Real Sectors` Performance as a Precursor to Economic Restructuring in Nigeria

Abstract

This study focused on real sectors performance as a precursor to economic restructuring in Nigeria. There seemed to be an unbalanced transition of the Nigerian economy from agriculture to industrial and to services sector which failed to achieve a transformed economy. The individual real sectors` growth have been disproportionate. Sector-specific policies need to be implemented due to recent service sector led growth in the economy. To proceed, we analyzed individual real sector performance using real sectors time series data from 1981 to 2018 sourced from CBN statistical bulletin and WDI. The study utilized the following variables: growth rate of real GDP (GDPR), growth rate of services sector output (SEVR), growth rate of manufacturing sector output (MANR), growth rate of industrial sector output (INDR), growth rate of Agricultural sector output (AGCR), growth rate of trade openness (OPEN) and Real interest rate (INTR).The Autoregressive Distributed Lag bounds testing approach to cointegration was utilized for this study. Using the bounds test, the result from the ARDL model indicate that the variables for this study are cointegrated while the error correction term appeared significant and confirms that short-run disequilibria are corrected up to 100 percent annually. This shows that the real sectors are the backbone of the economy. The empirical results reveals that the real sector growth exert positive and significant impact on economic growth both in the short-run and the long-run. Unlike previous findings that structural change must follow a certain pattern, our result implies that economic transformation in Nigeria requires a holistic policy framework to address each specific sector. We therefore, recommend that government should implement policies that will promote inter-sectoral linkages to achieve simultaneous growth in the real sectors. Nigerian trade performance should be improved through economic diversification and further availability of funds to private sector at competitive interest rate in order to produce internationally competitive products.