INDUSTRIAL SECTOR PERFORMANCE AND ECONOMIC GROWTH IN NIGERIA

Abstract

The paper examines the nexus between industrial sector performance and economic growth in Nigeria from 1981 to 2016. Time series data sourced from Central Bank of Nigeria (CBN) Statistical Bulletin was utilized by study. Ordinary Least Square (OLS) method of analysis was adopted to evaluate the empirical model within the framework of the classical linear regression model. The result of the empirical findings revealed that industrial sector performance proxied by industrial output exerts a significant positive effect on economic growth in Nigeria at 1% level of significance. Besides, while economic growth is positively influenced by inflation rate, interest rate does not exhibit any significant effect on growth in Nigeria. The results of the pairwise granger causality tests indicate that the causality between economic growth and industrial output, inflation rate and economic growth as well as industrial output and inflation rate in Nigeria is uni-directional. On the contrary, there seems to be no causality between interest rate and economic growth, interest rate and industrial output as well as inflation rate and interest rate in Nigeria. Therefore, there is need for government to initiate and pursue policies that will stimulate private sector-driven industrialization in Nigeria. Besides, the stringent conditions attached to loan accessibility by most of the financial institutions in Nigeria in terms of the high interest rate should be reviewed a as this will induce investment and ultimately enhance improvement in economic growth.