PRODUCTIVITY AND MANUFACTURING SECTOR GROWTH IN NIGERIA: EVIDENCE FROM THE MANUFACTURING SECTOR (1980-2013)

ABSTRACT

This study seeks to examine the impact of productivity on economic growth in Nigeria considering productivity and output growth in the manufacturing sector, using annual time series data spanning 1980 to 2013. Ordinary Least Squares (OLS) technique and Growth Accounting Methodology (GAM) were adopted for the analyses. Results revealed that Total Factor Productivity (TFP) was positively related to output in the manufacturing sector and highly significant. Also TFP growth accounts for close to one-half of manufacturing output growth in recent years. This development was adduced to the inflow of capital stock in form of foreign direct and portfolio investments to the sector and transfer of production technologies from developed climes. Factor inputs like capital and labour were also found to be positively related to output in the sector, albeit, not significant. Nonetheless, capital and labour growth contributed remarkably to manufacturing output growth in the 1991-2000 and 2001-2010 decades respectively. These were attributed to the benefits obtained from economic reforms. The study recommends that government, policy-makers and management of industries should establish a necessary institutional machinery to increase productivity.