ANALYSIS OF THE IMPACT OF INDUSTRIAL OUTPUT ON THE ECONOMETRICAL OUTPUTS ON THE NATIONAL ECONOMY

Abstract

The manufacturing sector is significant to economic development. In considering the Nigeria economic development experiences, this study is an insight on how manufacturing sector can influence Nigeria’s economic growth by facilitating the transfer of technology and other associated benefits. The objectives of the study were to determine the impact of manufacturing sector on Nigeria’s economic growth; and to investigate the major constraints confronting the Nigerian manufacturing sector. Data for the study was obtained from secondary sources, and the technique used in this research was the ordinary square regression method. The endogenous growth model was adopted as the theoretical framework of analysis. The study found out that industrial output is not statistically significant in terms of its influence on economic growth. Recommendations were made that; Government must ensure political stability and also invest in the people, since high economic performance is a function of the people working in the country (Capacity Development); Government should pursue favorable policy framework and provide necessary infrastructures and create an enabling environment that will foster huge investment in research and development.

CHAPTER ONE

• Background of Study

The manufacturing sector plays a significant role in economic development. Industries act as a catalyst that accelerates the pace of structural transformation and diversification of economy to enable a country to fully utilize its factor endowment and to depend less on foreign aid and supply of finished goods or raw materials for its economic growth, development and sustainability. In other words, in Nigeria, it has always been realized that economic development requires growth with structural change. In considering the Nigeria economic development experiences therefore, it is instrumental to examine the growth and structural change in certain major aspects of the economy (Ajakaye, 2002). 

Productivity is more in the manufacturing sector than in the agricultural sector.

The extended economic recession occasioned by the collapse of world oil market from the early 1980s and the associated sharp fall in foreign exchange earnings have adversely affected economic growth and development in Nigeria.

Other problems of the economy include excessive dependence on imports for consumption and capital goods, dysfunctional social and economic infrastructure, unprecedented fall in capacity utilization rate in industry and neglect of the agricultural sector; among others (Ku et al, 2010 Adesina 1992). These have caused fallen incomes and devalued standards of living amongst Nigerians.

Despite the introduction of structural adjustment programme (SAP) in 19986, was to address these problems, no notable improvement took place. From a middle-income nation in the 1970s and early 1980s, Nigeria is today among the 30 poorest nations in the world. The path to economic recovery and growth may require increasing production in puts land, labour, capital and technology and or increasing their productivity (Kayode and Teriba 1997).

A knowledge of the relative efficiency of industries in relations to economic growth and programs and polices especially in deciding on which industries should be accorded priority. In the light of the foregone, there cannot be a more appropriate time to evaluate the role of Nigerian manufacturing sector in the economic growth and development of the country than now.

1. Statement of problem

The Nigerian industrial development and manufacturing in Nigeria is a classic illustration of how a nation could neglect a vital sector through policy inconsistencies and distraction attributable to the discovery of oil (Adeola 2005). That the country’s oil is not major source of employment, and its benefit to the other sector in the economy is limited since the government has not adequately developed the capacity to pursue the more valued-added activities of the petrochemical value chain. As a result, the oil industry does not allow for any agglomeration of the technological spillover effects, Ogbu (2012) stresses.  

Upon several government policies on the stability of Nigeria economy through manufacturing industry, there have been a lot of challenges facing the growth of Nigerian manufacturing sector as industrial by researcher.  These challenges include: corruption and ineffective policies (Anyanwu 2007); lack of integration of macroeconomic plans and the absences of harmonization coordination of fiscal policy (Onoh, 2007), gross mismanagement/misappropriate of public funds (Okemini and Uranta, 2008); and lack of economic potential for economic growth and development (Ogbele 2010). Despite the emphasis placed on fiscal policy in the management of the economy, the management of the economy, the manufacturing sector inclusive, Nigerian economy is yet to come on the path of sound growth and development because of low out output in the manufacturing sector to the economy (GDP).

The near total neglect of agriculture and industries their primary source of raw materials. The absence of locally sourced imparts has resulted in low industrialization

Some of the constraints traced in this sector include: