THE IMPACT OF INDUSTRIALIZATION ON ECONOMIC GROWTH IN NIGERIA (1980-2010)

THE IMPACT OF INDUSTRIALIZATION ON ECONOMIC GROWTH IN NIGERIA (1980-2010)

 

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ABSTRACT

The objective of this study is to analyze the impact of industrialization on economic growth in Nigeria. Because of the link between industrialization and economic growth, both theoretical and econometric analysis are used to examine the contribution of industrialization to economic growth in Nigeria, using GDP as the dependent variable and industrial output, labour force, capital stock and human capital as independent variables from 1980-2010.

 

The results show that industrial output, capital stock, significantly contribute to economic growth while human capital and labour force do not contribute significantly to economic growth. The detailed results are: in industrial output, an increase in industrial output by 1 unit increases GDP by 2 folds; an increase in capital stock increases GDP by over 100 folds; an increase in human capital does not stimulate increase in GDP because the t-statistic is insignificant; and in labour supply, the same remark on human capital applies. On the whole, the adjusted R2value shows that the explanatory power of the model is as high as 92%.

 

The study recommends that government should develop policy measures to improve formal education that will produce graduates relevant for industrial needs of the country, improve legal frame works to protect human right, and property rights, and improvement on social and economic infrastructure to make the industrial sector competitive.

 

KEY WORDS: INDUSTRIALIZATION AND ECONOMIC GROWTH.


THE IMPACT OF INDUSTRIALIZATION ON ECONOMIC GROWTH IN NIGERIA

 

 

SECTION ONE: INTRODUCTION

 

1.1     Background to 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 linkages 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), industriesare 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 jcolonial era, the focus was to extract rawmaterials from Nigeria to foreign based industries. Like the rest of African countries, the colonial government in Nigeriawas 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. 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.

 

Now that the Nigerian government has decided to play the role of motivating industries through provision of infrastructure and improving the environment where businesses are done, it is not clear how this can affect industrial growth in Nigeria. After one and a half decades, there seems to be no remarkable improvement but rather industries have folded up without new ones coming up. What is the way forward?

 

 

1.2 The Statement of the Problem

The tendency of the industrial sector to stimulate more economic growth has prompted many economists to formulate theories to encourage industrialization. Famous among the early theories formulated are: Leibenstein’s (1957) theory of critical minimum effort thesis; Nelson’s (1956) theory of low equilibrium trap; Rosenstein – Rodan’s (1943) theory of the big push; the doctrine of balance growth; Hischman’s (1958) doctrine of unbalance growth; the import substitution strategy; and export promotion strategy.

 

Overtime, the influences of these theories on policy decisions have been varied. The first three of these theories(the theory of critical minimum effort thesis, the theory of low equilibrium trap and the theory of the big push) emphasize market constraint as a main barrier to industrialization and advocated state intervention to help minimize this constraint through massive investment of resources.

 

The middle two (the doctrines of balance growth and unbalance growth) acknowledge market constraint but advocated piecemeal approach to minimizing the market constraint. The last two theories (import substitution strategy and export promotion strategy) also identified market constraint as the main factor impinging industrial growth in developing countries and advocated the taping of existing domestic market and external market in tackling the constraint to industrialization.

 

Policies of the first theory (the theory of critical minimum effort thesis) were applied by the erstwhile USSR, Chinaand countries           in Eastern European to develop through huge investment in public resources; while the last method (the export promotion strategy) was first applied by Japan, later by the Asian Tigers (Singapore, Hong kong, South Korea and Taiwan) and more recently by the Newly Industrialized Countries: Malaysia, South Africa, Indonesia, etc. (Clunies-Ross, fosyth and Huq, 2010).

 

 

Given the above scenario, can we say that the present levels of industrialization efforts in Nigeria have contributed in stimulating economic growth in Nigeria? What are the impact of labour force, capital stock, and human capital on Nigeria economic growth? These are the questions this study is supposed to address.

 

 

 

This article highlights various college of education, polytechnics, universities website in Nigeria.

Adeyemi College of Education, Ondo,

Alvan Ikoku College of Education, Owerri,

Alvan Ikoku College of Education, Owerri,

Federal College of Educ. Abeokuta,

Federal College of Education, Eha-Amufu,

Federal College of Education, Kano,

Federal College of Education, Katsina,

Federal college of Education, Kontagora,

Federal College of Education, Obudu,

Federal College of Education, Okene,

Federal College of Education, Okene,

Federal College of Education, Pankshin,

 Federal College of Education, Yola,

Federal College of Education, Zaria,

Federal College of Education (Technical), Akoka,

Federal College of Education (Technical), Asaba,

Federal College of Education (Technical), Bichi,

Federal College of Education (Technical), Gombe,

Federal College of Education (Technical), Gusau,

Federal College of Education (Technical), Omoku,

Federal College of Education (Special) Oyo,

State college of education

College of Education, Agbor,

Akwa-Ibom State College of Education, Afaha-Nsit,

College of Education, Akwanga, ., form and admissions list

College of Education, Akwanga,

Cross River State College of Education, Akamkpa,

Adamu Augie College of Education, Argungu,

College of Education, Azare,

Bayelsa State College of Education, Okpoama,

Emmanuel Alyande College of Education, Oyo,

Enugu State College of Education (Tech.) Enugu,

College of Education, Ekiadolor,

Umar Suleiman College of Education, Gashua,

College of Education, Gindiri,

Michael Otedola College of Primary Education, Moforiji,

College of Education, Port Harcourt,

Adeniran Ogunsanya College of Education, Otto,

Tai Solarin College of Education, Ijebu-Ode,

Tai Solarin College of Education, Ijebu-Ode,

Ebonyi State College of Education, Ikwo,

College of Education, Ikere,

College of Education, Ilesha, .

