Manufacturing Sector Output and Economic Growth Nexus: Lesson from Nigeria

Abstract

This study examines the relationship between manufacturing sector output and economic growth in Nigeria from 1981 to 2022. The study adopts a quantitative econometric technique using ordinary least square method (OLS), after testing for level of integration of the macroeconomic variables in the specified model. The OLS result revealed that manufacturing sector output has a positive but insignificant relationship with economic growth in Nigeria within the period reviewed. This implies that as manufacturing sector output increases, economic growth will also increase. The reason for this insignificant effect of the manufacturing sector output on economic growth in Nigeria is attributed to insufficient investment on the manufacturing sector. Hence, the sector has not yield a meaningful impact on economic growth. Gross fixed domestic investment has a positive but also insignificant impact on Nigeria’s economic growth, interest rate and exchange rate have insignificant impact on economic growth in Nigeria while labour force impact significantly on the growth of Nigeria economy. Based on these results, the study recommends that there is need to increase investment in the manufacturing sector, encourage industrialization, reduce lending rate and implement policies that will address how the country will achieve sustainable high level of economic growth through industrialisation, for Nigerian economy to make a meaningful progress.