Impact of Industrial Sector on Nigeria Economic Growth

Impact of Industrial Sector on Nigeria Economic Growth 1981-2015 PDF. Download the full project work from chapter one to five with reference. Industrialisation plays a significant role in economic development of any nation. Industrialisation acts as a catalyst that accelerates the pace of structural transformation and diversification of economic, enable a country to fully utilize its factor endowment and to depend less on foreign supply of finished goods or raw materials for its economic growth, development and sustainability.

CHAPTER ONE

INTRODUCTION

1.1       Background of Study

Industrialisation plays a significant role in economic development of any nation. Industrialisation acts as a catalyst that accelerates the pace of structural transformation and diversification of economic, enable a country to fully utilize its factor endowment and to depend less on foreign supply of finished goods or raw materials for its economic growth, development and sustainability. Industrialisation which is a deliberate and sustained application and combination of an appropriate technology, infrastructure managerial expertise and other important resources has attracted considerable interest in development economies in recent times (Okafor, 2005).

This is because industrial development involves extensive technology-based development of the productive (manufacturing) system of the economy. In other words, it could be seen as a deliberate and sustained application and combination of suitable technology, management techniques and other resources to move the economy from the traditional low level of production to a more automated and efficient system of mass production of goods and services (Ayodele and Falokun, 2003).

Industrial development in Nigeria over the last three decades has become such a crucial factor in the pace and pattern of the country’s general economic development that it has moved from the periphery of the nation’s growth mechanism to a potential dominant position as an important engine of economic transformation. Throughout this period, Nigeria has consistently regarded the promotion, growth and development of manufacturing as the most reliable way of building an economically stable and viable country. In fact, it has Seen assumed that the manufacturing objectives of achieving self-reliance, self-sufficiency, foreign exchange savings, balanced regional development and reduction in unemployment rates would lead the way to the urgent realization of economic independence.

Historically, as far back as the early 1960s, the Nigerian government recognized the need to be among the industrial class of the society. Thus, during the colonial era, Nigerian economy was characterized by importation of goods and services of all kinds, there were few Processing industries and establishments importing raw materials from abroad for processing into finished products. This era however constituted enormous exploitation on the economy. The British government capitalized on the lack of manufacturing industries in Nigeria to ensure they earned foreign exchange advantageously. This they achieved by importation of goods and services from Britain to Nigeria they also ensured that technological development in the country was minimal. As a result of this, Nigeria tried to imbibe on import-substitution method by importing machinery required for the production of domestic goods which failed as a result of lack of technological base in the country. However, the idea of achieving full industrial development during this era was not successful.

Furthermore, it is evident that Nigeria’s independence led to several transformations in the country as nationalist leaders gained key positions in several offices which gave them the opportunity to create incentives and strategies to promote industrial development. They made import-substitution and industrialization a national priority through the national development plans of (1962-1968, 1970-1974, and 1975-1980). The first development plan encountered a lot of problems especially in the areas of political difference of our leaders. The emergence of military rule in 1966 just before the end of the first development plan also affected the second and third development plans. However, the Nigeria’s development met a great pause in the decade of the 1970’s, which marked the decade of first oil boom in Nigeria. With the discovery of oil, a lot of reconstruction had to be done in the country due to the after effects of war, the government as at then which was under military rule relied heavily on oil for this, Nigeria till date still suffers from the ‘Dutch’ disease which in this context refers to a situation in which an economy totally depends on oil for revenue and completely ignores other functioning sectors of the economy.

Industrial development is generally believed to be a catalyst for rapid growth and development of any economy, be it developed, developing or under-developed. It is usually argued that industrialization is capable of increasing the pace of economic growth and ensuring swift structural transformation of the economy. Paradoxically, most developing countries have failed to achieve industrial development despite several industrial policies and reforms. In Nigeria, the drive to transform her economy from non-industrialized state to an industrialized one has been the pre-occupation of successive administrations that has piloted the affairs of the nation since independence till date. Unfortunately, despite the abundant natural endowment (both human and non-human) of the growth and development have steady decline in the sectoral hence economic development tremendously.

However, despite series of deregulation policies introduced since 1986 by successive governments to facilitate industrialization process in an economically conducive manufacturing environment, the performance of the industrial sector remains undesirable. In the last two decades, Nigeria recorded an unremarkable economic performance especially in manufacturing industry in the areas of production and international trade. Besides, its poor macroeconomic management might have largely contributed to such unfavourable performance of the industrial sector.

