An Assessment of the Impact of Industrialization on Economic Growth and Development in Nigeria (1981 – 2016)
Chapter One
OBJECTIVES OF THE STUDY
The main objective of this study is to empirically assess the impact of industrialization on economic growth and development in Nigeria. The specific objectives of the study are as follows:
- To assess the contribution of industrial sector on economic development in Nigeria.
- To examine factors that as hinder industrialization in Nigeria economy
- To evaluate ways in which industrial sector in Nigeria can be made to play a better role towards high productivity for economic growth and development.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
Chenery (1960) suggested a stable arrangement of industrial sector improvement. He believed that, as industrial sector development continues, changes are generally noticed in economic structures. An increase in the relative importance of the industrial sector leads to changes in the production methods and sources of supply for industrial produces. Tamuno and Edoumiekumo (2012) determined production functions using constant substitution of electricity to the Nigerian industrial sector which was centered on a study of the industrial sector from 1962-1975 and discovered that labor and capital have a positive relationship and are also of economic and political importance. They also found that the substitution level in the Nigerian industrial sector is very low. Globalization can also be shown to be of great importance to the modern process of industrialization of many countries in recent times. Looking at Nigeria, globalization can play a major role in the privatization and commercialization of industries which simply means the transfer of government ownership to private ownership. Such ownership could be full (privatization) or partial (commercialization) (FRN, 1988). That is to say, that the government role is limited to that of maintaining basic law and order. The policies of 1989 were, in the main, accepted as a replacement for the earlier indigenization policies of 1977 that promoted international investments and gave room for local businesses to gain from the National Economic Reconstruction Fund (NERF). Nevertheless, the careful reevaluation of the many published papers on the effects of globalization remains of importance. Akinbola (2001) believes that the method of globalization which involves the increment of resources and market forces into an unregulated environment results in an unfavorable socio-economic situation for the common people. Using Nigeria as an example, the acceptance of the World Trade Organization (WTO) treaty seriously neglected the fall in the standard of living of the people and aggravated the failure in important sectors of the economy. Structural failure reduced the opportunities for increasing capacity utilization. Clunies-Ross et al., (2010) state that the industrial growth, or basically industrialization, has two different meanings. It can be perceived as a change in a country’s form of production and work force towards producing or minor industries. Relating it to income levels attaining certain level. On this basis nations can be grouped into different income levels (high-income, higher upper income, lower upper income, higher middle income, lowers middle income and the low income countries). This is a larger element of industrialization. There are works relating to industrial development and economic growth. Blomstrom et al., (1994) suggest that industrial development through foreign investors can have a positive influence on economic growth level. They claimed that the industrial development contribution to economic growth level is dependent upon a critical minimum level of income. Below this level the contribution of industries to economic growth is insignificant and above this level, it is significant. The reason given is that, countries that have attained certain level of income are those that can benefit efficiently from the experience of those overseas industries and foreign stakeholders with which they come in contact. The benefits include managerial skills, human capital improvement and new technologies. Shafaeddin (2005) evaluates the economic performance of unindustrialized countries that have commenced economic transformations since the early 80s with the motive of increasing exports and broadening their industrialized sector. The findings obtained were significantly different to those of Clunies et al. Forty percent of the model economies achieved a very rapid improvement in the export of produced goods. For some of the sample economies, mainly those from Eastern Asia, speedy export growth was also followed by a rapid increase of industrial supply capability. However, the performance of most of the sample economies, mainly those from Latin America and Africa is unsatisfactory. Half of the sample economies suffered poor industrialization. Poor export growth and poor industrialization was followed by a weakening of the economy, mostly the industrial sector, to external influences mainly as far as depending on imports is concerned. Most industries that had been successful during the import substitution period survived. Although, to be successful in production there had to be active exports and high investment. The import replacing industrial development approach which became popular due to Hirschman’s (1958) – ‘unstable growth principle’ has been often been directed to focus on the most well-known – but nevertheless – wrong industries so that, many developing economies did not simply continue to be unstable but became unstable in in the wrong way due supporting just those sectors having the highest comparative disadvantage. Schilovsky (1987) stresses that this has given import substitution a poor reputation causing many economies to accept export supported growth which is also unstable but it supports industries with high comparative advantage. Banmijoko (2001) states that the industrial sector in Nigeria is in crisis as its normal contribution to the nation’s Gross Domestic Product over the years has not gone above five percent. Many years of abandonment and poor administration on the side of the previous military and civilian governments together with corruption and indiscriminate policy problems have all collaborated to reduce the industrial sector inactiveness. In the 1990s, the agricultural sector focused on food self-sufficiency as its objective. The plan included price maintenance and schemes to regenerate the palm oil, cocoa and rubber subsectors. In the industrial sector, the administration supported a policy of domestic sourcing whereby locally sourced raw materials were transformed into finished goods. In 1999, the industries contributed less than 1% of Gross Domestic Product. Iwayemi (2011) maintained that the significance of the energy sector is that it will encourage high demand and a rise in supply will motivate high income and high living standards.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to an assessment of the impact of industrialization on economic growth and development in Nigeria (1981 – 2016)
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items or things. The researcher is interested in getting information an assessment of the impact of industrialization on economic growth and development in Nigeria (1981 – 2016). 200 staffs of CBN, Oyo states were selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain an assessment of the impact of industrialization on economic growth and development in Nigeria (1981 – 2016).
