillani

30

Dumpsite. Before conducting the final survey, questionnaire were pre-tested for checking

the reliability and validity and the econometric specification.

Cross-Sectional household survey collected health and medical expenditure data from

the household as a primary source. The research adopted multistage sampling procedure

following the sampling technique used in Gupta (2006) and Aggrey (2010). The purposive

sampling was used in the first stage and Union Council 37 (Hazar Khuwani-I) of Town VI

was identified as a sample unit for data collection. The second stage involved stratifying

the households in the area according to the residential proximity from the open dump

which included Afridi Ghari, Chamkani, Jameel Chowk and Dir Colony.

The sample size consists of 200 households from the Union council 37-Hazar

Khuwani I of Peshawar district. The sample constitutes 5% of households, out of the total

4,236 residential properties within four-kilometer radius of the dumpsite. Data collection

was carried out for one month, i.e. November, 2013, only due to time limitation.

Methodology:

The theoretical model that is being employed is the simplified version of the

health production function (Freeman, 1993) as used by (Adhikari, 2012), (Gupta, 2006)

and (Chowdhry & Imran, 2010), to estimate the optimal choice of medical expenditure.

The basic individual health production function can be written as

H = H (Q, M, X) (1)

Where, H represents the number of work days lost referring to the health status of

the individual which is positively related to the level exposure to pollution (Q); and

negatively related to the mitigation activities (M) carried out by the individual; and X

includes the vector of individual‟s health characteristics.

The utility function (U) of an individual is defined as

U = U (C, L, H (Q, M, Z), Q) (2)

with U/C, U/L O and U/H O.

C is consumption of other commodities, L is leisure and H is health status and Q

representing the level of pollution.

The individual allocates his non-labor income (Y); wage rate (w); the income

earned from work such that the sum of these two components gives the total income of an

individual (T-L-H) and the price per unit of mitigating activity (PM).

The budget constraint for an individual is expressed as

Y+ w (T-L-H) = C+PMM (3)

Here, w is the wage rate, while price of M are given by PM, respectively, and the

price of aggregate consumption is normalized to one. The individual maximizes U by

choosing C, L and M, subject to budget constraint (3).

The demand for mitigating activities for an individual can be written as:

M =M (PM, H, Q, X, Z) (4) Where;

Given the pollution level (Q), prices of mitigating activities (PM), wage rate (w), income

31



(Y), and other exogenous variables (X), individuals maximize (1) with respect to X, M,

and L given the budget constraint (3). By solving the following problem,

Max G= U (X, L, H, Q) + [Y+ w (T-L-H)-X-PM M] (5)

Where, represents the Lagrange multiplier The first order conditions of the optimization problem yields the following

demand functions for mitigating activities (PM), which depend on prices, wage rate (w),

non labor income (Y), level of pollution (Q), and the vector of individual characteristics

(X).

The cost of illness (COI) can be derived as the sum of individual‟s COI as the

sum of lost earnings due to workdays lost and medical cost to the concerned individual as

follows:

dQdMP

dHdQ

wCOI M (6)

ECONOMETRI C SPECIFICATI ON OF THE MODEL The study aims to quantify the health costs associated with the inappropriate

waste management. Therefore, both the functions namely; health production and demand

for mitigating activities functions are being employed for cost assessments and evaluations

using Poisson and Tobit Regression models. is to be estimated. (Gupta, 2006; Chowdhry

& Imran 2010; Naveen, 2012)

The Poisson regression model estimates the household health production function

as:

Hit = E (Hit) + Uit = it + Uit

ln it = β1 1n Xit + Uit

According to this model it is the mean value of the number of sick days, β1 is the vector

of regression coefficients, and Xit is the vector of independent variables.

The Tobit model is used to estimate the demand function for mitigating activities is

specified as:

M*it = Xit β2 + Uit

M*it is a latent variable with

M*it = Mit if Mit >0

M*it =0 if Mit ≤ 0 Where, β2 is the regression coefficients vector and Xit is the

independent variables vector.

The two estimated reduced form equations of the health production function and

the demand for mitigation activities are:

LogPCIILLSUFAWRMRST

EDUGNDAgeAgeDSTPRCODRH

1211109

87

2

654321

(7)

LogPCIILLSUFAWRMRST

EDUGNDAgeAgeDSTPRCODRM

1211109

87

2

654321

(8)

Huma Salma Gillani

32

μ and ώ are the stochastic error terms

* Explanation of the variables is given in Table 1

III. RESULTS AND DISCUSSION

REGRESSION RESULTS

Using the statistics software STATA, the results of the regression analysis are

reported in this section. The estimated Tobit equations for the demand for mitigating

activities (Table 2) while in addition to the Poisson, and Negative Binomial Regressions

are estimated for the dose response function (Table 3 and 4). We used the Tobit results in

Table 2 and the Poisson results in Table 3 to compute the annual health benefits to a

representative individual and the entire city due to living in a polluted area.

For estimating the effects of pollution variables and the individual characteristics

on the mitigation costs incurred by the household, mitigation costs were taken as the

dependent variable. As it is a discrete variable, it violates the linearity assumption of the

least squares, therefore Tobit regression is being employed for getting better results.

Whereas the dose response function is being estimated by employing the Poisson and

Negative Binomial regression models s the dependent variable, i.e., number of work days

lost due to living in a dirty environment. However, there are two separate tables for

estimating the number of work days lost with distance and odor. The rationale for

estimating them separately was that odor and distance were not giving significant results

when computed together because of multicollinearity between them.

INTERPRETATION OF TABLE 2- TOBIT REGRESSI ON

The parameter estimates from the reduced form equation of mitigation cost are presented

in table 2. The significant and negative coefficient of distance (DST) measured in

kilometers, which was used as a proxy for the pollution variable, indicates a monthly

reduction in the mitigation costs by Rs. 1258/- after moving away from the dumpsite.

Similarly, the burning practice (PRC) adopted has a negative relationship with the

household cost on mitigating activities, which implies that the cost of people living at a

distance of 4km or more is PKR. 321/-, less than those who live within the 2km or less

radius of the dumpsite. The pollution variable, odor (ODR) as reported by 70% of the

respondents was troubling odor nuisance, so their mitigation costs increases although it is

statistically insignificant. The socio-economic variables such as gender (GND), education

(EDU), marital status (MRTS) have positive signs, as expected, but insignificant. The

coefficient of age is negative and that of age2 is positive. Both the coefficients are

significant at 1% and 5% levels, respectively. The coefficient of LogPCI is positive and

significant which means that as the level of income increases so does the mitigation cost of

the respondent. It can be seen that the coefficients for household type is negative and

significant, whereas the awareness level of the respondent is insignificant and have an

inverse relation with the mitigating costs.

