Impact Of Industrial Output On The Economy Of Nigeria
The industrial output of Nigeria significantly influences its economic landscape, playing a crucial role in shaping its growth trajectory and overall prosperity. As one of Africa’s largest economies, Nigeria’s industrial sector encompasses a diverse range of activities, including manufacturing, mining, and energy production. The performance of this sector directly impacts key economic indicators such as gross domestic product (GDP), employment rates, and foreign exchange earnings. A robust industrial output fosters economic diversification, reduces dependence on oil revenue, and stimulates investment in infrastructure and technology, thereby enhancing productivity and competitiveness on both domestic and international fronts. Moreover, a vibrant industrial sector creates employment opportunities, particularly in manufacturing, contributing to poverty alleviation and social development. However, challenges such as inadequate infrastructure, inconsistent policies, and insufficient access to finance can hinder the full realization of the industrial sector’s potential. Addressing these challenges through strategic interventions and policy reforms is essential to unleash the full transformative power of Nigeria’s industrial output and propel sustainable economic growth and development.
This research work is on the “Impact of Industrial Output on the Economy of Nigeria” between the period of thirty years (30) covered from 1980-2010. Impact of industrial output on the economy of Nigeria is a continuous discussion to every economy especially developing economics which will give rise to economic growth and development of a nation. Secondary data was used on PC Give 8.00 version package to regress the model with GDP as the dependent variable, and industrial output, savings, net foreign capital flow, and inflation as independent variables. The model explain that the influence of industrial output on economic growth is not statistically significant, though the sign obtained from its à priori expectation is positively related to GDP but does not hold strong enough. Savings has a positive relationship and also significant impact on the economy. Inflation has a negative relationship while net foreign capital flow is positively significant on the impact of economic growth. R-squared shows a 76% increase on the GDP. Based on the findings, it is therefore recommended that some policies is to be made in ways to improve the establishment of industries especially the manufacturing industries to encourage industrialisation of the Nigerian economy so as to contribute to the strengthening of economic growth in the nation’s economy. Tax incentives through subsidies and government expenditure relate to increase in output and positive impact on economic growth. Increase in savings will make money available for the economy through high interest rate and income adjustments from the monetary policy.
Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of content
CHAPTER ONE:
1.0 INTRODUCTION
1.1 Background of study
1.2 Statement of research problem
1.3 Objective of the study
1.4 Statement of research hypothesis
1.5 Significance of the study
1.6 Scope and limitation of the study
1.7 Methodology and sources of data
1.8 Limitation of the study
CHAPTER TWO:
2.0 LITERATURE REVIEW
2.1 Theoretical literature
2.1.1 Sources of industrial growth and industrial Policies in Impact Of Industrial Output On The Economy Of Nigeria (1988-2010) Nigeria
2.1.2 Characteristics of Nigeria industries
2.1.3 Manufacturing in Nigeria
2.1.4 The era of manufacturing in Nigeria
2.1.5 Structure and performance of Nigerian Manufacturing Sector
2.1.6 The roles of manufacturing industries in then Development Of the Nigerian economy
2.1.7 Problems of industrial development in Nigeria
2.2. Empirical review
CHAPTER THREE:
3.0 RESEARCH METHODOLOGY
3.0 Methodology
3.1 Model specification
3.2 Model Estimation /procedure
3.3 Sources of Data
CHAPTER FOUR:
4.0 PRESENTATION AND ANALYSIS OF REGRESSION RESULT
4.1 Presentation of result and analysis
4.1.2 Interpretation of result
4.2 Evaluation of result
4.2.1 Evaluation based on economic a priori expectation Impact Of Industrial Output On The Economy Of Nigeria (1988-2010)
4.2.2 Evaluation based on statistical criteria
4.2.2.1 Statistical test of significant of parameter estimated (T-statistics)
4.2.2.2 Adequacy of regression equation (F-Test)
4.2.2.3 Goodness of fit test (R2)
4.2.3 Evaluation based on economic criteria
4.2.3.1 Test for auto-correlation
4.2.3.2 Test for Heteroscedasticity
4.2.3.3 Test for normality
4.2.3.4 Test for multicollinearity
4.3 Evaluation research hypothesis
CHAPTER FIVE:
5.0 SUMMARY OF FINDINGS, POLICIES RECOMMENDATION AND CONCLUSION
5.1 Summary of findings
5.2 Policy recommendation
5.3 Conclusion
Bibliography
Journal
Appendices
INTRODUCTION
1.1 Background Of Study
The oil boom of the 1970s made Nigeria neglected its agricultural and light manufacturing bases in favour of an unhealthy dependence on crude oil. In 2000, oil and gas export accounted for more than 98% of export earning and about 83% of federal government revenue. New oil wealth, the concurrent decline of other economic model fuelled massive migration to the cities and led to increasingly wide spread poverty especially in rural areas. A collapse of basic infrastructures and social services since the early 1980s accompanied this trend, (CIA, 2010).
