Manufacturing Output Growth Research Articles

Real growth in space manufacturing output substantially exceeds growth in the overall space economy

Accurately measuring real economic output in the space economy is made difficult by the rapid increase in capabilities and decrease in prices of launch and satellite technologies achieved over the past two decades. Nominal measures of output in space will tend to underestimate real growth if customers are paying lower prices for better services over time. In this paper, we use price indexes that apply techniques to the space economy that have been used for decades to adjust nominal measures of output in sectors such as information technology, including matched-model and explicit hedonic quality adjustment. We find that adjusting for price and quality changes in the space economy has substantial effects on estimated growth in economic output, especially across its sectors. Price increases over time in the space information sector, which is dominated by direct-to-home (DTH) satellite television, mean that real growth has been slower than nominal growth since at least 2012, the typical pattern in industries not undergoing rapid technological change. In sharp contrast, rapid price decreases and quality increases in other areas—especially launch and manufacturing of satellite, earth observation, and positioning, navigation, and timing (PNT) equipment—have meant that nominal growth rates substantially understate real growth rates in those industries. Given the central importance of space to our modern economy, having accurate information on growth in the space economy is vital for efficiently allocating the substantial private and public investment being devoted to its development.

IMPORT DEPENDENCE, VALUE ADDED AND EMPLOYMENT IN THE NIGERIAN MANUFACTURING SECTOR

This study undertakes the impact of import dependence and manufacturing sector performance in Nigeria with specific interest on the impact of imported intermediate, capital, and manufactured goods (herein referred to as import dependence) on manufacturing sector performancec indicators (such as manufacturing output growth, capacity utilization, value added, employment rate and export adopted in the study) from 1970 to 2019 utilizing a secondary data. The study adopted Augmented Dicky-Fuller (ADF) for unit root test analysis, Autoregressive Distributed Lag (ARDL) bounds test for cointegration test analysis, while, Error Correction Mechanism (ECM) was used to provide empirical evidence for the relationship between manufacturing sector performance (dependenct variable) and import dependence (independent variable). The ARDL bounds cointegration test revealed evidence of long-run relationship between manufacturing sector performance and import dependence. It was discovered from the empirical findings among others that only import of capital contributed positively to all indicators of manufacturing sector performance adopted in the study, however, import of intermdiate goods was mixed in the sense that, it contributed negatively to manufacturing average capacity utilization (MACU), manufacturing value added (MVAD), manuafcturing export (MEXP) and contributed positively to manufacturing output (MOUP) and manufacturing employment rate (MEMP). But, import of manufactured goods contributed negatively to all indicators of manufacturing sector performance adopted in the study. Based on the findings, the study recommends that government should sell off compromise of all forms and make import only for capital and partially for intermediate goods that cannot be produced domestically, while, the importation of manufacutured goods should be discouraged at all cost in Nigeria. Thus conclude that on the average Nigeria’s manufacturing sector is surrounded with doubting benefits and may not be good enough to set economic growth and developmental platform required in the economy.

The growth effects of knowledge-based technological change on Taiwan’s industry: A comparison of R&D and education level

This paper employs data envelopment analysis (DEA) and the Malmquist index (MI) to investigate the growth effects of knowledge-based technological change and technological efficiency change on the output of the industrial sector in Taiwan. The results reveal two main findings: First, due to the lack of knowledge-based scale efficiency, there is no improvement in knowledge-based technological efficiency during the period from 1997 to 2019. Although both the direction of the change in R&D expenditure per researcher and that in education spending time per worker can explain the knowledge-based technological efficiency change, the long-term average of the growth rate of technical efficiency change is negative; thus, the positive coefficient of the technical efficiency change to output growth still makes a negative contribution to the output growth. In other words, if the scale efficiency can be improved, the contribution of knowledge-based technological efficiency change to output growth can be reversed. Second, an increase in R&D expenditure per researcher is more important than an increase in education spending time per worker, especially in knowledge-based technological change. In addition, the results indicate that Taiwan’s economic growth driver mainly comes from technological change. The contribution of knowledge-based technological change to manufacturing output growth is close to 65%, especially in the last 20 years. Furthermore, both knowledge-based technological efficiency change and technological change have a positive and significant coefficient of output growth in the Taiwanese industry. Therefore, in addition to continuing to increase R&D to enhance the growth of technological change and facilitate the growth of output, if the contribution of technological efficiency change to output growth can be improved, Taiwan’s output growth will be more stable in the future. Overall, knowledge plays a key role in industrial growth and economic growth, and R&D promotes more direct growth than education in Taiwanese industry.

