Industrialization and economic growth relationship in Nigeria

Abstract

This paper investigates the impact of industrialization on economic growth in Nigeria from 2001 to 2013.Data was sourced from CBN statistical bulletin 2013. The paper employed Ordinary Least Square (OLS) techniques in estimating the relationship between industrial output, industrial employment and economic growth, after which ADF unit root test was conducted alongside Breusch-Godfrey serial correlation LM test and Breusch-Pagan-Godfrey heteroskeddasticity test.Base on the results of this study, the importance of industrialization to economic growth cannot be overemphasized. The OLS result of this study revaled that industrialization will go a long way in stimulating economic growth in Nigeria. The coefficient of industrial output shows that increase in industrial output will increase economic growth. This paper therefore, recommended that government and its relevant authorities should provide conducive investment environment by removing the structural rigidities that exist in the economy to encourage industrial activities. Government should endeavour to provide stable supply of power, good roads for transportation of goods and people, functional legal system, security of lives and property, infrastructural facilities etc. All these would boost industrial output thereby making goods and services readily available to meet the ever increasing demand in order to prevent inflation and subsequently lead to industrial expansion and improvement in economic growth of the economy. Based on the coefficient of industrial employment; increase in industrial employment will increase economic growth. This paper therefore, recommended the need to formulate policies to increase industrial employment which may likely improve the welfare of Nigerians which would provide employment opportunities for the people. The coefficients of elasticities revealed the extent to which industrial output and industrial employment affects economic growth in Nigeria. It was found that economic growth was highly susceptible to change in industrial output and less susceptible to change in industrial employment this paper therefore, recommended that more effort should be channel toward increasing industrial output than industrial employment so as to achieve the desired economic growth.