Interpretation of Table 3- Poisson and Negative Binomial for distance and Work

Days lost Table 3 shows the estimates of the reduced form of health production function

due to work days lost. The pollution variable, distance (DST) measured in kilometers is

negative; as me move away from the dumpsite the expected work days lost decreases. If

33



the distance is increased, expected work days lost is decreased 2.8% (100*0.028). The

coefficient of burning practice adopted (PRC) is positive and significant at 1 percent,

showing an increase in the sick days due to the emissions of the burning of wastes makes

the state of health of the people residing near the dumpsite more vulnerable. As the

emissions from the burning of wastes increases, the expected number of work days lost

increases by 20%. The socio-economic indicators of the respondents‟ show that age,

education (EDU), gender (GND) and marital status (MRTS) have their expected signs but

some of them, such as age and gender are only statistically significant at 1% and 10%,

respectively. The LogPCI of the respondents is statistically significant and is negatively

influencing the days of illness. This implies that the more the respondent is exposed to the

pollution originating by the dumpsite; the probability of the work days lost is increased

positively by more than 100% and is highly significant. However, results from the same

table shows that the awareness level (AWR) doesn‟t have any insignificant impact on the

work days lost and do not have the expect sign either.

The negative binomial estimates do not show any statistical significance with all

the variables. In fact the signs of the coefficients are also changed from those of Poisson

regression estimates. Only the coefficient of the illness suffered (ILLSUF) by the

respondents‟ is significant and has the expected sign, which implies that due to living in a

polluted area the probability of expected work days lost increases by more than 100%.

INTERPRETATION OF TABLE 4- POI SSON AND B INOMIAL FOR ODOR AND

WORK DAYS LOST

Table 4 shows that the coefficient of odor nuisance (ODR) is positive and

significant at 1% level, as expected. The probability of the expected work days lost, who

were troubled by the odor nuisance is almost 18 %. As the workers work in an unhealthy

environment, so, it positively affects their hours of work. However, results from the same

table shows that 1 unit increase in the burning practice adopted by the municipality will

increase the probability of work days lost by 19% and is highly significant. The

respondents‟ characteristic shows that age, education, gender and marital status have the

expected signs but only age is statistically significant at 1%. The awareness level of the

participants is negatively affecting the potential of working hours but does not explain any

significant impact. The log of per capita income (LogPCI) of the respondents is

statistically significant and is negatively influencing the days of illness. This implies that

the more the respondent is ill, the less the income would be generated and the probability

of the sick days increases positively by more than 100% at 1% significance level.

However, the results interpreted from the negative binomial regression of the dose

response estimations does not show any significant relationship with the pollution

variables, respondent‟s characteristics as well as the respondents‟ per capita income and

awareness levels; except for the illness suffered by the respondents due to living in a

polluted area which is highly significant.

WELFARE GAI NS The COI estimates provided in this study are lower bounds estimates as they

exclude the Avertive expenses by the people living in a polluted area. The total benefits to

Huma Salma Gillani

34

a person should include the benefits from avoiding the number of sick days due to illness

and saving mitigation costs. To calculate the benefits in monetary terms from living at a

distance more than 4km, the marginal effects from the Tobit regression, given the

coefficient of distance multiplied by the probability of the mitigation costs considering

only the positive values (Gupta, 2006; Naveen, 2012).

TOBIT REGRESSI ON RESULTS FOR D ISTANCE AND ODOR

FOR D ISTANCE

The distance was taken as the main variable in the study for measuring the

mitigation costs and the work days lost.

Saving from reduced mitigation costs per year = β * Pr (MC>0) * 365/30

Therefore, the estimated annual welfare gain to a representative individual in the

sample is PKR. 15,305.7 /-, per annum due to living at a distance more than 4km from the

dumpsite. So the estimated annual reduction in the mitigation costs for the entire

employed population of the Union council4 will be PKR. 192,559,787.244 (US$

1,816,601.77)5

FOR ODOR

The other main independent variable that influence the mitigation costs and the

work days lost was Odor.

Saving from reduced mitigation costs per year = β * Pr (MC>0) * 365/30

Therefore, the estimated annual welfare gain to a representative individual in the

sample is PKR. 14,833.016 /-, per annum due to living at a distance more than 4km from

the dumpsite. So the estimated annual reduction in the mitigation costs for the entire

employed population of the Union council will be PKR. 186,612,987.66(US$

1,760,499.88)

Poisson Regression Results for Distance and Odor

For Distance Similarly, the number of work days lost due to living around a dumpsite,

computed from the Poisson regression will be as follows:

Restricted days per annum = 30/365** Xe

; where, α is the coefficient of distance

and eΣαX

is the predicted value of the Poisson regression.

The results of Poisson regression estimates shows that as the distance increases

the work days lost decreases by 0.029. Whereas the annual restricted days saved for

increasing the distance for more than 4km will be 0.353. The average per day wage rate of

the sample was PKR. 848. As 27%6 of the population in the area is employed, so the

estimated annual benefit for saving the sick days would be PKR. 3,766,022.917 (US$

35,528.52)

4 Households in UC 37 are 4326; average family size is 11, therefore, the population of UC-37,

Hazar Khwani-I, Town VI is 46, 596 5 The exchange rate used is USD=106 PKR.

6 27% employed population is 12,580.92

35



For Odor Similarly, the number of work days lost due to living around a dumpsite,

computed from the Poisson regression will be as follows:

Restricted days per annum = 30/365** Xe

; where, α is the coefficient of distance

and eΣαX

is the predicted value of the Poisson regression.

The results of Poisson regression estimates shows that as the distance increases

the work days lost decreases by 0.18. Whereas the annual restricted days saved by

increasing the distance for more than 4km will be 2.19. The average per day wage rate of

the sample was PKR. 848. As 27% of the population in the area is employed, so the

estimated annual benefit for saving the sick days of the employed population would be

PKR. 23,364,278.15 (US$ 220,417.72)

CONCLUSION

Both, Tobit and Poisson regressions shows that distance has a negative

relationship with the mitigation costs and the work days lost, respectively. This implies

that we are going to accept the hypothesis that the cost of illness of the people living near

the dumpsite is higher than that living far from it. The health status of the people living in

the residential proximity of the dumping site is vulnerable and needs to be taken seriously

by the local authorities. The annual health benefits from having an alternate waste disposal

system, e.g. composting will save up to PKR. 186,612,897.66 to 192,559,787.244. Hence,

it is recommended that the population should be provided with colony which is situated at

least more than 4km from the dumping ground or the government should adopt an

alternate waste disposal method, such as composting to reduce the adverse health effects

and odor nuisance originating from the dumpsite.

IV. CONCLUSIONS AND RECOMENDATIONS

Conclusions

Socio-politico economics as one of the important branches of economics serves the

concept of social welfare and equality. SWM is a social problem with high costs and

environmental disasters. It needs to be tackled in a scientific manner meeting the

challenges of today‟s world. All stakeholders must share the responsibility and contribute

towards solution of this environmental menace with dedication, sincerity and devotion.

Federal and provincial governments provide sufficient financial and human capital to

the municipal authorities within the ambient of prevailing laws. Good governance is the

key to the successfully tackling the issue under discussion. Therefore, authorities

responsible must meet the required standards, all local, national and global prescribed

regulations. The transparency and accountability will ensure immediate and successful

implementation of all recommendation and suggestions enumerated in this paper.

The study evaluates the negative health and environmental challenges of old-

fashioned SWM practices in Peshawar city using the Cost of Illness (COI) approach and

the alternate SWM practices accessible, keeping in mind both the present and future needs.