Manufacturing Sector and Globalization Nexus in Nigeria: An Empirical Study

Globalization is meant to efficiently allocate resources around the world to enable economic growth. Hence, the study took as its objective to examine the relationship between globalization and the Nigerian manufacturing sector. To achieve this, the study utilized annual time series data from 1986 to 2019. The analytical method followed the Paseran, Shin, and Smith (2001) ARDL approach. Bound cointegration test revealed that stable long run relationship exists among the variables. The result shows that overall globalization and economic globalization had negative and significant impact on manufacturing output growth in the long run. However, in the short run only economic globalization has a positive significant impact on manufacturing in Nigeria. Based on these findings, the study, therefore recommended that, the government should adopt proactive trade policies to protect and give competitive advantage to the domestic manufacturers.

Manufacturing Output Growth and Employment in Nigeria

The Manufacturing sector of the Nigerian economy can perform better in job creation, particularly during the period of economic expansion, which did not happen in the last period of economic growth between 1981 and 2014. Consequently, it is important to understand the real relationship between growth and job creation in the sector during the period. Therefore, this study investigated the employment intensity of gross value added growth in the sector during the period of growth, using Vector Error Correction Model (VECM) with a view to providing useful statistics to facilitate policies for the development of sectoral employment strategy during the next cycle of economic growth. Previous studies have either used descriptive statistics or less robust econometric models applied to aggregate data of shorter series and did not explore the inter-sectoral relationship effect. The estimated employment elasticity of gross value added in the sector was not significant at 95 per cent confidence level, and can, therefore, not be relied upon for pin-point policy. However, the inter-sectoral and inter-temporal relationships provided significant estimates, indicating that such relationships should be taken into account in designing and developing sectoral employment strategy for the manufacturing sector. There is future scope for the extension of research to cover periods of recession, as well, for example, post COVID-19.

Dynamics of Core Inflation, Energy Inflation, Food Inflation and Manufacturing Sector Output Growth in Kenya: Econometric Analysis of Causality and Effects

World over, the manufacturing sector plays an important role in spurring economic development by boosting employment opportunities for semi-skilled labour and building a nation’s competitiveness through exports. Globally, only a few nations have managed to realize their development status without manufacturing sector playing a leading role. Kenya has not managed to develop a robust manufacturing sector and its growth has been majorly ascribed to the agricultural and service sectors. It has therefore, experienced de industrialization as evidenced by the decline in GDP contribution by the manufacturing sector from a paltry 10% in 2018 to 9.7% in 2019. The de industrialization has been characterized by fluctuating inflation rates, a scenario that has elicited debate as to whether there exists any nexus between manufacturing sector output growth and inflation rate. A few empirical studies have been conducted on the same, however, the exact relationship is not well defined. Furthermore, inflation has been largely treated as an aggregate, a scenario that hampers policy formulation. A disaggregated approach to the analysis thus motivated this study. Time series data from the world bank was used and VECM estimated to assess long run dynamics after stationarity test by ADF and Cointegration test by Johannes’s approach. Short run causalities were assessed via Wald test. The study revealed long run relationship between manufacturing output growth and the variables (core inflation, energy inflation and food inflation). Short run causality running from each of the inflation types to manufacturing output growth also exists. Food inflation negatively and significantly influences manufacturing output growth while core inflation has significant positive effect on the same. To enhance manufacturing output growth in Kenya, food inflation should be reduced and stabilized. In the same vain, low and stable level of core inflation should be ensured over time. Keywords: Inflation, Manufacturing Sector, Dynamics, Econometrics, Causality, Kenya DOI: 10.7176/JESD/12-4-06 Publication date: February 28 th 2021

Dynamics of Core Inflation, Energy Inflation, Food Inflation and Manufacturing Sector Output Growth in Kenya: Econometric Analysis of Causality and Effects

