Macroeconomic Variables and the Productivity of the Manufacturing Sector in Nigeria: A Static Analysis Approach (original) (raw)

THE ROLE OF MANUFACTURING SECTOR IN NIGERIA'S ECONOMY

Over time, the absence of locally sourced inputs has resulted in low industrialization. This is as a result of the near total neglect of agriculture which has denied many manufacturers their primary source of raw materials. Some constrains faced in this sector among others include; high interest rates, low patronage, unpredictable government policy. The paper thus, empirically examines the role of manufacturing sector in gearing economic growth in Nigeria from 1986-2014. Time series experimental research was adopted. Unit root test was carried out to test the stationarity levels of the variables before conducting the regression analysis to avoid spurious regression results. The co-integration results showed that long-run equilibrium relationship exist among the variables used for the analysis at 5% level of significance. The findings revealed that variations in demand are a significant driving force for variations in capacity utilization. The findings further showed that a percentage change in manufacturing output on average increases GDP by 0.04%. Suggestive from the analysis therefore is that there is need for provision of incentives for productive diversification through information externalities and coordination externalities. Also, there should be promotion of regionally integrated value chains and markets to enhance investment in manufacturing and other sectors to enhance industrial competitiveness and regional economic transformation.

Determinants of Manufacturing Growth in Nigeria

The manufacturing sector is seen as major catalyst to development due to the ripple effect of industrial growth on every part of a country's economy. However, the structure of the manufacturing sector in developing economies like Nigeria has undermined its ability to make meaningful contribution to industrial development. This has shrouded the understanding of factors propelling growth in the manufacturing sector. This study examines the determinants of manufacturing sector growth in Nigeria from 1980-2018 with the aid of dynamic ordinary least square (DOLS) method of econometric analysis which has the potential to generate reliable estimates than the static OLS. In particular, DOLS accounts for endogeneity problem by adding leads and lags. Results of the study indicate that the main determinants of Nigeria's manufacturing growth are foreign direct investment (FDI), interest rate, labour force, inflation and exchange rate. We therefore recommend a robust regulation of foreign capital importation and local content policies to stem capital flight and spur manufacturing growth in the country. Also, the interest rate regime should be made to favour domestic capital utilization. This should involve laying emphasis on single-digit interest rate in order to lower the cost of production and boost activities in the manufacturing sector. JEL Classification Codes: F63, L20, L25, L60, O10, O14

MANUFACTURING SECTOR PERFORMANCE AND THE NIGERIAN ECONOMY

This study investigated the manufacturing sector performance and economic growth in Nigeria. The study employed annual time series data from 1986-2014. The secondary data gathered were analyzed using both descriptive and econometric techniques. The descriptive techniques used included frequency, tables and charts while the econometric techniques included the Augmented Dickey Fuller (ADF) test for stationarity, Johansen Cointegration Procedure and the Error Correction Model (ECM). The research also employed the Granger causality test to ascertain the direction causality between the variables in the model. The results of the Johansen cointegration show that there was a long-run negative and significant relationship between the real GDP and exchange rate and between RGDP and inflation rate. On the other hand, it was found that government spending on the manufacturing sector, interest rate and manufacturing output had a positive and significant impact on real GDP in Nigeria in the long run. The results of the ECM show that the lag of exchange rate (EXR) had a negative and significant effect on economic growth, Government expenditure on the manufacturing sector has a positive and significant effect on economic growth in Nigeria, inflation rate had a negative and statistically significant impact on economic growth in Nigeria in the short run, the interest rate (INTR) had a negative and statistically significant effect on economic growth in the short run and the manufacturing output had a positive and significant effect on economic growth in the short run. The study recommended the need for improvement in administrative, legal and fiscal environment of manufacturing sector in order to enhance effective operation of the sector.

Macroeconomic Dynamics and the Manufacturing Output in Nigeria

This paper examined the impact of the changes in the macroeconomic factors on the output of the manufacturing sector in Nigeria from 1981 to 2015. Preliminary evaluation of the data was conducted using both descriptive statistics and stationarity evaluation. The test indicated that not all the variables are normal. The occurrence of order integration at first level difference necessitated the deployment of the Johansen cointegration test. The findings revealed no short run association among manufacturing output and each of GDP, exchange rate, broad money supply and unemployment rate. Negative relationship existed amongst inflation rate, interest rate, exchange rate, broad money supply on one hand, and manufacturing output. The inflation rate and interest rate, were statistically insignificant. However, significant and positive relationship existed between GDP of the previous year and unemployment on the one hand and manufacturing output on the other, at 5 percent level. The results showed that manufacturing was a veritable engine of economic growth. The post estimation tests showed presence of serial correlation but evidence of heteroscedasticity existed which, made the model inefficient, but its estimator is still unbiased. The study recommended the harmonization of both fiscal and monetary policies for the attainment of macroeconomic stability and avoidance of rapid policy summersaults.