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing an assessment of industrialization on economic growth and development in Nigeria (1981 – 2016)
Summary
This study was on an assessment of the impact of industrialization on economic growth and development in Nigeria (1981 – 2016). Three objectives were raised which included: To assess the contribution of industrial sector on economic development in Nigeria, to examine factors that as hinder industrialization in Nigeria economy and to evaluate ways in which industrial sector in Nigeria can be made to play a better role towards high productivity for economic growth and development. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staffs of CBN. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made HRMs, economists, accountants and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
This study examines industrialization in developing economies with a focus on Nigeria. We used an index of GDP of the Nigerian economy. Agriculture, Industry and Services were used to measure the domestic investments. The Johansen co-integration results indicate a significant positive long-run relationship between GDP, Agriculture, Industry and Services. The results reveal that there is a bivariate causation between GDP Industrial Sector, Agricultural Sector and Services Sector. These results concur with our expectations. It shows that the level of performance of the industrial sector will be determined by the same level of performance of the agricultural sector which will in turn affects the GDP level. In the light of this, we can say that industrialization is influenced by agricultural output. Thus, an increase in the agricultural sector leads to an increase in the industrial sector and services sector. At present the weak performance of the agricultural sector makes it difficult for the industrial sector to be efficient because the industrial sector lacks the resources needed. Thus for Nigeria to achieve industrialization it must first develop a sustainable agricultural sector to support its industrial sector which in the long-run will lead to a sustainable economy.
Recommendation
The outcome of the various tests carried out in this study and the results obtained leads us to recommend: that there is need for Government to, as a matter of urgency develop stimulants for the manufacturing sector and manufacturers in form of tax incentives and credit facilities, this will strategically reposition the manufacturing sector in driving economic growth in Nigeria; Government should try a balance of attention in terms of policies and capital investments between the petroleum industry and the solid mineral mining industry in order to harness the rich abundance of wealth in the solid mineral industry; There is need for the immediate implementation of the petroleum industry bill which will unbundle the NNPC and create efficient commercial units to fully carry on crude petroleum and natural gas business.
References
- Abbott, L. F. (2003). Theories of industrialisation and enterprise development. London: Good Book. [2].
- Abiola, M. E. (2010). Savings, investment, productivity and economic growth in Nigeria. Journal of Research in National Development, 8 (2): 356-374. [3].
- Akingunola, R. O. (2011) Small and medium scale enterprises and economic growth in Nigeria: an assessment of financing options. Pakistan Journal of Business and Economic Review2(1),46-53. [4].
- Ahmet, O. (2012) The relationship between macroeconomic variables and ISE industry index. International Journal of Economic and financial Issues 2(2), 89-96. [5].
- Ajayi, S. I. (2001). “What Africa Needs to Do to Benefit From Globalization”. Finance and Development, 38 (4): 6-8. [6].
- Akinbobola, A. (2001). Globalization and its Impact on the Emergent States, Concept Academic Monograph Series, Lagos: Concept Publications Limited. [7].
- Aliya, Z. I. and Odoh J. C. (2016).Impact of industrialization in Nigeria. European ScientificJournal12 (10) 1857 – 7881 [8].
- Ayagi, I. (1990). Nigeria: The Trapped Economy, Heinemann Educational Books Ltd. Ibadan [9].