World over, the manufacturing sector plays an important role in spurring economic development by boosting employment opportunities for semi-skilled labour and building a nation’s competitiveness through exports. Globally, only a few nations have managed to realize their development status without manufacturing sector playing a leading role. Kenya has not managed to develop a robust manufacturing sector and its growth has been majorly ascribed to the agricultural and service sectors. It has therefore, experienced de industrialization as evidenced by the decline in GDP contribution by the manufacturing sector from a paltry 10% in 2018 to 9.7% in 2019. The de industrialization has been characterized by fluctuating inflation rates, a scenario that has elicited debate as to whether there exists any nexus between manufacturing sector output growth and inflation rate. A few empirical studies have been conducted on the same, however, the exact relationship is not well defined. Furthermore, inflation has been largely treated as an aggregate, a scenario that hampers policy formulation. A disaggregated approach to the analysis thus motivated this study. Time series data from the world bank was used and VECM estimated to assess long run dynamics after stationarity test by ADF and Cointegration test by Johannes’s approach. Short run causalities were assessed via Wald test. The study revealed long run relationship between manufacturing output growth and the variables (core inflation, energy inflation and food inflation). Short run causality running from each of the inflation types to manufacturing output growth also exists. Food inflation negatively and significantly influences manufacturing output growth while core inflation has significant positive effect on the same. To enhance manufacturing output growth in Kenya, food inflation should be reduced and stabilized. In the same vain, low and stable level of core inflation should be ensured over time. Keywords: Inflation, Manufacturing Sector, Dynamics, Econometrics, Causality, Kenya DOI: 10.7176/JESD/12-2-05 Publication date: January 31 st 2021

An empirical analysis of the impacts of real exchange rate on GDP, manufacturing output and services sector in Mauritius

AbstractThe purpose of this study is to examine the effects of the real exchange rate (RER) movements on gross domestic product, manufacturing and services sectors growth in Mauritius. A Vector Autoregressive approach is used which accounts for both dynamics and endogeneity in the exchange‐growth modeling. In the growth model, real currency depreciation is observed to be contractionary in the short‐run while it is expansionary in the long‐run. Conversely, real home currency depreciation has expansionary effect on manufacturing output growth in the short‐run while it drops manufacturing output in the long‐run. Finally, real domestic currency depreciation has positive long term effect on services sector performance in Mauritius.

What drives aggregate investment? Evidence from German survey data

The ifo Investment Survey asks firms in the German manufacturing sector about the importance of sales, technological factors, finance, return expectations, and macroeconomic policy for their investment activity in a given year. We show that these subjective investment determinants 1) capture economically what their labels suggest, and 2) have strong explanatory power for aggregate manufacturing investment growth fluctuations. In a second step, we use these determinants to identify aggregate demand and aggregate technology shocks and argue that the bulk of the variance of both aggregate manufacturing investment and output growth fluctuations (as much as approximately two thirds in both cases) is explained by aggregate demand shocks. Consistent with neoclassical views, however, technological factors are the most important investment determinant on average.

Monetary Transmission Channel, Oil Price Shock and the Manufacturing Sector in Nigeria

Abstract Research background: The need for diversification of the Nigerian economy has been emphasized and the manufacturing sector has a major role in this. Being an oil producing country, monetary policy is an important macroeconomic policy that has always been used to manage the influence of oil price shock on the manufacturing sector. Purpose: The study examines the relationship between oil price shock, the monetary transmission mechanism and manufacturing output growth in Nigeria. Research methodology: The study applied the structural vector auto regression (SVAR) modelling technique and a descriptive analysis. Results: The results of the study show that the exchange rate is mostly affected by the oil price shock, while the monetary policy instruments and inflation rate are also very responsive to the exchange rate shock. The manufacturing sector output growth has also been shown to be strongly affected by the inflation rate and monetary policy shocks. Novelty: The study has revealed the most effective channel via which oil price shocks affect manufacturing output. The exchange rate channel of the monetary policy transmission mechanism is the most significant channel through which oil price shock affects manufacturing output growth in Nigeria. This shows that effective management of the exchange rate policy via the appropriate monetary policy approach can be used to minimize the adverse effect of oil price shocks on Nigerian manufacturing output.