The health status of the residents living within the 4km radius of the Hazar Khwani

dumpsite is assessed employing the Tobit and Poison regression models for estimating the

association between the mitigation costs of the residents from the distance of the dumpsite

Huma Salma Gillani

36

and the odor nuisance due to living in a polluted area. From the Tobit results it is observed

that there is a negative association between mitigation costs and the distance from

dumpsite. Correspondingly, the Poisson regression estimate shows that if the population

moves away from the dumpsite at a distance of 4 km or more than 4km, it results in the

reduction of work days lost. The Poisson results also shows that odor nuisance is much

higher for the people living within 3km radius than those living 4km away from the

dumpsite, as reported by the respondents during the survey, for which it is suggested that

an alternate waste disposal method, such as composting or sanitary landfill should be

adopted which yield low health costs, improved infrastructure and healthy environment for

the general public. The annual welfare gains due to adoption of environment-friendly

SWM practices to a representative individual in the study area is in the range of PKR.

186,612,987.66 -192,559,787.244.

Recommendations

After studying the solid waste condition in Peshawar and for reduction in the

burden of disease, some recommendations which local municipalities can adopt to

improve the current situation are as follows:

1. Public and private partnership should be encouraged for adoption of new waste disposal

technologies such as composting and incineration.

2. The people living around the dumpsite belonged to lower middle income group or lower

income group brackets, are more exposed to environmental and health hazards, so the

local government should provide them a colony or a community at a considerable distance

that is affordable for them.

3. The municipal authorities should define the boundary walls of the dumping ground so that

the exposure of environmental and health hazards are restricted and the health costs

associated with living in a polluted area can be reduced.

4. A comprehensive waste management policy needs to be developed to efficiently deal with

all types of wastes, reflecting the waste management hierarchy. The policy should identify

an integrated approach in coordination with other policies to lessen waste generation.

LITERATURE CITED Adhikari, N. (2012). Measuring the Health Benefits from Reducing Air Pollution in

Kathmandu Valley (Working Paper). from SANDEE

Balasubramanian, M., & Birundha, V. D. (2012). An Economic Analysis of Solid

Waste Management in Madurai District, Tamil Nadu. Applied Journal of Hygiene, 1(1), 1-

7.

Basnayake, B. F. A., Visvanathan, C., Trankler, J., Chiemchaisri, C., Joseph, K., & Gonming, Z. (2004). Landfill Management in Asia-Notions about Future Approaches to

Appropriate and Sustainable Solutions. from CISA, Environmental Sanitary Engineering

Centre

Chowdhry, T., & Imran, M. (2010). Morbidity Costs of Vehicular Air pollution:

Examining Dhaka City in Bangladesh. from SANDEE

Folefack, A. J. J. (2008). The Economic Costs of Illness from the Disposal of the

Yaoundé Household Waste at the Nkolfoulou Dumping Site in Cameroon. J. Hum. Ecol.,

24(20).

37



Freeman, A. M. (1993). The Measurement of Environmental and Resource Values.

Washington, DC.

Gordon, H. S. (1954). The Economic theory ofcommon property resources: the Fishery.

Journal of Political Economy, 62, 124-142.

Gupta, U. (2006). Valuation of urban air pollution: a case study of Kanpur City in India.

Kathmandu. from SANDEE

Khan, A. A., Ahmed, Z., & Siddiqui, M. A. (2012). Issues with solid waste management

in South Asian countries: A situational analysis of Pakistan. Journal of Environmental and

Occupational Sciences, 1(2), 129-131.

Khan, J. A. (2006). Solid Waste Management System of Peshawar. Journal of Pakistan

engineering council, 43(8).

Mahar, A., Malik, R. N., Qadir, A., Ahmed, T., Khan, Z., & Khan, M. A. (2007). Review and Analysis of Current Solid Waste Management Situation in Urban Areas of

Pakistan. Paper presented at the International Conference on Sustainable Solid Waste

Management, Chennai, India.

Masood, F. (2013). Solid Wastes Use as an Alternate Energy Source in Pakistan. (M.Sc

Uplublished), University of Arcada, Helsinki, Finland.

Pak-EPA/OECC. (2007). Urban Environmental Problems in Pakistan (A Case Study for

Urban Environment in Hayatabad, Peshawar) Peshawar.

Salam, A. (2010). Environmental and Health Impact of Solid Waste disposal at

Mangwaneni Dumpsite in Manzini: Swaziland. Journal of Sustainable Development in

Africa, 12(7).

UNEP. (2007). Environmental Pollution and Impacts on Public Health: Implications of

the Dandora Municipal Dumping Site in Nairobi, Kenya. Kenya: United Nations

Environmental Programme (UNEP).

Huma Salma Gillani

38

Tables

*TABLE 1- SUMMARY VARIABLES TABLE

Variable

Code

Variable

Type Variable Definition and Measurement

Age Continuous Age of the respondents

EDU Continuous Education in years of the respondents

MRST Dummy Marital Status of the respondent; if married=1; otherwise= 0

GND Dummy Gender of the respondent, for male=1& for female=0

LogPCI Continuous The log of the per capita income of the household per month

HHtype Dummy Tenure of dwelling: Owner=1; otherwise =0

DST Continuous Distance from the dumpsite from 1km to 4km

ODR Dummy Annoyed by the odor nuisance; if yes=1; 0 otherwise

AWR Dummy Living near a dumpsite is harmful: If aware=1; otherwise = 0

PRC Dummy Disposal practice by government: Burning/burying=1; 0

otherwise

M Continuous

The household per month costs on all the mitigating activities,

i.e., medication costs, laboratory costs, dr.‟s fee and the travel

costs in the last one month

H Discrete The number of work days lost due to illness in the last one

month

ILLSUF Dummy The illness suffered due to living near a dumpsite;

0=infections, 1= fevers; 2= chronic illness.

39



TAB LE 2- DE SC R I P TI V E STA TI STI C S

Variable Obs Mean Std. Dev. Min Max

M 1782 569.3732 4215.25 0 137300

H 1782 1.916386 5.159475 0 45

Odr 1782 0.70651 0.455489 0 1

Prc 1782 0.767677 0.422433 0 1

Dst 1782 0.936027 1.235064 0 4

Age 1782 22.74411 17.45001 0 94

age2 1782 821.6263 1147.325 0 8836

Gnd 1782 0.546577 0.497966 0 1

Edu 1782 4.62514 5.241372 0 18

Mrst 1782 0.404602 0.490953 0 1

Hhtype 1782 0.590909 0.491804 0 1

Awr 1782 0.704265 0.456501 0 1

Illsuf 1782 0.122335 0.391753 0 2

M 1782 569.3732 4215.25 0 137300

H 1782 1.916386 5.159475 0 45

Odr 1782 0.70651 0.455489 0 1

Prc 1782 0.767677 0.422433 0 1

Dst 1782 0.936027 1.235064 0 4

Age 1782 22.74411 17.45001 0 94

age2 1782 821.6263 1147.325 0 8836

Gnd 1782 0.546577 0.497966 0 1

Edu 1782 4.62514 5.241372 0 18

Mrst 1782 0.404602 0.490953 0 1

Hhtype 1782 0.590909 0.491804 0 1

Awr 1782 0.704265 0.456501 0 1

Illsuf 1782 0.122335 0.391753 0 2

Huma Salma Gillani

40

TAB LE 3- T OBI T R E G R E S SI O N Dependent Variable:

Mitigation Costs per

month (value in

PKR.)