By 2000, Nigeria‟s per capita income had plunged to about one quarter of its mid 1970s high, below the level at independence. Along with the endemic malaise of Nigeria‟s non-oil sector, the economy continues to witness massive growth of „informal sector‟ economic activities estimated by some to be as high as 75% of the total economy. The U.S United State remains Nigeria‟s customer for crude oil accounting for 40% of the country‟s total oil export, Nigeria provides about 10% of overall U.S oil import and ranks as the fifth-largest source for U.S imported oil and ranked 44th worldwide and third in Africa in factor output. (Adeolu B Anyawale, 1997).
Impact Of Industrial Output On The Economy Of Nigeria (1988-2010)
Nigeria economy is struggling to leverage the country‟s vast wealth in fossil fuels in other to displace the crushing poverty that affects about 57% of its population. Economics refers to the consistence of vast wealth in national resources and extreme poverty in developing countries like Nigeria as a „resource course‟. 80% of Nigeria‟s revenue flow to the government, 16% covers operational cast and the remaining 4% goes to investors. World Bank has estimated that as a result of corruption, 80% of energy revenues, benefit only 1% of the population (Econspapers, hosted by Swedish Business School Orebro University).
Generally, the manufacturing sector which plays a catalytic role in a modern economy has many dynamic benefits crucial for economic transformation is a leading sector in many aspects (Oguma, 1995) says it creates investment capital at a faster rate than any other sector of the economy. Available evidence showed that the share of manufacturing value in the Gross Domestic Product (GDP) was 3.2% in 1960. In 1977, its share of GDP increased to 5.4% and in 1992 grew to 13%. The share of the manufacturing in GDP fell to 6.2 in 1993, while overall manufacturing capacity utilization rate fluctuated downwards to 2.4% in 1998.
In 2003, the manufacturing sector accounted for 4% of the Gross Domestic Product (GDP) (Ojo, 1987:256). A country is industrialised when at least one-quarter of this Gross Domestic Product(GDP) is produced in its industrial output arises in the manufacturing section of industrial sectors, and when at
Impact Of Industrial Output On The Economy Of Nigeria (1988-2010)
least one length of its total population is employed in the industrial sectors of the economy. The manufacturing sector is to be dominant in terms of contribution to the Gross Domestic Product of any economy especially that of Nigeria (Auty, 1993).
1.2 Statement Of The Research Problem
The malfunctioning of industrial sector in a country is widely seen as a major handicap improving a country‟s economy and power pushing many governments to encourage or enforce industrialization (Wikipedia, free encyclopaedia). One of the problems bedevilling the Nigeria economy is that of output from its industrial sector of the economy. Admittedly, the decay in the manufacturing sector is the result of diverse factors that conspire to render many industries comatose (ill). The study is therefore necessary to enable a thorough investigation of the problems of the industrial sector especially that of manufacturing industries and various government agencies set up to provide credit facilities to the industrial sector to ensure continual growth of this sector for rapid economic development of this nation. In the light of this exposition, the research work is guided by the following question.
1. What is the impact of industrial output on economic growth of Nigeria?
Impact Of Industrial Output On The Economy Of Nigeria (1988-2010)
2. What are the roles of manufacturing industries in the development of the Nigerian economy?
1.3 Objectives Of The Study
The broad objective of this study is to examine the impact of industrial on economic growth in Nigeria between the periods of (1980-2010).
The specific objective includes,
1. To appraise the origin and structure of Nigeria‟s manufacture sector.
2. To analyse industrial output and to determine the effect it has on the economic growth and development of the country.
3. To recommend possible solutions to the country‟s manufacturing sector.
1.4 Statement Of Research Hypothesis
The hypothesis of this study is stated as follows:
Ho: Industrial output rate has no significant impact on the level of economic growth (GDP).
