Impact of Industrial output on Industrial growth of Nigeria

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This research work is on the “Impact of Industrial output on Industrial growth of Nigeria” between the period of thirty years [30] covered from 1980-2009. Impact of industrial output on economic growth of Nigeria is a continuous discussion to every economy especially developing economies which will give rise to economic growth and development of a nation. Secondary data was used on E-view 6.0 version package to regress the variables GDP = f [Industrial output, savings, net foreign capital flow and inflation]. Our findings indicate that the influence of Industrial output on economic growth is not statistically significant, though the sign obtained from its apriori expectation is positively related to GDP but does not hold strong enough. Savings has a positive relationship and also significant impact on economic growth (GDP). Inflation has a negative relationship while net foreign capital flow is positively significant on the impact of economic growth. Based on the findings, it is therefore recommended that some policies is to be made in ways to improve the establishment of industries especially the manufacturing industries to encourage industrialization of the Nigerian economy so as to contribute to the strengthening of economic growth in the nation’s economy. Tax incentives through subsidies and government expenditure relates to increase in output and positive impact on economic growth. Increase in savings will make money available for the economy through low interest rate and income adjustments from the monetary policy.




The oil boom of the 1970s led Nigeria to neglect its agricultural and light manufacturing bases in favor of an unhealthy dependence on crude oil. In 2000, oil and gas export accounted for more than 98% of export earning and about 83% of federal government revenue. New oil wealth, the concurrent decline of other economic sector and a lurch toward a static economic model fueled massive migration to the cities and led to increasingly wide spread poverty especially in rural areas. A collapse of basic infrastructures and social services since the early 1980s accompanied this trend. Source: (CIA world fact book; accurate as at November 3. 2010).

By 2000, Nigeria’s per capita income had plunged to about one quarter of its mid 1970s high, below the level at independence. Along with the endemic malaise of Nigeria’s non-oil sector, the economy continues to witness massive growth of “informal sector” economic activities estimated by some to be a high as 75% of the total economy. The U.S ( United States) remains Nigeria’s customer for crude oil accounting for 40% of the country’s total oil export, Nigeria provides about 10% of overall U.S oil import and ranks as the fifth-largest source for U.S imported oil and ranked 44th world wide and third in Africa in factor output. ( Adeolu B Anyawale)

Nigeria economy is struggling to leverage the country’s vast wealth in fossil fuels in other to displace the crushing poverty that affects about 57% of its population. Economics refer to the consistence of vast wealth in natural resources and extreme poverty in developing countries like Nigeria as a “resource curse”. 80% of Nigeria’s revenue flow to the government, 16% covers operational cast and the remaining 4% goes to investors. World bank has estimated that as a result of corruption, 80% of energy revenues, benefit only 1% of the population ( Econspapers, hosted by Swedish business school Orebro University).

Generally, the manufacturing sector which plays a catalytic role in a modern economy has many dynamic benefits crucial for economic transformation is a leading sector in many aspects. ( Ogwuma, 1995) says it creates investment capital at a faster rate than any other sector of the economy. Available evidence showed that the share of manufacturing value in the Gross Domestic Product (GDP) was 3.2% in 1960. In 1977, its share of GDP increased to 5.4% and in 1982 grew to 13%. The share of the manufacturing in GDP fell to 6.2 in 1993, while overall manufacturing capacity utilization rate fluctuated downwards to 2.4% in 1998.

In 2003, the manufacturing accounted for 4% of the Gross Domestic Product (GDP) (Ojo, (1987:256). A country is industrialized when at least one-quarter of this Gross Domestic Product (GDP) is produced in its industrial output arises in the manufacturing section of industrial sectors; and when atleast one length of its total population is employed in the industrial sectors of the economy. The manufacturing sector is to be dominant in terms of contribution to the Gross Domestic Product of any economy especially that of Nigeria.


The lack of an industrial sector in a country is widely seen as a major handicap improving a country’s economy and power pushing many governments to encourage or enforce industrialization. (Wikipedia, free encyclopedia). One of the problems bedeviling the Nigeria economy is that of output from its industrial sector of the economy. Admittedly, the decay in the manufacturing sector is the result of diverse factors that conspire to render many industries comatose (ill). The study is therefore necessary to enable a thorough investigation of the problems of the industrial sector especially that of manufacturing industries and various government agencies set up to provide credit facilities to the industrial sector to ensure continual growth of this sector for rapid economic development of this nation. In the light of this exposition, the research work was guided by the following question.

  1. What is the impact of industrial output on economic growth of Nigeria.


The broad objective of this study is to examine the impact of industrial on economic growth of Nigeria between the period of (1980 - 2009).

The specific objectives includes,

  1. To determine the impact of industrial output on economic growth in Nigeria.


The hypothesis of this study is stated as follows;

Ho: Industrial output has no significant impact on the economic growth (GDP).


The significance of this study lies in the fact that the work will expose the extent of which industrial output has contributed to economic growth in Nigeria thereby highlighting some obstacles hindering increase in industrial output. This work will be relevant to the government policies and entrepreneurs directing them on industrial development plan. It adds to the already existing literatur7e on industrial output in Nigeria.

Further more, the work will assist potential industrialist, economist, investors and other related users of this veritable material in this field of study. It is interesting to know that industrial output is the shortest route to economic development.


The researcher tends to find out the impact of industrial output on economic growth. The study covers a general contribution of manufacturing industries in Nigeria toward the attainment of economic growth from (1980 - 2009)


The researcher made use of secondary data obtained from the publication of the Central Bank of Nigeria, Central Bank of Nigeria statistical bulletin and the annual report of accounts as well as resource materials from the library and the internet.

The analytical tools employed on this research include t-test and regression analysis.


A study of this nature cannot be researched without encountering constraints, some of which includes;

  1. Finance: Financial constraint or inadequacy was the major limitation for this research to gather materials, logistics, etc.

  2. Data :There was a problem of acquiring all necessary data though the researcher had to rely on the ones available

  3. Time : Time they say is money; while embarking on this research work, the researcher was jointly attached to other commitments as lectures, assignment, clearance in preparation for exams, etc.

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