After the successful installation democratic government in 1999, there was high hope that the pace of economic development and industrialization was going to take a different turn. The reestablishment of democratic 1999 was followed by aggressive enthusiasm by the government in redirecting development policies in the country. To some Nigerians, democracy was perceived as the major ingredient economic growth and development. This thinking is, however, not strange in the theoretic on democracy-development nexus.

In the current trend of globalization of trade and investment, however, Nigeria is facing a crucial turning point of how to improve significantly, the performance of the industry, in terms of production and trade. Thus, the challenge to the country is how to design strategies and policies relevant to regional and global competition given the small market of the economy especially in the area of industrial products.

In addition, more recent studies on the topic argue that there exist a causal relationship between industrial development and economic growth and the level of impact between the two variables has been so minimal especially in developing countries. In evaluating this relationship, the analysis will be based on four hypotheses which have important policy implications. This among others propel the researcher  interest into the relationship that exit between industrial development and economic growth in the country.

1.2       Statement of the Problem

Among the many challenges facing the global community is how to achieve sustainable development. Economic growth is fundamental for sustainable development. Most countries regard industrialization as a positive development capable of generating rapid wealth, revitalizing run-down areas, and conferring influence in world affairs.

Despite having plentiful natural largest domestic market in Africa, and an abundant and cheap labour force, Nigeria’s industrial performance has been highly disappointing in the last decade. Between 1990 and value added and manufactured exports have declined, and the dangerously dependent on petroleum as the
only means to obtain foreign exchange. As a result, Nigeria is losing its competitive manufacturing edge and is becoming increasingly marginalized in the international industrial scene. Nigeria faces severe flaws in its production and export structures, which have been the outcome of inappropriate policies, macro-economic instabilities, a distorting business environment, lack of transparent governance and weak industrial capabilities.

Industrial development with its gains which ranges from increased employment opportunities, abundance of goods and services more favorable balance of trade , better income etc. to improve standard of living is not fully utilized in the Nigerian economy and as such, economic growth and development suffers a huge set back. Although the government has developed different policies and programs in the past that are aimed at boosting industrial development in the country, most of these policies though magnificent on paper have failed woefully in the area of implementation while some of them did not see the light of the day, others were abandoned halfway and funds meant for the programs were misappropriated.

Conclusively, industrial development is an important factor used in converting all resources to mankind’s use and benefit. Economists observed that the development and utilization of industrial sector is important in a nation’s economic growth. Against this background, the study intends to evaluate the empirical relationship and causal patterns between industrial development and economic growth in Nigeria.

1.3       Research Questions

(1)        Is there any significant impact of industrial sector development on Nigeria’s economic growth?

(2)        Is there any long run relationship between industrial development and economic growth?

1.3       Research Objectives

The general objective of the study is to assess the relationship between industrial development and economic growth in Nigeria. The specific objectives include the following:

(i)         To investigate the impact of industrial sector development on Nigeria economic growth.

(3)        To evaluate if there is long-run relationship between industrial development and economic growth.

1.5       Research Hypothesis

In this study, the hypotheses below shall be tested;

H0i:      Industrial sector development has no significant impact on Nigeria economic growth.

H0ii:     There is no long-run relationship between industrial sector development and economic growth.

1.5. Significance of the Study

This study aims at investigating the impact of industrial sector development on Nigeria economic growth at large and hence, its impact cannot be over-emphasized. The study will be of great importance to policy makers, government and its agencies, private individuals and firms at large.  The study will be also of great importance to student s of economics and other researchers who may have interest in industrial sector or industrialization and its impact on Nigeria economy. Finally, the findings of this study would add to the stock of econometric literature of Nigeria.

1.6       Scope and Limitation of the Study

The geographical scope of this work will be centered on the Nigerian economy with particular emphasis on the industrial sector between 1981-2015. The industrial sector as used in this context refers to the sector of the economy that involves deliberate and sustained application and combination of suitable technology, management techniques and other resources to move the economy from the traditional low level of production to a more automated and efficient system of mass production of goods and services (Ayodele and Falokun, 2003).

The researcher encountered a number of constraints in the course of this work to include; data sourcing or data inconsistence due to poor nature of information management in Nigeria. Other constraints are; time factor, financial constraints and host of other constraints that prevent the researcher to present a better work than this.

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