Impact of Foreign Direct Investment on Manufacturing Sector Output Growth in Nigeria

The role of the manufacturing sector in economic growth and development cannot be over-emphasized. Economic theory enthuses that economic growth can be further realized when the manufacturing sector makes steady positive contribution in the overall GDP growth rate. In an attempt to harp on this, this study investigates the impact of foreign direct investment (FDI) on manufacturing sector output growth in Nigeria for the period 1970 – 2016 using OLS and Granger causality tests analysis. Due to various constraints including paucity of funds capital, the positive contribution of the manufacturing sector has not been encouraging. So the need for foreign capital inflow may be a welcome development. Thus, the study estimates a logarithmic model of the impact of FDI inflow on manufacturing output growth in Nigeria in order to assess its possible contribution to economic diversification of the Nigerian economy which has been heavily dependent on the energy sector. The findings of this study reveal that there is a long-run relationship between FDI and manufacturing sector output growth (MSOG) though statistically insignificant. Granger causality result shows that there is a unidirectional causality from FDI and MSOG. The study recommends that the variables; electricity generation, exchange rate, private sector credit and political stability which show significant relationships to MSOG should be given priority by the government policy makers to diversify the economy through the manufacturing sector.

Local effects of a military spending shock: Evidence from shipbuilding in the 1930s

Using novel county-level data on shipbuilding contracts awarded during the Great Depression by the federal government, I estimate a local government spending multiplier. Manufacturing output, value added, employment, and average earnings all rise significantly in counties receiving naval spending. Contracts worth 12 percent of lagged output generate an extra 1.9 percentage points of manufacturing output growth over the following two years. The effects grow over time, and spillovers are estimated to be positive. Household survey data suggests that consumption rises at the household level.

Trajectory of Manufacturing Industry in India since Post Reform Period

Manufacturing has been an engine of growth in India in the seventies and eighties. After the 1991 reforms the engine appears to be slowing. This paper attempts to examine the reality behind the increased productivity by applying methods that measure productivity per factor and returns to scale. The analysis reveals that manufacturing output growth in post reform period is ‘input-driven’ rather than efficiency driven. The growth in manufacturing sector is dependent on the investment climate. The structural reforms since 1990s have made some progress. Despite recent setbacks, it is universally acknowledged that the reforms process in India cannot be reversed and sooner or later these reforms will be implemented. However, the long term competitive ability of Indian firms would depend on production efficiency. Production efficiency, in turn, is dependent on ability to develop, import and adapt new technologies among other factors. Hence, for achieving the efficiency the theories have been critically examined from Indian scenario and some measures have suggested in this paper.

Input reallocation within multi-product firms

This paper studies within-firm input reallocation, resulting from trade protection on imported raw material inputs used in firm-level production. Indian antidumping cases show that firms significantly lower their use of protected inputs from abroad, relative to other inputs in response to import protection. We develop a firm-level input-output correspondence, to identify outputs produced with protected inputs and find significant output losses relative to sales of other outputs. For India this corresponds to an aggregate annual output loss of up to 10% of Indian manufacturing output growth. The paper contributes to the misallocation debate by providing micro-foundations underlying more aggregate misallocations.

Manufacturing and Economic Growth in ECOWAS Countries: A Test of Kaldor’s First Law

Kaldor’s first growth law posits that the growth rate of an economy is positively related to the growth rate of its manufacturing sector. Since the sixties, this relationship has been examined in a large number of studies using a wide variety of data sets and econometric methods. This paper examines the validity of this law for 11 ECOWAS member countries over the period 1970-2014 by employing an Autoregressive Distributed Lag bounds test approach to cointegration and Granger causality tests. The results show that manufacturing output growth causes positively economic growth and non-manufacturing output growth, thereby providing support for Kaldor’s first growth law. The policy recommendation from the results of the study is that structural transformation in favour of industrial production activities would help to accelerate economic growth in ECOWAS countries.

What Drives Aggregate Investment?: Evidence from German Survey Data

The ifo Investment Survey asks firms in the German manufacturing sector about the importance of sales, technological factors, finance, return expectations, and macroeconomic policy for their investment activity in a given year. We show that these subjective investment determinants 1) capture economically what their labels suggest, and 2) have strong explanatory power for aggregate manufacturing investment growth fluctuations. In a second step, we use these determinants to identify aggregate demand and aggregate technology shocks and argue that the bulk of the variance of both aggregate manufacturing investment and output growth fluctuations (as much as approximately two thirds in both cases) is explained by aggregate demand shocks. Consistent with neoclassical views, however, technological factors are the most important investment determinant on average.