Tobit Regression

Independent

Variables Coef. Std. Err. t P>|t|

Odr 1219.152 904.3548 1.35 0.178

Dst -1258.752 350.0837 -3.6 0***

Prc -321.895 877.8417 -0.37 0.714

Age -224.441 106.8938 -2.1 0.036**

age2 4.112592 1.221448 3.37 0.001***

Gnd 362.1657 721.4553 0.5 0.616

Edu 77.47083 83.64961 0.93 0.355

Logpci 2475.868 1158.195 2.14 0.033**

Mrst 1258.311 1219.219 1.03 0.302

Hhtype -1985.656 725.6559 -2.74 0.006***

Awr -655.1911 1337.137 -0.49 0.624

Illsuf

1 12023.64 1028.436 11.69 0***

2 18694.42 1693.95 11.04 0***

_cons -17907.32 4042.116 -4.43 0***

/sigma 9531.808 379.8036

log likelihood -3993.5546

LR chi2(13) 338.20(0.00 )

No. of obs. 1782 ( 1438-Left

Censored)

344-Uncensored

0-Right Censored

**and *indicate significance at 1% and 5% levels.

41



TAB LE 4- POI S SO N A ND NE G ATI V E B I NO M I A L FO R D I S TA NC E A ND WOR K DAY S

LO ST Dependent

Variable

(work days

lost in last

one month)

Poisson Negative Binomial

Independent

Variables Coef. Std. Err. Z P>z Coef. Std. Err. z P>z

Prc 0.19996 0.042836 4.67 0*** -0.01869 0.200351 -0.09 0.926

Dst -0.02853 0.015342 -1.86 0.063* -0.03872 0.065278 -0.59 0.553

Age 0.01341 0.004947 2.71 0.007*** 0.025342 0.026916 0.94 0.346

age2 -3.10E-

05 5.48E-05 -0.57 0.572 -0.00011 0.000335 -0.32 0.752

Gnd 0.065513 0.036656 1.79 0.074* 0.151513 0.167029 0.91 0.364

Edu 0.001928 0.003951 0.49 0.626 -0.00744 0.020469 -0.36 0.716

Mrst 0.004965 0.054707 0.09 0.928 -0.03706 0.28724 -0.13 0.897

Awr -0.03514 0.06617 -0.53 0.595 -0.14531 0.300306 -0.48 0.628

Illsuf 1.231553 0.022883 53.82 0*** 1.45841 0.209996 6.94 0***

Logpci -0.24721 0.056242 -4.4 0*** -0.20071 0.280796 -0.71 0.475

_cons 0.660062 0.195953 3.37 0.001 0.474439 1.00608 0.47 0.637

/lnalpha

2.305808 0.065126

Alpha 10.03228 0.653358

Log

likelihood -5527.9065 -2204.9183

Chi2(10) 2889.6(0.00) 100.65(0.00)

No. of obs. 1782 1782

***, ** and * indicate significance at 1%, 5% and 10% levels.

Hausman test does not reject the random effects.

Huma Salma Gillani

42

TAB LE 5 - POI S SO N A ND B I NO M I A L F OR OD OR A N D WOR K DA Y S LO S T

***, ** and * indicate significance at 1%, 5% and 10% levels.

Hausman test does not reject the random effects.

Dependent

Variable

Work days

lost in one

month)

Poisson Negative Binomial

Independent

Variables Coef. Std. Err. Z P>z Coef. Std. Err. Z P>z

Prc 0.191774 0.042232 4.54 0*** -

0.0386993 0.1957295 -0.2 0.843

Odr 0.177136 0.0433 4.09 0*** 0.2940076 0.1878441 1.57 0.118

Age 0.014497 0.004936 2.94 0.003*** 0.0289963 0.0268375 1.08 0.28

age2 -4.2E-05 5.46E-05 -

0.77 0.444

-

0.0001485 0.0003333 -0.45 0.656

Gnd 0.054343 0.036775 1.48 0.139 0.134992 0.1668523 0.81 0.418

Edu 0.001845 0.003935 0.47 0.639 -

0.0042219 0.0205525 -0.21 0.837

Mrst -0.01247 0.054413 -

0.23 0.819

-

0.0520727 0.2849934 -0.18 0.855

Awr -0.10829 0.068748 -

1.58 0.115 -0.289745 0.3148033 -0.92 0.357

Illsuf 1.235453 0.022879 54 0*** 1.474229 0.2102822 7.01 0***

Logpci -0.26031 0.056156 -

4.64 0***

-

0.2689494 0.277361 -0.97 0.332

_cons 0.606784 0.197962 3.07 0.002 0.5291671 0.9942343 0.53 0.595

/lnalpha

2.302095 0.0651654

Alpha 9.9951 0.6513348

log likelihood -5521.0879 -2203.9007

Chi2(10) 2903.23 (0.00) 102.68 (0.00)

No. of obs. 1782 1782

43

AN ANALYTICAL STUDY OF THE RELATIONSHIP BETWEEN GDP,

INFLATION AND STOCK MARKET





Sudha Swaroop

Assistant Professor

HIMT, Greayter Noida

ABSTRACT

The stock market promotes the growth and development of the economy of a nation. This

paper investigates the relationship between GDP, Inflation rate and Stock market. Using

time series data for the period from 1997-2011 the study findings suggests that GDP and

SENSEX are positively related at low level , inflation rate and SENSEX are negatively

related at low level and when we talk about the relationship between GDP and inflation

rate it is positively related at low level.

Key words: GDP, SENSEX, BSE, Inflation,

Introduction

Stock markets play an important role in the financial sector development of any economy.

They allocate funds to the most productive sectors of the economy (Cooray,2010;

Billmeier and Massa, 2009; Caporale et al., 2004). More generally, stock marketscan

influence economic growth through mobilizing and directing savings, facilitating

risksharing, and providing a venue for investments (see Hou and Cheng, 2010; Arestis et

al.,2001; Rousseau and Wachtel, 2000; Enisan and Olufisayo, 2009; Levine and

Zervos,1996; Levine, 1991).The concentration of research is to evaluate the relationship

between GDP, Inflationand stock market returns in India.

Inflation is an increase in general level of price of goods and services in an economy

resulting in a fall in purchasing power or value of money. Earliest inferences on relation

between inflation and stock returns were based on hypothesis presented by Irving Fisher in

1930. From Fisher‟s hypothesis, it can be inferred that real assets returns should move

positively with expected inflation rates. Thus, there should be a positive relationship

between Inflation and stock returns whereby nominal stock returns should rise along with

inflation providing investors a hedge against inflation. On the other hand, a contrarian

view of a negative relation between inflation and stock returns is also very much

prevalent. Fama (1981) explained that negative stock returns-inflation relations are

induced by the positive correlation between stock returns and real activity and the negative

correlation between inflation and real activity – the Proxy Hypothesis. This is based on the

following reasons:

1. Increase in inflation increases the consumption expenditure (as more money is required

to buy same quantity of goods and services), resulting in fall in savings and investment by channelizing scarce resources meant for investment to consumption. This decreases the

demand for stocks and other financial assets causing a fall in share prices.

Sudha Swaroop

44

2. Also, an increase in inflation adversely affects corporate profits through increased input

costs, increased interest pay-outs and demand pressures. This again causes a fall in stock

prices due to adverse corporate performance.

3. From another perspective, a rise in inflation rate increases the discount rate in the stock

valuation model, leading to lower share prices .