College of Education, Ilesha,

College of Education, Ilorin,

College of Education, Jalingo,

Kano State College of Education, Kumbotso,

College of Education, Benue,

Kebbi State College of Education, Argungu,

College of Education, Minna,

Nwafor Orizu College of Education, Nsugbe,

College of Education, Oju,

College of Education, Oro,

College of Education, Oro,

Oyo State College of Education, Oyo,

www.eacoedoyo.com

College of Education, Warri,

College of Education, Warri,

FCT College of Education, Zuba,

Private college of education in Nigeria

Angel Crown College of Education, Gidan-Daya, .

Elder Oyama Memorial College of Education, Ofat-Adun,

Assanusiyah College of Education, Odeomu,

African Thinkers Community of inquiry College of Education,

Best Legacy College of Education, Ikirun,

Bauchi Institute for Arabic and Islamic Studies, .

Calvin Foundation College of Education, Naka,

Harvard Wilson College of Education, Aba,

Hill College of Education, Akwanga,

Institute of Ecumenical Education, Enugu,

College of Education, Foreign Links Campus Moro,

College of Education, Foreign Links Campus Moro,

Diamond College of education aba

Muhyideen College of Education, Ilorin,  

ONIT College of Education, Abagana, .

The African Church College of Education, Lagos,

St. Augustine College of Education, Yaba,

Yewa Central College of Education, Ogun,

List of Federal Universities in Nigeria

Abubakar Tafawa Belewa University,

Ahmadu Bello University, Zaria,

Bayero University, Kano,

Federal University, Gashua,

Federal University of Tech, Akure,

Federal University of Petroleum Resources, Effurun,

Federal University of Technology, Minna,

Federal University of technology, Owerri,

Federal University Dutse,

Federal University Dutsin-Ma,

Federal University, Ndufu-Alike,

Federal University, Otuoke,

Federal University, Wukari,

Federal University, Birnin Kebbi,

Federal University, Gusau

Michael Okpara Univeristy of Agric, Umudike, .

Modibbo Adama University of Tech, Yola, .

National Open University of Nigeria,

Nigeria Police Academy Wudil, .

Nigeria defense Academy, Kaduna, .

Nnamdi Azikiwe University, Awka,

Obafemi Awolowo University, Ile-Ife, .

University of Abuja, Gwagwalada, .

University of Agriculture Abeokuta,

University of Agriculture Markurdi,

University of Benin,

University of Calabar,

University of Lagos,

University of Maiduguri,

University of Nigeria Nsukka,

University of Port-Harcourt

University of Uyo, .

Usmanu Danfodiyo University,

List of State Universities in Nigeria admission list

Abia State University, Uturu,

Adamawa State University, Mubi,

Adekunle Ajasin University, Akungba,

Amrose Alli University, Ikot Akpaden,

Anambra State University of Sc. & Tech, Uli,

Anambra State University of Sc. & Tech, Uli,

Bauchi State Unibversity, Gadau,

Benue State University Markurdi,

Bukar Abba Ibrahim University, Damaturu,

Cross River State University of Sc. & Tech, Calabar, .

Delta State University Abraka,

Ebonyi State University, Abakaliki,

Ekiti State University,

Enugu State University of Sc. & Tech. Enugu,

Gombe State University, Gombe

Ibrahim Badamasi Babangida University,

Ignatius Ajuru University of Education,

Imo state University,Owerri,

Jigawa State University,

Kaduna State University, Kaduna

Kano University of Sc. & Tech, Wudil

Kebbi State University, Kebbi,

Kogi State University, Anyigba,.

Kwara State University, Ilorin, .

Ladoke Akintola university of Tech,

Lagos State University Ojo,

Nasarawa State University, Keffi,

Niger Delta University, Yenagoe,

Olabisi Onabanjo University Ago-Iwoye,

Ondo State University of Sc. & Tech, Okitipupa,

Osun State University, Oshogbo,

Plateau State University, Bokkos,

Rivers State University of Sc. & Tech,

Tai Solarin University of Education, Ijebu-ode,

Taraba State University, Jalingo,

Umaru Musa Yar’Adua University,

Private Universities

Achievers University, Owo,

Adeleke University, Ede,

Afe Babalola University, Ado- Ekiti,

African University of Sc. & Tech, Abuja,

Al-hikmah University, Ilorin,

Ajayi Crowther University, Ibadan,

Al-Qalam University, Katsina,

American University of Nigeria, Yola, .

