THE IMPACT OF MANUFACTURING SECTOR ON THE NIGERIAN ECONOMIC DEVELOPMENT

ABSTRACT

 

This research work is geared at evaluating the effectiveness of manufacturing sector in promoting economic development in Nigeria. This is very essential in the Nigerian economy is characterized by GDP dependence on manufacturing output.  Indices of exchange rate, capacity utilization, electricity supply and industrial output are hereby studied for the period of 1985-2007 with respects to the effectiveness of manufacturing sector in promoting economic development in Nigeria. A simple linear and multiple regression model was used for this project and criteria were examined. From the findings of this research work, it was observed that manufacturing sector constitute an integral part of the industrial base of any nation. They form the foundation on which the industrial sector of any nation must be built. It is logical, therefore, to say emphatically, that without a properly developed manufacturing sector base, there can be no industrialisation of any sound foundation on which a sustainable economic growth and development could be based.

 

TABLE OF CONTENTS

 

CHAPTER ONE

 

1.1

Introduction

 

1.2

Statement of Research Problem

 

1.3

Aim and Objectives of the Study

 

1.4

Research Question

 

1.5

Statement of Hypothesis

 

1.6

Research Methodology

 

1.7

Significance of the Study

 

1.8

Scope and Limitation of the Study

 

1.9

Plan of the Study

 

 

References

 

 

CHAPTER TWO: Literature Review

 

2.1      Introduction

2.2      Theories and Concept of Manufacturing Sector

2.3      Importance of Manufacturing Sector

2.4      The Theory of Investment

2.5      Impact of Average Capacity Utilization on Manufacturing

Sector

2.6      Impact of Trade Policy on Manufacturing Sector in Nigeria

References

 

CHAPTER THREE: The Nigerian Manufacturing Sector

3.1      Introduction

3.2      Structure and Performance of the Nigerian Economy

3.3      Development Plan

3.4      Performance and Structure of the Nigerian Manufacturing Sector

3.5      The Structural and Institutional Constraint of the Manufacturing Sector in Nigeria

3.6      Problems of the Manufacturing Sector in Nigeria 38 3.7 Solution to Problems of Manufacturing Sector in Nigeria

References

 

CHAPTER FOUR: Research Methodology, Data Presentation and Analysis

4.1      Introduction

4.2      Research Questions

4.3      Collection of Data

4.4      Method of Data Analysis

4.5      Data Presentation and Analysis

4.5      Model Specification

4.7      Empirical Results

References

 

CHAPTER FIVE: Summary, Conclusion and Policy Recommendation

5.1

Summary

 

5.2

Conclusion

 

5.3

Recommendations

 

 

Bibliography

 

 

 

 

CHAPTER ONE

 

1.1    INTRODUCTION

The development of the Nigerian Manufacturing sector has not been fully addressed and the impact has not been fully felt. Manufacturing sector in Nigeria has been experiencing a stunted growth and its, contribution to gross domestic product has remained low. For instance, the manufacturing sector as a whole remains small, according for only 6.6 percent of GDP in 2000 and 12 percent of employment (World Bank, 2002). The production indices (using 1990 as a base year (100) also indicated that while agriculture and services experienced modest growth from 103.5 and 101.5 to 133.6 and 297.0 between 1991 and 1999 respectively, manufacturing sector recorded a decline from 109.4 to 92.3 in the same period. It is also sad to mention that capacity utilization in the manufacturing sector declined from about 70.1% in 1980 to just 44.3 percent in 2002 (CBN 2002).

 

Moreso, the study attempts to establish an empirical relationship between manufacturing sector and other macroeconomic variables. The manufacturing sector is an integral part of the industrial sector in any economy. The major policies and measures applied to promote the development and the strategies and the policy reforms needed to accelerate the pace of industrialization.

 

Before independence in 1960, the Nigeria economy was mainly agrarian, both in production for domestic consumption and exports industrialization was not part of the colonial economic policy, which was anchored on making the colonial producers of primary raw materials foreign industries and importers of manufactured goods.  Therefore, the task of the first indigenous administration set for itself on attaining political independence was the transformation of the country into a modern industrial economy.