METHODOLOGY The empirical analysis was conducted using time series model. The study uses long and

up-to date annual time-series data (1997-2011), with a total of 15 observations for each

variable. The data for the study, GDP, SENXEXand Inflation Rate, are obtained from RBI

Handbook, CSSO and BSE Sensex sites. The following tools is used for the analysis of the

data:

1. Correlation

2. Standard error == 1− 𝑟2/ 𝑛

3. Probable error = 0.6745*Standard error

4. t-test at 5% at n-2 degree of freedom

5. Ho= GDP growth, inflation and investment in stock market are related to each other.

H1= GDP growth, inflation and investment in stock market are not related to each other.

Review of Literature The linkage between stock market returns and inflation if any has drawn the attention of

researchers and practitioners alike particularly since the twentieth century. The foundation

of the discourse is the Fisher (1930) equity stocks proclamation. According to the

generalized Fisher (1930) hypothesis, equity stocks represent claims against real assets of

a business; and as such, may serve as a hedgeagainst inflation. If this holds, then investors

could sell their financial assets in exchange for real assets when expected inflation is

pronounced. In such a situation, stock prices in nominal terms should fully reflect

expected inflation and the relationship between these two variables should be positively

correlated ex ante (Ioannides, et.al., 2005:910). This argument of stock market serving as a

hedge against inflation may also imply that investors are fully compensated for the rise in

the general price level through corresponding increases in nominal stock market returns

and thus, the real returns remain unaltered.

Further extension of the hedge hypothesis posits that since equities are claims as current

and future earnings, then it is expected that in the long run as well, the stock market should

equally serves as a hedge against inflation. Fama (1981) however, put up a proxy

hypothesis when he argued the relationship between high rates of inflation and future real

economic growth rates as negative. Views that rationalize the negative co-movements

between inflation rates and real stocks returns however differ.

The inflation illusion hypothesis of Modigliani and Cohn (1970) point‟s out, that the real

effect of inflation is caused by money illusion. According to Bekaert and Engstrom

(2007:1), inflation illusion suggest that when expected inflation rises, bond yields duly

increase, but because equity investors incorrectly discount real cash flows using nominal

rates, the increase in nominal yields leads to equity under-pricing and vice versa. Feldstein‟s (1980) variant of the inflation and stock market returns theoretical nexus,

suggests that inflation erodes real stock returns due to imbalance tax treatment of

45



inventory and depreciation resulting to a fall in real after-tax profit. Feldstein further

observed that the failure of share prices to rise during substantial inflation was because of

the nominal capital gains from tax laws particularly, historic depreciation cost (Friend and

Hasbrouck, 1981). In Fama‟s (1981) hypothesis, which is based on money demand theory;

correlation between inflation and stock market returns is not a causal one; rather, it is a

spurious relationship of dual effect. Yeh and Chi (2009:168) in explaining the Fama‟s

hypothesis observed that the reason for the revised correlation is because when inflation is

negatively related to real economic activity, and there is a positive association between

real activity and stock returns, the negative relationship and stock returns holds. This flow

of relationship according to them is not direct.

Hoguet (2008), explanation of stock-inflation neutrality is anchored on two stances as

outlined from Giammarino (1999); 1) that companies can pass on one-for-one costs; and

2) that the real interest rate which investors use to discount real cash flows does not rise

when inflation rises and in addition, inflation has no long-term negative impact on growth.

The appropriate direction of the relationship or the neutrality between inflation and stock

market returns relationship have equally generated a large body of evidence in the

empirical literature. Earlier studies by Bodie (1976), Nelson (1976), and Fama and

Schwert (1977) were aroused by the rising inflation of the 1970s in the US. According to

Alagidede and Panagiotidis (2006), these studies compared the inflation hedge properties

of common stocks with those of other financial and real variables for the US. They found

that common stock acted as poor hedge against unexpected and expected inflation. In

another development, Firth (1979) and Gultekin (1983) found reverse evidence using UK

data. Jaffe and Mandelker (1976) also report a negative relation between annual stock

returns and concurrent rates of inflation over short sample periods but a positive relation

over the much longer period 1875-1970. In another vein, Marshall (1992) argued that the

negative relationship between stock returns and inflation will be less pronounced during

periods when inflation is generated primarily by monetary fluctuations. Studies that have

agreed with this proposition are Graham (1996), who found a positive relationship

between common stocks and inflation in the USA (1976-1982) during the period money

rather than real activity was the cause of the inflation. Spyrou (2004) study of ten

emerging economies further provide evidences that may suggest equity providing an

effective hedge against inflation and that the inflation could be explained by a significant

relationship between money and consumer prices in the emerging markets.

Rapach (2002) employed data of 16 OECD countries to determine the direction of the

correlates. He observed that long-run inflation neutrality exists in the stock markets of the

countries. Following the methodology of King and Watson (1997) in the establishment of

time series properties, Rapach explained that the long-run Fisher effects exists if the long-

run real stock returns do not respond to a permanent inflation shock ( Yeh and Chi, 2009:

169). Studies on the inflation-stock return maxim for the Nigerian economy as the scan on

the literature revealed are however relatively sparse. The available few from our search

equally have their limitations. Subair and Salihu (n.d.)using an error correction model to investigate the effects of exchange rate volatility on the Nigerian stock market though

found exchange rate volatility to exert strong negative impact on the Nigerian stock

Sudha Swaroop

46

market, the rate of inflation did not have any long run relationship with stock market

capitalization. The reason for no long run relationship as adducedby the authors are the

overbearing participation of the government in the market. First, the co integration result

which authors claimed to underscore this reason was not reported. Second, which market

(stock exchange or foreign exchange) government participation is overbearing is not

explicitly defined. However, in either of the two markets, government participation over

the years has been eroded. Consequently, Subair and Salihu findings may be misleading.

Findings

The Correlation between GDP and Sensex is 0.27; it means it is positively related at low

level. Its standard error is 0.07 which is within the upper and lower limit. Since it is within

the limit so it is significant and errorless. The probable error between GDP and Sensex is

0.24.Since 6*probable error is less than correlation between GDP and Sensex so it means

there is no error. When t-test is done between GDP and Sensex it‟s result came 1.91 at 5%

significance level at n-2 degree of freedom and when it is compared to it‟s critical value i.e

1.77 it is found that critical value is less than t value.so this hypothesis will not be

accepted. It means growth in GDP and investment in stock market is not related to each

other.

The Correlation between WPI and Sensex is -0.19,it means it is negatively related at low

level. It‟s standard error is 0.24 which is within the upper and lower limit. Since it is

within the limit so it is significant and errorless. The probable error between WPI and

Sensex is 0.16.Since 6*probable error is greater than correlation between WPI and Sensex

so it means there is error. When t-test is done between WPI and Sensex it‟s result came -

0.70 at 5% significance level at n-2 degree of freedom and when it is compared to it‟s

critical value i.e 1.77 it is found that t value is less than critical value.so this hypothesis

will be accepted. It means growth in WPI and investment in stock market is related to

each other.

The Correlation between WPI and GDP is 0.029; it means it is positively related at low

level. It‟s standard error is 0.25 which is within the upper and lower limit. Since it is

within the limit so it is significant and errorless. The probable error between WPI and

GDP is 0.16.Since 6*probable error is greater than correlation between WPI and GDP so it

means there is probable error and it is not significant. When t-test is done between WPI

and Sensex it‟s result came 0.11 at 5% significance level at n-2 degree of freedom and

when it is compared to it‟s critical value i.e 1.77 it is found that t value is less than critical

value.so this hypothesis will be accepted. It means growth in GDP and growth in WPI is

related to each other.