Babcock University, Ilishan,

Baze University,

Bells University of Technology, Otta,

Benson Idahosa University, Benin,

Bingham University, New Karu,

Bowen University, Iwo,

Caleb University, Lagos, .

Caritas University, Enugu,

CETEP City University, Lagos,

Covenant University, Ota,

Crawford University, Igbesa,

Crescent University,

Elizade University, Ilara-mokin, .

Fountain University, Oshogbo,

Gregory University, Uturu,

Hallmark University,

Igbinedion University, Okada

Joseph Ayo Babalola University,Ikeji,

Kwararafa University, Wukari,

Lead City University, Ibadan,

Madonna University, Okija

Mcpherson University, Seriki

Nigerian-Turkish Nile University, Abuja,

Novena University, Ogume,

Obong University, Obong Ntak, .

Oduduwa University, Ipetumodu,

Pan-African University, Lagos,

Paul University, Awka,

Redeemer’s University, Mowe,

Renaissance University, Enugu,

Salem University, Lokoja,]

Tansian University, Umunya, .

University of Mkar

Veritas University, .

Wellspring University, Edo, .

Wesley University of Sc. & Tech, Ondo,

Western Delta University, Oghara

List of all the Federal Polytechnics in Nigeria

    Air Force Institute of Technology Nigerian Air Force,

    Air Force Institute of Technology Nigerian Air Force,

    Akanu Ibiam Federal Polytechnic, Unwana,

Nigeria Army School of Military Engineering,

     Auchi Polytechnic .

     Auchi Polytechnic .

    Federal Polytechnic, Ado-Ekiti

Federal Polytechnic, Ado-Ekiti .

Federal Polytechnic, Bauchi, .

    Federal Polytechnic, Bida,

 Federal Polytechnic, Bida,

   Federal Polytechnic, Damaturu,

     Federal Polytechnic, Ede, Osun State,

 Federal Polytechnic, Ede, Osun State,

 Federal Polytechnic, Ida,

   Federal Polytechnic, Ida, .

  Federal Polytechnic, Ilaro,

     Federal Polytechnic, Ile-Oluji, Ondo State,

    Federal Polytechnic, Mubi,

   Federal Polytechnic, Namoda,

   Federal Polytechnic, Nassarawa,

  Federal Polytechnic, Nekede,

    Federal Polytechnic, Nekede,

Federal Polytechnic, Offa,

 Federal Polytechnic, Offa,

 Federal Polytechnic, Oko,

Federal School of Dental Technology and Therapy,

Kaduna Polytechnic, Kaduna,

Hussaini Adamu Federal Polytechnic,

Nigeria Army School of Military Engineering,

Federal College of Animal Health and Production Technology

Waziri Umaru Federal Polytechnic Birnin Kebbi,

Yaba College of Tech,

List of State Polytechnics in Nigeria

 Abraham Adesanya Polytechnic, Ijebu-Igbo,

Abia State Polytechnic, .

Adamawa State Polytechnic,

Akwa-Ibom State Polytechnic, Ikot-Osurua,

Benue State Poly, Ugbokolo,

Gateway Polytechnic, Igbesa,

Rufus Giwa Polytechnic,

Rufus Giwa Polytechnic,

The Polytechnic, Ibadan, .

Institute of Mgt. and Tech,

Imo State Polytechnic, Umuagwo

Kano State Polytechnic,

Kogi State Polytechnic, Lokoja,

Kwara State Polytechnic, Ilorin,

Lagos State Poly, Ikorodu,

Moshood Abiola Poly,

Nasarawa State Polytechnic

Nuhu Bamalli Polytechnic,

Delta State Polytechnic, Ogwashi-Uku,

Osun State Poly, Iree,

Osun State Poly, Iree,

Osun State College of Tech, Esa-Oke,

Delta State Polytechnic, Ozoro,

Plateau State Polytechnic, Barkin-Ladi,

Adamawa State Poly,

Rivers State College of Arts and Science,

Rivers State College of Arts and Science

Rivers State Polytechnic,

Gateway Polytechnic Saapade

Edo State Inst. of Tech and Mgt, Usen,

Niger State Poly, Zungeru, Niger State,

List of Private Polytechnics in Nigeria

Allover Central Polytechnic,

Crown Polytechnics,

Covenant Polytechnic,

Dorben Polytechnic, Bwari-Garam Road,

Fidei Polytechnic, Gboko,

Grace Polytechnic,

Grace Polytechnic,

Igbajo Polytechnic,

The Polytechnic, Ile-Ife, NITEL Road

Lagos City Poly, Ikeja, Lagos State,

Light House Polytechnic, Eubuobanosa,

Interlink Polytechnic,

Kings Polytechnic, Ubiaja,

RONIK Polytechnic,

Shaka Polytechnic, Polytechnic, Benin city,

Temple-Gate Polytechnic,

Wolex Polytechnic

Prime Polytechnic

The Polytechnic Imesi-Ile, Osun

Heritage Polytechnic, Ikot Udota

Ibadan City Polytechnic

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