 

1.2    STATEMENT OF THE RESEARCH PROBLEM

The early period of post-independence up till mid-1970s saw a rapid growth of industrial capacity and output, as the contribution of the manufacturing sector to GDP rose from 4.8% to 8.2%.  This pattern changed when oil suddenly became of strategic importance to the world economy through its supply price nexus.

 

What is the impact of manufacturing industry on the Nigerian economic development?

 

What is the impact of monetary policies on the manufacturing industry in Nigeria?

 

What is the impact of trade policy on the development of manufacturing industries in Nigeria?

 

1.3    AIM AND OBJECTIVES OF THE STUDY

The aim of this study is to examine the impact of manufacturing sector on the Nigerian economic development.  While objectives are:

i)       To show the impact of manufacturing industry on the economic development of Nigerian.

ii)      To determine the impact of monetary policies on the manufacturing industry in Nigeria?

iii)    To determine the impact of trade policy on the manufacturing industries in Nigeria.

 

1.4    RESEARCH QUESTIONS

The research questions are- as follows:

 

  • Is there any relationship between the manufacturing industry and the Nigerian economic development?
  • Does monetary policies has any impact on the manufacturing industry in Nigeria?
  • Does the introduction of trade policies improve the development of the manufacturing sector?

 

1.5    STATEMENT OF HYPOTHESIS

In the course of this study, three main hypotheses are formulated.

 

Hypothesis One

Ho:   that there is no relationship between manufacturing industry and the Nigerian economic development.

Ha:   that there is relationship between manufacturing industry and the Nigerian economic development.

 

Hypothesis Two

Ho:   That monetary policy does not have impact of on the manufacturing industry in Nigeria?

Ha:   That monetary policy has impact of on the manufacturing industry in Nigeria?

 

Hypothesis Three

Ho:   That trade policies does not improve the development of the manufacturing sector in Nigeria.

Ha:   That trade policies improve the development of the manufacturing sector in Nigeria.

 

1.6   RESEARCH METHODOLOGY

 

1.6.1 Collection of Data

Secondary data are used and are sourced from textbooks, newspapers, brochures, magazines, CBN annual publications, World Bank debt tables etc.

 

1.6.2 Method of Analysis

Regression method is used to established the relationship that exists between the variables and to test the truthfulness or otherwise of the research hypothesis.

 

1.6.3 Model of Specification

This shows the nature of the relationship between explained and unexplained variables.

Y      = βo + β1x1 + β2x2 + β3x3 + β4x4 + U

 

Y      = GDP

QM  = Manufacturing productive output

XM  = Manufacturing export

G      = Government loan to manufactured sector

M      = Manufactured import

U      = Error term

βo, β1, β2, β3, β4 = Coefficient of the equation

 

1.7    SIGNIFICANCE OF THE STUDY

It is expected that the findings from this study will expose the impact of the manufacturing sector on the Nigerian economy and how they tend to promote economic growth.

 

It will also show the trend of the manufacturing sector over the years.

 

It will also show how export supply capacity has improved and dependence on imports by Nigerians has reduced. It will also serve as a guide to the nation economists and policy makers on how to direct and control the economy in a positive direction.

 

1.8    SCOPE AND LIMITATION OF THE STUDY

The basis of our research on the impact of the manufacturing sector on the Nigerian economy will be limited to the manufacturing export.

 

Despite the fact that the research is limited on the scope of the manufactured export of the sector, we are still going to be faced with difficulties like the variation in the data obtained from different officials i.e. political data, conversion of such data into a whole since the data were complied with different base years and irregularities in the process of data collection in the society pose a big problem for the researcher.

 

1.9    PLAN OF THE STUDY

The project has been divided into five chapters for easy understanding.

 

Chapter one consists of introduction, statement of problem, significance of the study, aim and objectives, research methodology, scope and limitation of the study.

 

Chapter two deals with the literature review in which the works of previous authors are analyzed and this are compared with existing state of knowledge with empirical finding and the theoretical framework.

Chapter three is the Structural composition of the study.

Chapter four look into research methodology, data presentation and analysis.

Chapter five is a summary of the work, conclusion and Policy recommendation.