Manufacturing Sector Performance And Economic Growth In Nigeria

Journal of Physics: Conference Series, 2019

The paper attempted to examine the impact of manufacturing sector output on economic growth in Nigeria from 1981 to 2016. The study employed secondary data sourced from the Central Bank of Nigeria statistical bulletin for Autoregressive Distributed Lag (ARDL) model and the Granger causality techniques on RGDP, manufacturing capacity utilization (MCU), manufacturing output (LMO), government investment expenditure (GINVEXP), money supply (LM2) and interest rate (INR). Evidence of long-run and short-run relationships among the variables was established. The results showed that MCU has positive influence on RGDP while LMO also affects RGDP positively. It also showed that GINVEXP has negative effects on RGDP whereas LM2 influenced RGDP positively. Moreover, the result indicated a unidirectional causality between RGDP and MCU, LMO and LM2. Based on the above, the study suggest government should intensify efforts to promote socio-economic infrastructural, macroeconomic and institutional fr...

Effect of Monetary Policy on Industrial Growth in Nigeria

2021

Monetary policy is one of the regulatory measures of the government to checkmate the money supply in the economy in order to achieve the desired level of prices, employment, output, and boost the industrial sector growth. Industrialization has always constituted a major focus of development strategy and government policy. One of the engines of industrialization is enhancing manufacturing sector capacity; this study adopted manufacturing sector output to examine the effect of monetary policy on industrial growth in Nigeria between 1986 and 2019. Data for the study were collected from the CBN Statistical bulletin, 2019 edition. A multiple regression model was developed and the Ordinary Least Square (OLS) regression technique employed for data analysis. The results showed that Open Market Operation (OMO) measured by Treasury bill rate had positive and significant effect on the Nigerian Manufacturing Domestic Sector Gross Product; Cash Reserve Ratio (CRR) has a positive and significant ...

Impact of Selected Macroeconomic Variables on Industrial Sector Development in Nigeria: 1990-2022

1Aigbedion, I Marvelous, Ataboh Adah, 2024

Despite Nigeria's abundant resource potential and sizable domestic customers, its industrial sector has consistently underperformed, making up less than 10% of GDP throughout the research period. The objective of this research is to uncover the precise macroeconomic elements that are either impeding or driving industrial growth and to offer valuable insights for policy responses. This study examined the selected macroeconomic variables affecting industrial sector development in Nigeria (1990-2022). The study made use of ex-post facto research and time series data. While using the descriptive technique. Correlation matrix and dynamic ordinary least squares techniques were used to examine the relationship between the broad money supply in Nigeria (BMS), interest rate in Nigeria (IRN), cash reserve ratio in Nigeria (CRR), foreign direct investment in Nigeria (FDI), inflation rate in Nigeria (IFN), and industrial sector development in Nigeria. The study reveals that the R-square of 0.99 suggests that there is a strong relationship. This implies that macroeconomic variables accounted for 99 percent of the variation in industrial sector development in Nigeria. Also, based on the coefficient and probability values, the BMS and FDI have a positive and significant impact, and in a similar vein, the IFN has a positive and insignificant impact on industrial sector development in Nigeria. In contrast, BRN and CRR have a negative and significant impact on industrial sector development in Nigeria. Therefore, the study recommends that the Central Bank of Nigeria and stakeholders increase the broad money supply to boost industrial sector development. Low-interest rates, a low cash reserve ratio, and an increased inflation rate are also crucial. These measures will help maintain a positive but significant impact on industrial sector growth in Nigeria. Ultimately, these measures will contribute to the country's economic growth.

Macroeconomic Variables and Performance of Manufacturing Sector in Nigeria (1981-2019

This study examined effect of macroeconomic variables on performance of manufacturing sector in Nigeria a thirty six year (39) period spanning from 1981-2019. Specifically, this study investigated how macroeconomic variables such as real interest rate, exchange rate and inflation rate relate with performance of manufacturing sector measured by output contribution ratio to real gross domestic product and average capacity utilization. In

Industrialization Drivers and Nigeria Economic Growth

International Journal of Science and Research Methodology, 2017

Keywords:Foreign Direct Investment, Financial System Development, Trade Openness, Causality ABSTRACT This paper sets out to empirically investigate potent industrialization drivers and Nigeria economic growth between the periods 1980 to 2014 using time series data. The study employed Unit Root Test, Co-integration Test, Error Correction model and Granger Causality Test in ascertaining the objectives of the research. Findings revealed that Foreign Direct Investment (FDI), Financial System Development which is proxy with Aggregate Bank Lending (ABL) and Exchange Rate (EXR) significantly stimulate the Nigeria economy while Trade Openness negatively influences economic growth in the long run. We conclude based on our findings that Foreign Direct Investment, Aggregate Bank Lending and Exchange Rate are key determinants of industrialization that helps to achieve the sustainable level of industrial development and hence promote economic growth. Hence, we recommend creation of favourable economic environment to encourage more inflows of foreign investment and more administrative sweeteners like low operation costs, low tariffs be put in place to further encourage foreign investors as these will help in stimulating industrialization and hence promote growth in the Nigeria economy.