AN ASSESSMENT OF THE INDUSTRIAL SECTOR AS A CATALYST FOR THE DEVELOPMENT OF THE NIGERIAN ECONOMY (1985-2019)

Abstract

This study empirically examined the role of the industrial sector in the development of the Nigerian economy from 1985-2019. Being a time series data, and to avoid spurious regression result in our model, a test for stationary of the data using Augmented Dickey-Fuller unit root test was carried out. The variables; real GDP, industrial output, capital expenditure, nominal exchange rate, and interest rate were found to be stationary at their first difference. Then Johansen co-integration technique was used to establish if the stationary variables are co-integrated in the long-run. The Trace statistic indicates that all the variables were found to be co-integrated in the long run. Further, ECM was employed to correct for any form of dis-equilibrium in the short run. The ECM result revealed that industrial output (positive impact) exerts a significant influence on economic growth. While capital expenditure (negative impact), nominal exchange rate (negative impact) and interest rate (positive impact) were found to be insignificantly related to economic growth in Nigeria. The study recommends that there is need for the country to ensure diversification of the economy as this will help to reduce the overdependence in the oil sector of the economy. Government should focus on the other productive sectors of the economy such as agricultural and manufacturing sector, as this will also boost industrial output in the country. The study therefore concludes the role of industrial value added in stimulating the level of economic activities vis-à-vis real level of income cannot be overemphasized

Keywords: Real GDP, Industrial Output, Capital expenditures.