THE ROLE OF MANUFACTURING SECTOR IN ECONOMIC GROWTH IN NIGERIA

ABSTRACT

This research study on the role of manufacturing sector in economic growth in Nigeria examined the empirical relationship between the Manufacturing sector and Economic Growth in Nigeria for the period 1990 to 2018 using Ordinary Least Square method to ascertain the relationship between manufacturing, its components and economic growth. The results show that the output of the manufacturing sector contributed negatively and had an insignificant relationship to real Gross Domestic Product growth, which was indicative of the fact that the manufacturing sector of the Nigerian economy is presently experiencing decay as a result of non-implementation of policies aimed at boosting the sector; the average manufacturing capacity utilization rate contributed positively and had a significant relationship to real gross domestic product growth; and interest rate did not contribute to real gross domestic product growth, which shows a sign of macroeconomic instability; manufacturing capacity utilization contributed positively to real gross domestic product growth but government expenditure was significant indicating that the expenditure made by the government in the Nigerian economy was adequate but not properly managed, but nevertheless, contributed positively to economic growth. The study therefore, suggests that there should be an increase in government expenditure and proper management of the expenditure on manufacturing sector to ensure stable growth in the economy; there should be promotion of financial institutions to cater for the creation of funds for the manufacturing sector; there should be a reduction in interest rate to encourage more investment in the economy which will boost the economic growth of Nigeria; there should be a moderation in exchange rate to encourage investments thereby ensuring stability in the economic growth of Nigeria and; improving in the productivity of the manufacturing sector by upgrading its technologies.

CHAPTER ONE

INTRODUCTION

1.1    Background to the Study

This research study examines the Role of Manufacturing Sector in Economic Growth and Development in Nigeria. It has been argued that the fastest trend through which a nation can achieve sustainable economic growth and development is neither by the level of its endowed material resources, nor that of its vast human resources, but technological innovation, enterprise development and industrial capacity (Olamade et al 2014). For instance, despite its poor natural resources, and the hurdles it faced from 1920s chronic inflation, Germany has effectively exploited the manufacturing sector and rose up to become the largest economy in Europe and the fourth largest in the world. Manufacturing sector plays a significant role in economic development. Industrialization acts as a catalyst that accelerates the pace of structural transformation and diversification of economic, enable a country to fully utilize its factor endowment and to depend less on foreign supply of finished goods or raw materials for its economic growth, development and sustainability. Industrialization which is a deliberate and sustained application and combination of an appropriate technology, infrastructure managerial expertise and other important resources has attracted considerable interest in development economies in recent times. (Okafor, 2005) Exchange rate in Nigeria witnessed a radical change from the long operated fixed system between the 1960s and the first half of the 1980s. It shifted dramatically from the second half of 1986 to a flexible regime when the structural adjustment programmes (SAP) began. Since the move to liberalized system, the economy witnessed series of changes that have substantially affected the trend and stability of the rate.

1.2  Statement of Problem

The Nigerian manufacturing sector in Nigeria is nothing to write home about. The productive sector is in a crisis as its average contribution to the nation’s Gross Domestic Product over the past few years has not gone beyond 5%. Many years of neglect and maladministration on the part of successive military and civilian governments, coupled with corruption and indiscriminate policy reversals have all conspired to render the manufacturing sector ineffective in terms of productivity...

1.3    Objectives of the Study

          The objective of this study is to examine the Role of Manufacturing Sector and the effects and impacts it has on Economic Growth and Development in Nigeria. And to also investigate the vital role of the manufacturing sector in the economic growth and development of Nigeria, to assess the level of productivity in the Nigerian manufacturing sector, to identify the major constraints confronting the Nigerian Manufacturing sector and to find out the various policy measures available to the government that can be used to redress the persistent decline in the manufacturing production.

1.4   Research Hypothesis

The hypothesis tested in the course of the analysis are:

H0 : that the manufacturing sector does not contribute significantly to Nigerian economy.

H1 : that the manufacturing sector contributes significantly to Nigerian economy.

1.5     Significance of the Study

The study of role of manufacturing sector on the economic development of Nigeria is significant in the following ways: It will help to reveal the role of industrial activities in solving the basic problems of unemployment, inflation, budget deficit and general economic disequilibrium; it equally assist to appraise the policies of the government that have been directed towards the improvement of local production; it will expose the forces behind the continued pressure on balance of payment in spite of the various policy measures taken so far to address the situation.

1.6   Scope of the Study

The study examines the role of manufacturing sector in economic growth and development in Nigeria by prioritizing on a Twenty - year period spanning from 1990-2017. This time frame is picked in order to examine the relevant performance indicators such as index of manufacturing production...

1.7    Limitations of the Study

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection.

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8    Organisation of the Study

This research study shall be divided into five chapters.

The first chapter provides the background of the subject matter justifying the need for the study.

Chapter two presents related literature on the subject matter.

The research methodology, which includes the research design, sources of data, model formulation, estimation techniques etc are stated in chapter three.

While data presentation and analysis were made in chapter four.

Concluding comments in chapter five reflects on the summary, conclusion, recommendations and suggestion for further studies based on the findings of the study.

CHAPTER TWO

                                       LITERATURE REVIEW

2.1   Conceptual Issues.-   -       -       -       -       -       11

2.2   Theoretical Literature-               -       -       -        16

2.3   Empirical Literature   -       -       -       -       -       23

CHAPTER THREE

3.1   Theoretical Framework-     -       -       -       -       31

3.2   Sources of Data-                -       -       -       -       33

3.3   Method of Data Analysis-   -       -       -       -        34

3.4   Model Specification-  -       -       -       -       -         34

                            

  CHAPTER FOUR

                   DATA PRESENTATION AND ANALYSIS

4.1   Data Presentation-     -       -       -       -       -       36

4.2   Interpretation of Regression Results- -       -          40

                             

CHAPTER FIVE

               SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1   Summary -         -       -       -       -       -       -       46

5.2   Conclusion-       -       -       -       -       -       -        48

5.3   Recommendations-    -       -       -       -       -         49

       

REFERENCE-    -       -       -       -       -       -       -      52

 

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