H1: Industrial output rate has profound significant impact on the level of economic growth (GDP).
Impact Of Industrial Output On The Economy Of Nigeria (1988-2010)
1.5 Significance Of The Study
The significance of this study lies in the fact that the work will expose the extent of which industrial output has contributed to economic growth in Nigeria thereby highlighting some obstacles hindering increase in industrial output. This work will be relevant to the government policies and entrepreneurs directing them on industrial development plan. It adds to the already existing literature on industrial output in Nigeria.
Furthermore, the work will assist potential industrialist, economist, investors and other related users of this veritable material in this field of study, it is interesting to know that industrial output is the shortest route to economic development.
1.6 Scope Of The Study
The researcher tends to find out the impact of industrial output on economic growth. The study covers a general contribution of manufacturing industries in Nigeria toward the attainment of economic growth from (1980-2010).
1.7 Methodology and Sources of Data
The validity and reliability of this research work will depend on the use of statistical data using simple regression model and the hypothesis setting that requires testing the validity of the analysis.
Impact Of Industrial Output On The Economy Of Nigeria (1988-2010)
The researcher made use of secondary data obtained from the publications of the Central Bank of Nigeria, Central Bank of Nigeria statistical bulletin and the annual report of accounts as well as resource materials from the library and the internet.
1.8 Limitation Of The Study
A study of this nature cannot be researched without encountering constraints, some of which includes;
1. Finance: Financial constraint or inadequacy was the major limitation for this research to gather materials, logistics etc.
2. Data: There was a problem of acquiring all necessary data through the researcher has to rely on the ones available.
Impact Of Industrial Output On The Economy Of Nigeria (1988-2010)
Impact Of Industrial Output On The Economy:
The impact of industrial output on the economy is significant and multifaceted. Industrial output refers to the production of goods and services by the industrial sector of an economy, which includes manufacturing, mining, construction, and utilities. This sector plays a crucial role in economic development and growth. Here are some of the key ways in which industrial output affects the economy:
- Gross Domestic Product (GDP) Contribution: Industrial output contributes significantly to a country’s GDP. It includes the value-added in manufacturing and other industrial activities, making it a key driver of economic growth.
- Employment: The industrial sector is a major source of employment. It creates jobs directly in manufacturing and related industries, as well as indirectly in support industries, such as logistics and transportation.
- Innovation and Technological Advancement: The industrial sector often leads in technological innovation. Investments in research and development (R&D) and the adoption of advanced manufacturing techniques can lead to increased productivity and competitiveness.
- Exports: Many industrial products are exported to foreign markets, contributing to a country’s balance of trade. A strong industrial sector can generate foreign exchange earnings, which can be used to pay for imports and service external debt.
- Supply Chain Effects: The industrial sector is intertwined with other sectors of the economy through supply chains. Changes in industrial output can impact suppliers and customers, influencing their economic health and activities.
- Infrastructure Development: Industrial projects often require significant infrastructure development, such as transportation networks, power generation, and telecommunications. This can stimulate investment in infrastructure, benefiting various sectors of the economy.
- Economies of Scale: Industrial production often benefits from economies of scale, which can lead to lower per-unit production costs. This can result in lower prices for consumers and increased competitiveness in global markets.
- Multiplier Effect: Increases in industrial output can have a multiplier effect on the economy. As the industrial sector grows, it stimulates demand for goods and services in other sectors, such as retail, finance, and real estate.
- Income Generation: The industrial sector typically provides higher wages compared to some other sectors, contributing to higher household incomes and standards of living for workers.
- Environmental Impact: Industrial output can have significant environmental consequences, both positive (e.g., through the development of cleaner technologies) and negative (e.g., pollution and resource depletion). Sustainable industrial practices are essential for long-term economic and environmental well-being.
- Government Revenue: Taxes and tariffs on industrial output can be a significant source of government revenue, which can be used for public services, infrastructure, and social programs.
- Global Competitiveness: A strong industrial sector enhances a country’s global competitiveness by producing high-quality products that can compete in international markets.
However, it’s important to note that the impact of industrial output on the economy can vary depending on the country’s economic structure, industrial policies, and global economic conditions. Additionally, the environmental and social consequences of industrial output are increasingly important considerations in modern economies, emphasizing the need for sustainable and responsible industrial practices.