Impact Of Industrialization On Economic Development
Industrialization has been a transformative force in driving economic development, reshaping societies, and altering landscapes globally. It entails the shift from agrarian-based economies to ones dominated by manufacturing and mechanization, leading to increased productivity, job creation, and wealth generation. The infusion of technological advancements and infrastructure improvements associated with industrialization enhances efficiency, fosters innovation, and enables economies of scale, thereby bolstering competitiveness in the global marketplace. Moreover, industrialization often facilitates urbanization as rural populations migrate to cities in search of employment opportunities, further stimulating economic growth. However, while industrialization fuels economic progress, it also brings challenges such as environmental degradation, resource depletion, and social inequalities, necessitating sustainable development strategies to mitigate adverse impacts and ensure equitable distribution of benefits. Through strategic policies and investments, harnessing the positive aspects of industrialization while addressing its drawbacks can foster inclusive growth and propel nations towards greater prosperity and resilience in the face of evolving global dynamics.
The industrial sector remains a strong sector of any economy, be it developed or developing. The developed countries are noted for their high industrial performance. The effect of the industrial activities on the economy of underdeveloped or developing nation si still under contention. It’s a fact that the economy will not grow without its industrial activities. These activities include: agriculture, manufacturing, mining and mineral processing and export opportunities for manufacturers. This study specifically analyze the impact of industrialization to economic development. It postulate that inspite of the effort of Nigerian government, Nigeria still show a stunted growth because of some constraints. In order to redress these problems, it was suggested that government should ensure policy consistency by allowing fiscal and monetary policies to work themselves out before a counter policy is introduced, also, industrial policy must be designed, reviewed and implemented in such a way that it will facilitate and not discourage investment in the sector. Based on the above, the prosperity of the nation to a large extent dependents on the development and sustenance of the industrial sector.
Title Page
Certification
Dedication
Acknowledgment
Table of Contents
Abstract
CHAPTER ONE
1.0 INTRODUCTION
1.0 Background of the Study
1.1 Statement of the Problem
1.2 Objective of the Study
1.3 Hypothesis of the Study
1.4 Significant of the Study
1.5 Scope of the Study
1.6 Limitations of the Study
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Theoretical Literature
2.1.1 Industrial Sector and Nigerian Economy
2.1.2 The Rationale/Reasons for Increased Industrial Output
2.1.3 Problems of Industrial Development in Nigeria
2.1.4 Government Incentives/Policy Measures to the Industrial Sector
2.2 Empirical Literature
2.3 Limitations of the Previous Study
CHAPTER THREE:
3.0 RESEARCH METHODOLOGY
3.0 Methodology
3.1 Model Specification
3.2 Method of Evaluation
3.3 Model Justification
3.4 Data Sources and the Econometric Software
CHAPTER FOUR
4.0 PRESENTATION AND ANALYSIS OF RESULT
4.1 Regression Result
4.2 Result Interpretation
4.2.1 Economic A Priori Criteria
4.2.2 Statistical Criteria
4.2.3 Econometric Criteria
4.3 Policy Implications
CHAPTER FIVE
5.0 SUMMARY
5.1 Policy Recommendation
5.2 Conclusion
References
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
Industrialization is regarded as a central object of economic policy in most developing economies. They see industrialization and agriculture as an integral part of development and structural change. Some economic analyst are of the view that industries play a vital role in the economic growth and development of any country. In this research work, effort is made to analyze the impact of the industrial sector to the economic development of Nigeria.
Generally, the industrial revolution which took place in Britain between the late 18th and 19th centuries has gotten much to do with the present set back on industrial development led to the factory process that metamorphosised into industrial production. Thus, history recorded that the industrial sector performance in Nigeria’s economic growth is as old as the nation itself. It dates back to the amalgamation of the southern parts of the country in 1914 to for the geographical land mass called Nigeria. By a representative of the colonial administration of Britain Lord, Fr. Fredrick Lugard.
