Full Project – The impact of industrial output on the economy of Nigeria (1980-2010)
1.1 Background of Study
The oil boom of the 1970s made Nigeria neglected its agricultural and light manufacturing bases in favour 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 model fuelled 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, (CIA, 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 as high as 75% of the total economy. The U.S United State 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 worldwide and third in Africa in factor output. (Adeolu B Anyawale, 1997). 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 refers to the consistence of vast wealth in national resources and extreme poverty in developing countries like Nigeria as a „resource course‟. 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 (Oguma, 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 1992 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 sector accounted for 4% of the Gross Domestic Product (GDP) (Ojo, 1987:256). A country is industrialised 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 at least 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 (Auty, 1993).
1.2 Statement of The Research Problem
The malfunctioning of 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 encyclopaedia). 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 is guided by the following question.
- What is the impact of industrial output on economic growth of Nigeria?
- What are the roles of manufacturing industries in the development of the Nigerian economy?
1.3 Objectives of the Study
The broad objective of this study is to examine the impact of industrial on economic growth in Nigeria between the periods of (1980-2010).
The specific objective includes,
- To appraise the origin and structure of Nigeria’s manufacture sector.
- To analyse industrial output and to determine the effect it has on the economic growth and development of the country.
- To recommend possible solutions to the country’s manufacturing sector.
1.4 Statement of Research Hypothesis
The hypothesis of this study is stated as follows:
Ho: Industrial output rate has no significant impact on the level of economic growth (GDP).
H1: Industrial output rate has profound significant impact on the level of economic growth (GDP).
1.5 Significance of the Study
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 literature on industrial output in Nigeria.
Furthermore, 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.
1.6 Scope of The Study
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 (1980-2010).
1.7 Methodology and Sources of Data
The validity and reliability of this research work will depend on the use of statistical data using simple regression model and the hypothesis setting that requires testing the validity of the analysis.
The researcher made use of secondary data obtained from the publications 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.
1.8 Limitation of the Study
A study of this nature cannot be researched without encountering constraints, some of which includes;
- Finance: Financial constraint or inadequacy was the major limitation for this research to gather materials, logistics etc.
- Data: There was a problem of acquiring all necessary data through the researcher has to rely on the ones available.
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Full Project – The impact of industrial output on the economy of Nigeria (1980-2010)