ABSTRACT
This research work is on the “Impact
of Industrialization on Economic Growth in Nigeria” between the period of
thirty-one years (31) covered from 1981-2012. Impact of industrialization on
economic growth in Nigeria is a continuous discussion to every economy
especially developing economics which will give rise to economic growth and
development of a nation. Secondary data was used on PC Give 8.00 version
package to regress the model with RGDP as the dependent variable, and
manufacturing sector output, oil and gas sector, solid mineral sector and money
supply as independent variables. The model explain that the influence of
industrialization on economic growth is not statistically significant, though
the sign obtained from its à priori expectation is positively related to GDP but
does not hold strong enough. There is a long run relationship between economic
growth and the various explanatory variables and there is a positive
relationship between economic growth and manufacturing sector output but there
is negative relationship between money supply and economic growth. Based on the
findings, Increased money supply would inevitable hamper economic growth in the
long run. The result also shows that linkage among the sectors is very low. The
linkages run from the Oil sector to the manufacturing and solid minerals
sectors. This means that the manufacturing sector has not contributed
significantly to the oil sector. It also means that the oil sector has been
dependent on imports for her manufacturing equipment.
CHAPTER ONE
INTRODUCTION
1.0 Background of the study
Industrialization has been regarded as
a veritable channel of achieving lofty and desirable goals of improved
technology and improved quality of lives of the citizens of the country.
Countries develop their industrial sectors for many reasons: (i) industries
have more backward and forward leakages to the other sectors of an economy;
(ii) they exhibit increasing returns to scale; and (iii) they have the ability
to diffuse technology in the economy wider than the primary sector. According
to Bolaky (2011), industries are very essential in a developing country like
Nigeria because the marginal revenue products of labour in the industrial
sector are higher than the marginal revenue product of labour in the agricultural
sector. Based on this, the releasing of labour force from agricultural sector
to the industrial sector increases the marginal product of labour in the
agricultural sector and increases the overall revenue and output of the society
and hence contributes to economic-growth. Therefore, industrialization is an
ideal policy option for sustainable economic growth in Nigeria and it is what
the present regime needs to achieve its transformation agenda. Based on the
above, Nigeria has designed policies to attract manufacturing and industrial
activities during the colonial and postcolonial periods. In the colonial era,
the focus was to extract raw materials from Nigeria to foreign based
industries. Like the rest of African countries, the colonial government in Nigeria
was interested in extracting raw materials for its industries at home. For this
reason no conscious efforts was made to industrialize Nigeria. It used to be
argued that countries should specialize in areas of production that they are
best suited. Between the periphery and the centre, the centre had more
advantage in industrial output and the periphery in raw materials ( Jhingan,
2008). In the post-Independence Nigeria, the indigenous government that emerged
was very ambitious not only to industrialize, but also to ensure indigenous
participation. This led to the emergence of Indigenization policy along with
Import substitution strategies. Nigeria had practiced this from 1960s to the
early 1980s. It was noticed that the twin policies of import substitution and
indigenization could not yield the expected industrialization in Nigeria. Two
main problems were encountered here. 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). One, the Nigerian citizens
to whom import substitution and indigenization policies favour lack the
financial capacity, the technical knowhow, the entrepreneurial ability and the
managerial acumen. Second, import substitution necessarily entails inefficiency
of local industries because they are not established to face foreign completion
and so were over protected. To industrialize, it became necessary to abandon
these twin policies.
In 1985, Nigeria adopted the
Structural Adjustment Programme (SAP) that was supposed to restructure the
Nigerian economy, encourage both local and international investors to invest in
Nigerian economy. The implementations of the policy, rather than improving the
Nigerian economic performance, worsen the situation, leading to under capacity
utilization of the economy. SAP was finally abandoned in the 1990s for private
sector to take the leading role in the manufacturing and the industrial sectors
of the economy. Government has agreed to take up boosting local technology
expertise and promoting small scale industries. It is not yet clear how
government intends to improve local technology and encourage small and medium
scale industries for stimulating industrial growth in Nigeria. 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 Banyawale, 1997) Industrialization is obviously the replacement
of hand tools by machine and power tools is the sine qua non of an
industrialized society. But industrialization a) so involves vast economic and
social changes, e.g., a tendency toward urbanization, a growing body of wage
earners, increased technical and advanced education. By studying these and
other concomitants, one can detect the sign of incipient industrialization in
Nigeria. Historically, the pattern of settlement in Nigeria has been, for the
most part, one of farmers living in towns and cities, traveling many muse a day
to tend their fields. Today the forces of urbanization are serving to
accentuate this existing tendency. There are two large sources of existing and
potential wage eamel'8: peasant farmers who either begin to produce a surplus
for sale, or who go to work for another farmer, and the ever increasing number
of school graduates.