As soon as independence was over, the government of Nigeria embarked on import substitution as an industrial strategy in order to reverse the problem of deficit balance of trade and fasten industrialization among other reasons.
Right from the first national development plan (1962-1968) to the fourth national development plan (1981-1985) rapid industrialization received priority in Nigeria’s development objectives. The government sector for instance, the allocation of 16.2 percent of the budget plan to the manufacturing sector during the third national development plan (1975-1980) was the highest. The industrial policies and strategies of development were adoption of import substitution strategy, expansion of indigenous equity participation in foreign owned enterprises, provision of integration, linkages and diversification of industrial increased domestic resources content of industrial product and provision of financial and manpower resources to promote research and adoption of technology to encourage the small and medium scale industries and
public sector participation and control of some large industrial products such as iron.
To withstand the rising problems of the sector and economy in general, Nigeria embarked on structural adjustment programme (SAP) in 1986 on the assumption that structural adjustment programme (SAP) would corrects these problems. It has important implication on both the government and industry. It has brought government re-appraised of the regulatory environment, the structure of protection for local industries and the package of incentives available. For the private sector and industrialist in particular, SAP presented a new challenge which reported a more serious effort to control costs, increase production efficiency and remain competitive.
In the spirit of SAP, the second tier foreign exchange market (SFEM) was introduced in 1987 to allow market forces determine the foreign exchange rate, remove price distortions and thereby effect a more efficient allocation of resources.
Because of inability of the existing policies to live up to expectation, government therefore in 1988 adopted a new approach
to industrial development, which gave prominence to the role of the private sector. To give effect to this management approach, government, in August 1988, established the national committee on industrial development (NCID). The strategic management of industrial development (SMID) or industrial master plan (IMP) is predicted on the need to organize a network of sectors (referred to as strategic consultative groups) around on industrial activities with the aim of having a comprehensive and perception view of the investment problems in particular line of industrial activity. The (IMP) seeks to minimize the problems of policy and programme consistency in the development of the nations industries.
A number of fiscal and monetary policies together with institutional reform measures have been undertaken by the Olusegun Obasanjo administration since transition in May 1999. With these measures, it is envisioned that Nigeria will be transformed into a major industrialized nation and an economic power.
1.1 STATEMENT OF THE PROBLEM
The industrial sector is known to be the strength of the value-added processes in many economies. Nigeria is wanting to industrialize must encounter some problems which are militating against industrialization for the purpose of this study, it is pertinent to survey those problems which are forming obstacles to industrialization.
Industrial sector encountered the problem of low price elasticity of export and lack of comparative advantage. This means that Nigeria share of foreign exchange market cannot appreciate despite the numerous incentives granted to the industrial sector.
The absence of an indigenous entrepreneurship class couple with other problems of multinational corporation affect the structure and influence the nature of utilization of scientific and technological labour for national development.
Realizing that industrialization can indeed have some adverse effect on the economic growth and development of the country, one
will logically ask low effective are the industrialization policies in Nigeria?
1.2 OBJECTIVES OF THE STUDY
It has been observed that most industries in Nigeria have not realized their economic development goal even with the existence of manufacturing industries within the economy. Therefore this work researches the following objectives.
i. To determine the role of manufacturing industry in the economic development of Nigerian economy.
ii. To examine ways in which industrial sector in Nigeria can be made to play a better role towards high productivity for economic growth of Nigeria.
1.3 HYPOTHESES OF THE STUDY
The following hypotheses are tested on this study:
H0: The industrial sector contribution has no significant impact to economic development of Nigeria.
Hi: The industrial sector contribution has significant impact to the economic development of Nigeria.
1.4 SIGNIFICANT OF THE STUDY
The significant of this study lies in the fact that it will expose the extent to which industrialization has contributed to economic development of Nigeria. It will highlight some obstacles hindering increase in industrialization and industrial output in Nigeria.
This work will be relevant to entrepreneurs and government by directing them on the easiest means of embarking on industrial development plan. The relevance of this work also lies in the fact that it adds to the already existing literature on industrial output.