Monetary policy transmission and growth of the manufacturing sector in Algeria

The principal objective of this study is to investigate the relationship between monetary policy and growth of the manufacturing sector in Algeria. Using a structural vector autoregressive model and quarterly frequency data for the period 1980Q1 to 2010Q4, the study finds no evidence that money supply responds to fluctuations in manufacturing sector growth or Gross Domestic Product (GDP) growth. Interest rates, however, are seen to explain nearly a third of the variations in manufacturing output growth, suggesting that the manufacturing sector is sensitive to interest rates. The study also reveals that money supply variations are largely explained by changes in interest rates. A peek at the monetary transmission process reveals that Algeria employs monetary aggregates as the primary operating tool of monetary policy. The monetary authorities adjust total money supply in response to any movements in the rate of interest, probably to keep the rate of interest within a certain target given other developments in the fundamentals. The interest rates, in turn, play an important role in determining variations in manufacturing sector growth. In addition, the interest rates significantly affect exchange rates, which are observed to respond to changes in overall GDP growth. It is the overall GDP growth that has the largest influence on manufacturing sector growth, probably due to strong forward and backward linkages between the manufacturing sector and other sectors of the economy. Keywords: Monetary policy, transmission mechanism, manufacturing output, oil price shocks. JEL Classifications: E23, E31, E52

Manufacturing growth in India in recent years

Purpose Since the announcement of the new series of national accounts for India (with base 2011-12) in January 2015, there has been endless controversy over the new gross domestic product (GDP) growth numbers, particularly in respect of growth of Indian manufacturing. The purpose of this paper is to highlight certain policy issues concerning India’s system of national accounts, in the context of the methodological changes made in the new national accounts series, and to check the validity of the view held by some critics that the new series has significantly overstated the growth rate in real gross value added in manufacturing in recent years. Design/methodology/approach The paper presents a brief, selective review of the literature that has emerged on the new series of national accounts. A close look is taken at the available data on real gross value added growth in Indian manufacturing in conjunction with data on growth in India’s exports and in outstanding non-food commercial bank credit. Analysis of these data is undertaken with the help of a table and some graphs. Findings The paper finds that there is not enough basis to believe and argue that the GDP estimates in the new series of national accounts significantly overstate the true manufacturing sector growth in India. Originality/value Rates of manufacturing output growth in recent years indicated by the new series of national accounts for India are subjected to careful scrutiny by contrasting yearly growth rates in manufacturing output with those in India’s non-oil exports and in outstanding non-food commercial bank credit.

Manufacturing Growth in India in Recent Years: Is it Getting Overstated in India's New GDP Series

Purpose Since the announcement of the new series of national accounts for India (with base 2011-12) in January 2015, there has been endless controversy over the new gross domestic product (GDP) growth numbers, particularly in respect of growth of Indian manufacturing. The purpose of this paper is to highlight certain policy issues concerning India’s system of national accounts, in the context of the methodological changes made in the new national accounts series, and to check the validity of the view held by some critics that the new series has significantly overstated the growth rate in real gross value added in manufacturing in recent years. Design/methodology/approach The paper presents a brief, selective review of the literature that has emerged on the new series of national accounts. A close look is taken at the available data on real gross value added growth in Indian manufacturing in conjunction with data on growth in India’s exports and in outstanding non-food commercial bank credit. Analysis of these data is undertaken with the help of a table and some graphs. Findings The paper finds that there is not enough basis to believe and argue that the GDP estimates in the new series of national accounts significantly overstate the true manufacturing sector growth in India. Originality/value Rates of manufacturing output growth in recent years indicated by the new series of national accounts for India are subjected to careful scrutiny by contrasting yearly growth rates in manufacturing output with those in India’s non-oil exports and in outstanding non-food commercial bank credit.

China and Latecomer Industrialization Processes in Sub-Saharan Africa: A Case of Combined and Uneven Development

This article examines the question of how China's systemic impact on the world economy and growing presence in sub-Saharan Africa (SSA) affects processes of structural change in SSA countries through the framework of combined and uneven development: Global economic forces can act to perpetuate underdevelopment, but these global forces, of which China's rise in the world economy is one among many, need to be studied in conjunction with the societal forces that mediate them. This article argues that many China-related effects actually work in favor of manufacturing development, but the size and composition of China-related effects vary considerably across countries. Therefore, the article uses cluster analysis to find groups of SSA countries with similar patterns of interaction with China and shows that we do, indeed, observe differences in average manufacturing output growth across these groups. However, the cluster analysis also reveals considerable variations within the groups of countries with similar China-related effects. The article provides a case study on Angola to illustrate the interplay between global factors linked to China and the domestic political economy setting.