The Role of the Manufacturing Sector on Economic Growth and Development in Nigeria
Chapter One
Objectives of the Study
The major objective of this study is to examine the role of the manufacturing sector in economic growth and development in Nigeria.
Other objectives of the study include:
- To investigate the impact of the manufacturing sector on 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.
- To find out the various policy measures available to the government that can be used to redress the persistent decline in manufacturing production.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Conceptual Review
Manufacturing Sector and the Nigerian Economy
Historically, the growth in manufacturing output has been a key element in the successful transformation of most economies that have seen sustained rises in their per capita incomes. In most of Africa, performance in this area has been poor over the last decades. The lack of high-quality data constitutes a major impediment for rigorous policy relevant research on African industry, and the majority of previous economic research on Africa has therefore been based on aggregate data.
Opaluwa et al (2010) opine that the manufacturing sector plays catalytic role in a modern economy and has many dynamic benefits that are crucial for economic transformation. They noted that in an advanced country, the manufacturing sector is a leading sector in many respects; it is an avenue for increasing productivity in relation to import substitution and export expansion, creating foreign exchange earning capacity, raising employment, promoting the growth of investment at a faster rate than any other sector of the economy, as well as wider and more efficient linkage among different sectors.
Obasan and Adediran (2010) argue that when industrialisation is compared to agriculture, the manufacturing sector offered special opportunities for capital accumulation. They explained that capital accumulation can be more easily realised in spatially concentrated manufacturing than in spatially dispersed agriculture. This is one of the reasons why the emergence of manufacturing has been so important in growth and development. Obasan and Adediran (2010) noted that the contribution of the manufacturing industries in the Nigerian economy cannot be over emphasized when considering its employment potentials and financial impacts on the economy. Apart from its role of building grounds for development by laying solid foundation for the economy, they argue that it also serve as import substituting industry and provide ready market for intermediate goods.
Al Awad M. (2010) adopted a newly developed panel cointegration techniques to study the role of manufacturing in non-oil economic growth of the Gulf Cooperation Council (GCC) countries and found that manufacturing is strongly linked to GCC non-oil economic growth over the long run, in the way that income and population are both important to stimulate manufacturing in the GCC, especially income.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
Research design basically provides an outline of how the research will be carried out and the methods that will be used. It includes descriptors of the research design, dependent and independent variables, the assumptions and limitations of the research, research question hierarchy, sampling design and a format for the experimental data showing how data will be presented.
Research design
The research design adopted for this work is the times series experimental research design. The reason is that times series experimental research design combines the theoretical exposition with empirical observation.
Model
Taking inference from the empirical findings and theories, which has been derived from the theoretical exposition of the Cobb Douglas production function theory and then making production central to the equation, a model will be drawn up to determine economic growth in Nigeria context. The theoretical model for this study is the conventional neo-classical one-sector aggregate production model drawn from the mainstream theory of growth, A more comprehensive methodology that avoids the ad hoc selection of additional variables can be found in the manufacturing production function approach proposed by Gajanan and Malhotra (2007), which models GDP as a function of manufacturing sector variables- MO and MCU. The model is expressed as:
CHAPTER FOUR
RESULTS AND DISCUSSION
Pre-estimation Diagnostics Test
Unit Root Test
As is the case with similar studies, the Augmented Dickey-Fuller (ADF) test was used to ascertain whether the four variables of the study exhibit unit root property. This is to find out if the relationship between economic variables is spurious or nonsensical.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
Conclusion
However, while manufacturing might be the most dynamic sector, the study argues that industrial policy should not focus on specific sectors but rather continuously search for new and most profitable activities for productive diversification in manufacturing, agriculture or services. Instead of concentrating on outcomes, effective industrial policy should endeavor to create a process that ensures continuous collaboration between the private sector and the government to identify constrains and remedies to structural transformation. Strategies to accelerate and sustain long-term growth in Nigeria should go beyond national boundaries. Promoting regionally integrated value chains and markets can be a powerful tool for the continent to widen the scope of profitable investment opportunities, increase productivity through scale economies and enhance international competitiveness.
Recommendations
Based on the findings, the following recommendations are made:
- Providing incentives for productive diversification by addressing information externalities and coordination externalities. Information externalities arise because new activities that might be profitable in the future are often not feasible based on existing information. The promotion of such activities requires government support through research and development, selective taxation, financing, regulation etc. Coordination failures necessitate active industrial policy because many projects require large-scale investments to be made in order to be feasible.
- Promoting regionally integrated value chains and markets to enhance investment in manufacturing and other sectors to enhance industrial competitiveness and regional economic transformation.
References
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