Furthermore, this research work will assist students of economics, government and real potential industrialist, investors and other related coursed. Other researchers will see this work veritable material in their field of study .
Finally, since no knowledge is a waste, readers of this work will find it interesting to know that high industrialization is the shortest route to economic development.
1.5 SCOPE OF THE STUDY
This research work deals on the impact of industrialization on Nigeria’s economic development. The date used is a secondary data, which was obtained from the publication of the central bank of Nigeria statistical bulletin and the amial report of accounts. The analytical tools employed on this research include t-test and regression analysis.
1.6 LIMITATIONS OF THE STUDY
A study of this nature cannot be done without some problems and as such it was constrained by many factors namely:
TIME: While embarking on this detailed research work, the researcher was having lectures, preparing for examinations, engaging in such activities and domestic work as well. So time was not enough for the researcher to perfect the work.
FINANCE: Financial inadequacy was the major limitation of this work. The researcher was financially dependent as a student. The need for materials, trips and logistics needed for this research was not adequately provided.
DATA: The controversial nature of the Nigeria data delayed this work. It took the researcher a lot of time before the harmonization of the data used in this research work.
SHARE PROJECT MATERIALS ON:
Impact Of Industrialization On Economic Development:
Industrialization has a profound impact on economic development and has historically been a driving force behind the transformation of economies. Here are some key ways in which industrialization influences economic development:
- Increased Productivity: Industrialization typically involves the shift from agrarian or craft-based economies to manufacturing and mechanized production. This transition often leads to increased productivity due to the use of machinery, technology, and efficient production processes. This increased productivity can result in higher output and economic growth.
- Employment Generation: Industrialization creates jobs in manufacturing and related sectors. As factories and industries expand, they require a larger workforce. This, in turn, reduces unemployment rates and contributes to higher income levels for the population.
- Economies of Scale: Industrialization allows for economies of scale, where the cost per unit of production decreases as output increases. This leads to lower production costs and potentially lower prices for consumers, stimulating demand and economic growth.
- Urbanization: Industrialization often leads to rural-to-urban migration as people move to cities in search of employment opportunities. This urbanization can contribute to economic development by concentrating labor and resources, facilitating access to education and healthcare, and fostering innovation and entrepreneurship in urban centers.
- Technological Advancement: The process of industrialization encourages technological innovation and development. As industries seek to improve efficiency and competitiveness, they invest in research and development, which can lead to the creation of new technologies and industries.
- Infrastructure Development: Industrialization necessitates the development of infrastructure such as roads, ports, railways, and energy supply systems. This infrastructure not only supports industrial activities but also enhances connectivity and trade, further driving economic development.
- Income Growth: Industrialization often leads to higher wages and better working conditions for employees compared to traditional agrarian or cottage industries. This rise in income levels contributes to increased consumer spending, which can boost economic development.
- Export Growth: Industrialization can facilitate a country’s participation in international trade by producing goods for export. This can lead to an influx of foreign exchange and economic growth through exports.
- Diversification of the Economy: Industrialization allows for economic diversification by reducing the dependence on a single sector (e.g., agriculture). Diversification can enhance economic stability and resilience by spreading risk across various industries.
- Human Capital Development: As industries demand a skilled and educated workforce, industrialization can drive investments in education and training. This, in turn, enhances human capital development, which is crucial for long-term economic growth.
- Environmental Challenges: While industrialization offers numerous economic benefits, it can also lead to environmental challenges such as pollution and resource depletion. Managing these challenges is essential to ensure sustainable economic development.
- Inequality: Industrialization can lead to income inequality if not accompanied by appropriate policies and regulations. It’s important for governments to implement measures that promote equitable distribution of the benefits of industrialization.
In conclusion, industrialization has the potential to significantly boost economic development by increasing productivity, creating jobs, fostering technological advancement, and driving overall growth. However, its impact can vary depending on factors such as government policies, access to resources, and the ability to manage associated challenges effectively. A well-managed industrialization process can be a powerful driver of economic progress for nations.