REFERENCE

Merika, G. A. & Anna, A. M. 2006. Stock prices response to real economic variables: the

case of Germany,

Managerial Finance. 32(5):446-450. Moon, W. s. 2001. Currency Crisis and Stock Market

Intergration:A comparison between East Eastern and European Experiences. Journal of

International and Area Studies 8:41-56.

Rapach, D. E. 2002. The longrun relationship between inflation and real stock prices,

Journal of Macroeconomics. 24:331-351.

47



Saryal, F. S. 2007. Does inflation have an impact on Conditional Stock Market Volatility?

Evidence from Turkey and Canada. International Research Journal of Finance and

Economics, 11.

Spyrou, S. 2001. Stock returns and inflation: Evidence from an emerging market, Applied

Economics Letter. 447-450.

Taylor, B. 1996. World Stock Market Returns 1990-1995:Domestic Real Stock Market

Performance.

Appendix

Year GDP Growth rate

(%)

Sensex Growth

rate (%)

WPI Growth rate

(%)

1997 10.7 18.5 2.89

1998 14.68 -16.49 4.37

1999 12.18 63.83 2.69

2000 7.62 -20.64 3.27

2001 8.19 -17.86 1.83

2002 7.66 3.5 2.63

2003 12.03 72.88 5.67

2004 14.10 13.07 6.26

2005 13.91 42.33 -38.42

2006 16.28 46.70 5.66

2007 16.12 47.14 4.80

2008 12.89 -52.44 6.17

2009 15.05 81.03 2.24

2010 20.33 17.43 5.68

2011 15.13 -24.64 7.22

Dr. V. D. SHARMA 48



GLOBAL WARMING IS MAJOR CONCERN FOR ENVIRONMENT &

ECOLOGY

Dr V D SHARMA Gandhian Professor of Spiritual Mgt, Deptt. of Business Economics (FMS), Coordinator: Centre for

Gandhian Studies, Extn Cell, Ex. Proctor, VBS P U Jaunpur-222001 (U.P.),

Abstract

Global warming is caused by human efforts - destruction of Nature - deforestations,

erosion / damaging of hills, mountains and Ecology in the name of so called

development. Unwanted and unethical pattern of industrialization is causing the

huge Carbon emission and CFC & green house gases. Such irrational human efforts

cause the depletion of ozone layer and ultimately global warming which results

climate change. Researches warrant that if such anti Nature destructive efforts

(because of western/ waste model of so called development) are not controlled

anyway, it may cause the danger not only for environment & ecology but also for our

universe. Its truly said that Global Warming is a great & major concern for

environment & ecology.

Getting rid from Poverty, Unemployment, Illiteracy, and lack of basic access to primary

Health Care and Education, Free from Malnutrition, Stabilizing Population, Reduction in

Infant Mortality Rate, Ensuring Safe Drinking, Water and Sanitation: still remains far-off

for the more than the 90% population of the world today. On the other hand, due to higher

Green House Gas Emissions, Earth is experiencing a higher rise in temperature (40°

Centigrade in 100 years), which drastically influencing the changes in the weather

patterns, resulting in melting the Ice-caps, causing flash floods, droughts, different types

of cyclones, hurricanes, abnormal increase or decrease in rainfall, arising water scarcity,

desertification, change in crop-yield, sea level rise or coastal flooding, causing victor-

borne diseases, and many unexpected natural disasters including the changes in major

river systems and even adversely affecting Bio-diversity.

We must follow Vedic & Gandhian Philosophy to regard the mother-nature (environment

& ecology) to address the challenges of Global Warming by adapting the path of

alternative & sustainable (huge & abundant) resources of energy like Gobar Gas Energy,

Solar Energy, Wind Energy, Waves Energy rather than conventional energy like thermal

power projects, fossil fuels (coal & petroleum products etc) and Hydro Energy by way of

construction of huge dams etc.

Introduction

Global warming is caused by human efforts - destruction of Nature - deforestations,

erosion / damaging of hills, mountains and Ecology in the name of so called

development. Unwanted and unethical pattern of industrialization is causing the

huge Carbon emission and CFC & green house gases. Such irrational human efforts

cause the depletion of ozone layer and ultimately global warming which results

climate change. Researches warrant that if such anti Nature destructive efforts

49


ECOLOGY

(Because of western/ waste model of so called development) are not controlled

anyway, it may cause the danger not only for environment & ecology but also for our

universe. Truly said that Global Warming is great /major concern for environment

& ecology.

While achieving “Development”, remains as a major challenge of the Developing

Countries; most of them are not in a position to ensure basic human need such as food,

shelter, clothing and minimum “standard of living” to all of their citizens. Getting rid from

Poverty, Employment, Literacy, and lack of basic access to primary Health Care and

Education, Free from Malnutrition, Stabilizing Population, Reduction in Infant Mortality

Rate, ensuring Safe Drinking Water and Sanitation still remains far-off for the more than

the Ninety per cent population of the world today. On the other hand, due to higher Green

House Gas emissions, earth is experiencing a higher rise in temperature (40 Centigrade in

100 years), which drastically influencing the changes in the weather patterns, resulting in

melting the Ice-caps, causing flash floods, droughts, cyclones, hurricanes, abnormal

increase or decrease in rainfall, arising water scarcity, desertification, change in crop-

yield, sea level rise or coastal flooding, causing victor-borne diseases, and many

unexpected natural disasters including the changes in major river systems and even

adversely affecting Bio-diversity.

As a priority, Development certainly comes first. Because Climate Change Policy, cannot

solve the problems and need of a developmental prospects of a country and at the same

time initiatives for Adaptation and Mitigation for Climate Change, can also not be

ignored; since this is closely linked to the process of development at each stage. The

climate of the future is going to be different from the climate of the past; hence from our

experience and traditional knowledge, built over the years, we should able toadopt

appropriate Climate Change Policies and subsequently implement the Mitigation

Strategies; otherwise the poorest of the poor would suffer the most, since they are the

ones, most vulnerable to climate change process.

The most of the Developing Countries, unfortunately do not have sufficient either

financial resources or technological know-how to support their minimum developmental

programmes and in such a situation, Adaptation and implementing Mitigation Policy

would certainly be an additional burden for them. In fact, Capacity Building assumes

prime importance in such a context for the Developing World.India has the world‟s second

largest population and fourth largest economy, with a per capita annual GDP of $ 2.4.

While our economy has been among the fastest growing in the world in the last two

decades, the major part of this growth is due to the service sectors, including information

technology, bio-technology, and media and entertainment. The nation aims to reduce the

poverty rate to 15 per cent, provide full employment, and ensure food, energy and

economic security and double per capita income – all by 2012. In order to achieve these

goals, India has developed an open, market-based economy.

Dr. V. D. SHARMA 50

India‟s carbon emissions per capita, is the lowest in the world, averaging only one-quarter

of the global average and one-twentieth the U.S. rate. While India places a higher priority

on development needs, policies driven by economic and environmental challenge have

reduced growth in greenhouse gas (GHG) emissions. The greatest challenge has been

economic liberalization and restructuring to improve living standards of the people.

