Manufacturing Sector and Economic Development of Nigeria

Abstract

Manufacturing has been viewed as the fastest channel for a country to achieve speedy development and reduce the rate of poverty in a country. As a result, the study explored the effect of manufacturing sector on the economic development of Nigeria. Annual data from 1999 to 2021 was obtained from Statistical Bulletin of Central Bank of Nigeria and was used to test the effect of explanatory variables (Average manufacturing capacity utilization; Manufacturing Production Index; Contribution of manufacturing sector to gross domestic product and Foreign direct investment) on the dependent variable (human development index). Auto Regressive Distributed lag models (ARDL) was employed to analyze the data and the result indicates that manufacturing sector has insignificant effect on human development index in Nigeria. The study therefore recommends the need to encourage local production while investing in infrastructures like power, water, roads and transportation. The study also recommends the need for manufacturing sector to have access to finance, also tax incentives should be given to manufacturers as this will encourage local investors and attract foreign investors.