Most of these young, literate
Nigerians feel that peasant farming offers no future, and yet the majority of
them have not been trained for any specific job. Although all young developing
economies suffer from the problem of underemployment and unemployment, the
situation has been aggravated in Nigeria by the increased pace of basic
education. Advanced education is still somewhat of a novelty, and tends to
become a status symbol rather than a force for economic progress. The Nigerian
economy simply cannot at present absorb the existing labor supply. In spite of
the large amount of labor available, Nigeria greatly handicapped by the paucity
of skilled labor. This is probably her greatest obstacle to more rapid
development. Managerial skills are in short Supply. Very few Nigerian
businessmen are willing to launch a manufacturing venture at their own risk.
This is largely due to limited capital and to the lack of an industrial
tradition. Although ideally, government role in economic development should be,
for the most part, one of help and encouragement to the private sector of the
economy. How or why some agrarian societies have evolved into industrial states
is not always fully understood. What is certainly known, though, is that the
changes that took place in Britain during the Industrial Revolution of the late
18th and 19th centuries provided a prototype for the early industrializing
nations of western Europe and North America. Along with its technological
components (e.g., the mechanization of labour and the reliance upon
inanimate sources of energy), the process of industrialization entailed profound
social developments. The freeing of the laborer from feudal and customary
obligations created a free market in labour, with a pivotal role for a specific
social type, the entrepreneur. Cities drew large numbers of people off the
land, massing workers in the new industrial towns and factories.
Later industrializers attempted to
manipulate some of these elements. The Soviet Union, for instance,
industrialized largely on the basis of forced labour and eliminated the
entrepreneur, while in Japan strong state involvement stimulated and sustained
the entrepreneur's role. Other states, notably Denmark and New Zealand,
industrialized primarily by commercializing and mechanizing agriculture. Although
urban-industrial life offers unprecedented opportunities for individual
mobility and personal freedom, it can exact high social and psychological
tolls. Such various observers as Karl Marx and Émile Durkheim cited the
“alienation” and “anomie” of individual workers faced by seemingly meaningless
tasks and rapidly altering goals. The fragmentation of the extended family and
community tended to isolate individuals and to countervail traditional values.
By the very mechanism of growth, industrialism appears to create a new strain
of poverty, whose victims for a variety of reasons are unable to compete
according to the rules of the industrial order. In the major industrialized
nations of the late 20th century, such developments as automated technology, an
expanding service sector, and increasing suburbanization signaled what some
observers called the emergence of a postindustrial society.
1.1 Statement of The 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 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.
That industrialization of a truth is
the catalyst of economic prosperity for many nations in the twentieth century
can no longer be disputed. It has been a much emphasized development strategy
in Nigeria as in many other countries even see industrialization as providing
the basic means of overcoming their economic backwardness. While the exact
relationship between industrialization and economic development has been a
controversial issue in the economic literature, not many economists doubt the
capacity of industry for rapid growth and in turning sharply the table of
economic progress. To the less developed countries like ours, the high level of
industrialization and rapid economic growth of the advanced countries taken
account of and are making frantic efforts towards attaining it too, through
several industrial policies aimed at encouraging both individuals and the
public/government to establish industries. However, the greatest obstacle to
rapid industrial development in Nigeria has been identified to be; inadequate
finance. Abdulkadir, (1984) pointedly puts it that “if the country’s industrial
aspirations are to be achieved, the provision of adequate finance should be
accorded high priority. But regrettably, Nigerian industrialists have been
badly starved of this very important ingredient for both the establishment and
maintenance of industry. This exists in the following forms:
i) Inadequate initial capital for
takeoff.
ii) Inadequate funds for maintaining
existing industries.
iii) Insufficient funds for expansion.
The lack of funds by industrialists
has greatly denied the nation of many opportunities of achieving development
industrially or industrialization which it (Nigeria) has always longed, hoped
and craved for. Considering the enormous importance attached to
industrialization in our economic development, any problem militating against
its achievement should be of interest to us.
1.2 Research Question
This study is designed to answer the
following questions:
1. Has industrial growth in Nigeria
stimulated economic growth in the country?
2. What are the linkages among the
various industrial sectors in Nigeria?
1.3 Objective of the study
The broad objective of the study is to
assess the impact of industrialization on economic growth in Nigeria. The
specific objectives of the study are:
To examine the impact of various
industrial sectors on economic growth
To determine the linkages among the
various industrial sectors.
TOPIC: THE IMPACT OF INDUSTRIALIZATION ON ECONOMIC GROWTH IN NIGERIA(1981-2012)
Format: MS Word
Chapters: 1 - 5
Delivery: Email
Delivery: Email
Number of Pages: 78
Price: 3000 NGN
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