Pressure from citizen activists to reduce air pollution has also led to sufficient legal

interventions in mandating strong clean air measures that affect energy systems. India

ratified the United Nations Framework Convention on Climate Change (UNFCCC) in

1993 and the Kyoto Protocol in 2002. First, our per capita Green House Gas emissions are

only a fraction of the world average, and an order of magnitude below that of many

developed countries. This situation will not change for several decades to come. We do

believe that the ethos of democracy can support equal per capita rights to global

environmental resources.

In Five-year Planning process, India stated placing “ Environment Protection “, due

importance right from its fifth Five-year Plan. The Ninth Plan (1997-2002) recognizes the

synergies among environment, health, and development, and identifies as one of its core

objectives, as the need for ensuring environmental sustainability of the development

process through social mobilization and participation of people at all levels (Planning

Commission 1997).

The Approach Paper to the India‟s Tenth Five-year Plan (2002-2007) links economic

development and poverty with environmental degradation. As the poor are dependent on

nature for their livelihoods, they are highly vulnerable to natural calamities, environmental

degradation, and ecological disasters. Any economic development, which destroys the

environment, may aggravate problems of poverty, unemployment, and disease. Moreover,

the Approach Paper also emphasizes that India would target a high rate of economic

growth (8% GDP), simultaneously striving for enhancement of human will being. This

includes adequate levels of consumption of food and other consumer goods, access to

basic social services (education, health, drinking water, and basic sanitation), expansion of

economic and social opportunities for all individuals and groups, reduction of disparities,

and greater participation in decision-making. This is the key challenge for the Indian

economy at the start of the new millennium.

Targets set for India’s Tenth Plan period (2002-07) and Beyond

Growth in gross domestic product at 8% for the period 2002-07.

Reduction of poverty ratio by 5% by 2007 and by 15% by 2012.

Providing gainful high-quality employment to the addition to the labourforce over the plan

period.

Admittance of all children in school by 2003; completion of five yearsof education by

children by 2007.

Reduction for gender gaps in literacy and wage rates by at least 50%by 2007.

Reduction in the decadal rate of population growth between 2001 and2011 to 16.2%.

Increase in literacy rate to 75% within the Plan period.

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ECOLOGY

Reduction of infant mortality rate to 45 per 1000 live births by 2007and to 28 per 1000

live births by 2012.

Reduction of maternal mortality ratio to 2 per 1000 live births by 2007and to 1 per 1000

live births by 2012.

Increase in forest and tree cover to 25% by 2007 and to 33% by 2012.

Sustained access to potable drinking water for all villages within the Plan period.

Cleaning of major polluted rivers by 2007 and other notified stretches by 2012

Although the countries of the developing world are more vulnerable to climate change,

their contribution to the greenhouse problem has been much smaller than that of developed

countries, historically; developed countries have been responsible for more than 60% of

GHGs (greenhouse gases)added in the last 100 years (WRI 2001). This is recognized in

the UNFCCC, which follows the principles of „common but differentiated responsibilities‟

and‟ respective capabilities‟ in addressing its ultimate objective of stabilizing atmospheric

GHG concentrations. In 1990, India accounted for approximately three per cent of global

GHG emissions. The major part of India‟s emissions came from fossil-fuel-related CO2

emission. In per capita terms, India emitted 1.19 tones of CO2 – equivalent, compared to

Japan‟s 8.8 tones andUS‟s 19.8 tones in the same year (ADB-GEF-UNDP 1998).

Ten year later, India‟s CO2 emissions from fossil flue combustion continue to be much

lower than those of key Developed Countries. In per capita terms, India‟s emissions

constitute just a fraction of the world average. Despite its low share in atmospheric GHG

concentrations, and its overriding development priorities, India is undertaking numerous

initiatives that contribute significantly to international efforts for atmospheric protection,

thus putting the country on the path of climate-friendly development.

Recent Energy and Emissions Profile

After climbing steadily for at least two decades, India‟s energy, power, and carbon

intensities all began to decline rapidly after 1995 and this shift suggests the start of a

decoupling of energy and economic growth, as has historically occurred in industrialized

nations at higher per capita income levels.

Industrial development has contributed significantly to economic growth in India, though

not without an environmental price. With coal accounting for over half of total primary

energy consumption, this industrial development has been fueled by a relatively high-

polluting energy source. Industrial pollution is increasing public health risks, and

abatement efforts are consuming a significant portion of India‟s GDP. Energy

consumption by the industrial sector accounted for 41 per cent of the total energy

consumption in1998.

Non-commercial biomass energy meets the cooking needs of most rural India households

and nearly half of urban households. Although commercial forms of energy are

penetrating rural and traditional sectors, biomass still accounts for roughly one-third of

total Indian energy use. India‟s carbon emissions have grown by 63 per cent over the last

decade, despite the decline in carbon intensity later in the decade. This emissions growth

Dr. V. D. SHARMA 52

results primarily from energy use associated with economic development and heavy

dependence on coal. Methane, originates primarily from rice paddies and ruminant cattle,

contributed one-third of India‟s total GHG emissions, although its share decreased rapidly

with the rise in energy related carbon emissions.

Appropriate Mitigating Measures

Growth of energy-related carbon dioxide emissions in India was reduced over the last

decade by an estimated 111 million tons. The key factors in these reductions have been

economic restructuring, local environmental protection, and technological change. These

drivers have been mediated through economic reform, enforcement of existing clean air

laws by the nation‟s highest court, and renewable energy incentives and development

programs funded by the national government and foreign donors. In 2000alone, energy

policy initiative reduced carbon emissions growth by 18 million tons-about 6 per cent of

India‟s gross energy-related carbon emissions. Market reform driven by domestic policy

and international dynamics over the past decade has improved India‟s fuel quality,

technology standards, infrastructure, and operating practices. A key example is power

sector restructuring and reform. This Electricity Supply Act of 1905 designated electricity

as essentially a human right in India. The advent of market-based pricing for both power

and liquid fuels is replacing the administered-price system of the old planned economy.

Current prices and bill collections now cover about two-thirds of the cost of power; they

remained amount is recovered by only through various forms of subsidy. In some cities

such as Delhi and Bangalore power costs more than the U.S. average. Many people still do

not pay for power, meaning that the high price reflects a large cross subsidy for the poor

and free riders. Liquefied petroleum gas, which is used widely for cooking, is modestly

subsidized, but prices are headed toward international levels. Other market reforms have

allowed the import of foreign cars and appliances, which generally are more energy-

efficient than those they replace.

Technology development measures in the energy sector have contributed a series of small

but notable reductions in emissions growth. Improvements in stoves, reduction of gas

flaring in fossil-fuel production, improvements in demand-and supply-side efficiency, and

the introduction of modern renewable energy systems now mitigate about 18 million tons

of carbon per year. None of these measures has been exploited to its full potential, and

many could lead to further reductions in emissions growth in the future.

Lower carbon emissions also have resulted from important technological advancements in

coal washing. Indian coal averages approximately one-third ash, wreaking havoc with

boilers and their efficiency, driving up transportation costs, and creating serious air

pollution. One recent government policy restricts the transportation of unwashed coal to

less than1,000 kilometers. Customers are motivated to reduce ash content to improve

efficiency, reduce local pollution, and cut freight costs. New combustion technologies,

including supercritical coal-fired power plants, are being introduced, and the capture of

coal-bed methane is being promoted. While coal shall continue to be the most important

source of energy in India in the foreseeable future, we are promoting many technological

innovations in this sector to enhance efficiency and reduce its environmental impacts.

