Journal of Economic and Financial Sciences (Dec 2022)
Impact of industrialisation on economic growth in Nigeria
Abstract
Orientation: The industrial sector contributes to the growth of other sectors of the economy. Despite the number of industries in various sectors of the economy, inclusive economic growth is still not met in Nigeria. Research purpose: This article examines the impact of industrialisation on the growth of Nigeria’s economy. Motivation for the study: There exists a divergence in the results of the existing empirical investigations conducted on Nigeria in comparison with other developing economies. Research approach/design and method: The Johansen co-integration and Granger causality tests are utilised to determine the long-term relationship and causality among variables. Main findings: Industrial output has a significant direct effect and an aggregate effect of 86% on the real gross domestic product (GDP). A unidirectional causal impact of industrial output on real GDP was also established. Practical/managerial implications: Fund managers, international traders, policymakers and designers of business strategies and policies should take note of the dynamics of Nigerian industrialisation. This study recommends that government should encourage more foreign direct investment through the adoption of industrialisation policies such as tax holidays, provision of land for industrial uses to foreign investors and also ensuring that the lending interest rate for the real sector is lowered during low production to stimulate growth in the sector. The government should also increase electricity supply, ensure green industrialisation, encourage renewable energy consumption and control the exchange rate that may stimulate industrialisation and increase growth of the economy. Contribution/value-add: This article contributes to existing economic development literature by filling the gap related to the dynamic effect of industrialisation on the Nigerian economy.
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