53


ECOLOGY

Government policy has included public investment to develop the Natural Gas

infrastructure for long-distance and local distribution as well. One example is the HBJ

1,500- kilometer high-pressure gas pipeline from near Mumbai to the north of Delhi,

which carries 4 to 5 billion cubic meters ofgas from off-shore production. The share of gas

in power generating capacity has risen to 8 percent against the 2 per cent ten years ago.

Liquefied petroleum gas has significantly replaced commercial coal and kerosene in urban

households. Public vehicles have been converted to Compressed Natural Gas.

India has instituted a sizable renewable energy program over the past 20 years, which is

implemented by the Ministry of Non-Conventional Energy Sources, since 1992. About 3.3

million household Biomass Gasification Systems have been built, which produce 3-4

cubic meters of Biogas per unit per day, enough to supply cooking fuel for a large

percentage of rural homes.

A larger scale program has improved the efficiency of wood stoves in 34million homes,

reducing deforestation in areas, where wood-fuels were unsustainably harvested.

Forest covers nearly one-fifth of India‟s geographical landmass. The per capita

deforestation rate has been among the lowest of the major tropical countries. In recent

years, closed forests have actually increased in total area. Forest conservation measures

include prohibiting the use of forestland for non-forestry purposes, encouraging agro-

forestry and private plantations to meet industrial wood needs, and expanding areas under

protection. During the last decade, over 14 million hectares were protected under Indian

forestry programs. These efforts have led to a steady increase in the rate of forestation,

significantly contributing to the removal of atmospheric carbon.

Future Mitigation Options Projections assuming sustained economic growth and continued dependence on domestic

coal resources, suggest sharply rising energy use and GHG emissions in India. One studies

the Asia Least-Cost Greenhouse Gas Abatement Strategy (ALGAS), projected energy-

sector carbon emissions of at least 688 million tons in 2030, which is nearly three times

then the current level. Forestry-related emissions would reach 21 million tons of carbon by

2020 and about 29 million tons by 2030. More recent studies have given lower energy-

related estimates, one projecting 572 million tons in 2020.

The ALGAS scenario is driven by a continuation of economic, demographic, and energy

trends and current policies. The economy would grow at an annual rate of 5 per cent,

increasing GDP in 2030 to nearly fivetimes the present level. India‟s population would

increase from 1 billion to1.35 billion. However, energy use would only triple, mainly

because thecurrent energy intensity reduction rate of 1.5 per cent per year is assumed

tocontinue. Carbon emissions would increase at about half the rate of GDP –2.7 times –

because carbon intensity would decrease as gas and renewablesubstitute for coal. Methane

emissions would grow slowly due to low growthin the agriculture and livestock sectors,

the main contributors of methaneemissions. Local air pollutants would rise at much lower rates– and particulateemissions would actually decline- due to policies that are already

beingimplemented as a result of increasing public pressure.

Dr. V. D. SHARMA 54

Most studies of future emissions in India suggest a hierarchy of mitigation options. It is

estimated that India could reduce projected emissions over the next 30 years by nearly

one-quarter for less than $25 per ton of carbon equivalent, with a substantial portion

available at a very low cost.

Over the next decade, 120 million tons of carbon mitigation could be achieved at a cost of

$0-15 per ton avoided. Major opportunities include demand supply-side efficiency

measures, fuel switching from coal to gas, a forestation, and power transmission

improvements. Demand and Supply side efficiency measures alone could avoid 45 million

tons of emissions.

The cost of these measures depends on the extent to which they would be applied, which

in turn depends in part on the stringency of GHG production policies. India could in the

midterm help finance these mitigation measures by selling emission reduction credits,

either through the Clean Development Mechanism established under the Kyoto Protocol or

in a futures market based on expectations that future global policies would certainly

impose more stringent GHG restrictions, provided that credits could be banked and sold.

Now let us pledge for:

Recognition that, given current scientific knowledge, deep cuts in emissions will be

necessary to avoid dangerous climate change. These must be achieved with the principles

of equity and common but differentiated responsibilities.

Increased capacity and financing for adaptation must be ensured. In practice, adaptation

should be integrated with sustainable development. However, without far deeper

emissions reductions, no amount of adaptation can stave off catastrophic impacts.

Fair and adequate public participation in Decision-making and implementation, which

requires increased public awareness, education and training.

Reaffirmation at the right to sustainable development is fundamental to achieving the

goals of the convention and the protocol. This includes making poverty eradication a

global priority, just as it includes shifts to equitable and sustainable patterns of

consumption.

Global Warming has emerged as one of the most serious environmental concerns of our

times, which is a global phenomenon with diverse local impacts. The problem has aroused

because of “Waste Model of West” and solution is there to leave it immediately. In the

name of so called development, we have created the natural disasters & calamities. There

is a need to pay adequate attention to the concerns of developing countries on vulnerability

and adaptation issues. It‟s truly said that Global Warming is great/ major for

environment & universe. Hence adaptation is the key theme for achieving the goals of sustainability of resources.

Let us expect this should not be a substitute for Mitigation for cutting back emissions. We

should follow the Vedic & Gandhian Philosophy to regard the mother-nature

(environment & ecology) for addressing the challenge of Global Warming as an integral

part of achieving sustainable development to create a better world for all our people

adapting the path of alternative & sustainable (abundances) resources of energy like Gobar

gas energy, Solar Energy, Wind Energy, Waves Energy rather than conventional energy

55


ECOLOGY

like thermal power projects, fossil fuels (coal & petroleum) and construction of huge dams

etc.

References:

Goldemberg, J., Squitieri, R., Stiglitz, J., Amano, A., Shaoxiong, X. and Saha, R.,

Introduction: scope of the assessment. In ClimateChange 1995: Economic and Social Dimensions of Climate Change, Contribution of Working Group III to the Second

Assessment Reportof the Intergovernmental Panel on Climate Change, Cambridge

University Press, Cambridge, 1996.

Climate Change 2001: Synthesis Report, Intergovernmental Panel on Climate Change,

Geneva, Switzerland, 2001.

Climate Change 2001: Impacts, Adaptation, and Vulnerability, Summary for Policy

Makers and Technical Summary of the WorkingGroup II Report, Intergovernmental Panel

on Climate Change (2001), Geneva, Switzerland, IPCC.

Climate Change 2001: Mitigation, Summary for Policy Makers and Technical Summary

of the Working Group III Report, IntergovernmentalPanel on Climate Change (IPCC),

Geneva, Switzerland, 2001.

Garg, A., Ghosh, D. and Shukla, P. R., Energy sector policies and mitigation of GHG

emissions from India. In Climate Change Economicsand Policy: Indian Perspectives (ed.

Toman M.), Resources for the Future Publication, Washington DC, 2003.

Bruce, J. P., Lee, H. and Hates, E. F., Climate Change 1995: Economic and Social

Dimensions of Climate Change, Contribution ofWorking Group III to the Second

Assessment Report of Intergovernmental Panel on Climate Change (IPCC), Cambridge

UniversityPress, Cambridge, 1996.