The Impact Of Import Growth On The Development Of Industrial Sector In Nigeria

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The study was undertaken to find out the impact of import growth on the development of industrial sector in Nigeria. The study adopted simple regression on the ordinary least square (OLS) regression technique. The sample size was taken from 1981 to 2015 (34 years). Consequently, secondary sources of data from the central bank of Nigeria (CBN) were used. The use of students’-test, f-ratio and Durbin western statistic was employed in finding out the empirical variability of the regression plans and testing the presence of autocorrelation respectively. In addition the coefficient of determination (r2) was used to test for goodness of fit. The researcher made the findings that the result shows a significant positive relationship between import growth and industrial sector output. A significant relationship is shown between exchange rate and industrial sector output, though positive and contrary to a priori expectation. the lag value of the dependent variable (indp (-1) is shown to have a significant positive relationship with economic growth. this also meets the priori expectation. the r2 value of 57.51% shows normal goodness of fit implying that the explanatory variables adequately explained the behaviour of the dependent variables. the study recommends as follows: the monetary authority should ensure stability of exchange rate in order to bring low cost of importation of essential raw-material for industries, policies are to be redirected by the policy maker in order to avoid the import of super-furious in the industrial sector. the financial authorities in Nigeria should specify guidelines that will increase credit accessibility for investment in the financial sector.



Title page                                                                                                    i        

Declaration                                                                                                 ii

Approval                                                                                                    iii

Dedication                                                                                                  iv

Acknowledgements                                                                                     v

Table of Content                                                                                         vi

Abstract                                                                                                      viii


1.1   Background to the Study                                                                    1       1.2   Statement of problem                                                                     2

1.3   Research question                                                                               3

1.4   Objective of the study                                                                         3

1.5 Research hypothesis                                                                                       3       

1.5   Significance of the study                                                                     3

1.6   Scope of study                                                                                    4


2.1 Conceptual framework                                                                         6

2.2 Theoretical framework                `                                                        7

2.3 Empirical framework                                                                                     13


3.1 Development theory                                                                                       22

3.2 Methodology                                                                                        22

3.3 The model specification                                                                        22

3.4 Justification of the model                                                                      24

3.5 Method of data analysis                                                                       24

3.6 Method of evaluation        `                                                                            25

3.7 Data required and source                                                                     25


4.1 Presentation and Analysis of result                                                      26     

4.2 The empirical result                                                                              26

4.3: Adf cointegration result                                                                       28

4.4: Evaluation based on economic criteria                                                          29

4.5 Evaluation based on statistical criteria                                                30     

4.6 Econometrics test (diagnostic checking)                                                         32


5.1 Summary and findings                                                                         35      5.2 Recommendations                                                                                       36

5.3 Conclusions                                                                                          36     

References                                                                                                  38

Appendix                                                                                                    40




1.1 Background to the study

The Nigerian industrial sector has largely been dominated by the use of raw materials that are imported and that has made the industrial sector more capital intensive rather than labour intensive. The industrialization strategy aims at achieving greater global competitiveness in the production of processed and manufactured goods by linking industrial activity with primary sector activity, domestic, foreign trade, and service activity. Industrial development is generally believed to be a catalyst for rapid growth and development of any economy, be it developed, developing or under-developed. It is usually argued that industrialization is capable of increasing the pace of growth and ensuring swift structural transformation of the economy. The Bank of Industry (BOI) established in 2000, was introduced as a development institution to accelerate industrial development through the provision of long-term loans, equity finances and technical assistance to industrial enterprises.

Most of the raw materials used by industries in Nigeria are imported, the growth in Nigeria’s imports has an upward trend from 1981 till date.

Looking at the trend of development of Nigerian’s industrial sector with respect to growth in Nigerian’s import, it becomes necessary to examine the impact of import growth on industrial sector development. Therefore, the study is set to ascertain the impact of import growth in the development of industrial sector in Nigeria.

1.2   Statement of problem

Industrial development with its gains which ranges from increased employment opportunities, abundance of goods and services more favorable balance of trade , better income etc. to improve standard of living is not fully utilized in the Nigerian economy and as such as the growth and development suffers  a huge set back. Although the government has developed different policies and programs in the past that are aimed at boosting industrial development in the country, most of these policies though magnificent on paper have failed woefully in the area of implementation while some of them did not see the light of the day, others were abandoned halfway and funds meant for the programs were misappropriated therefore this study was designed to investigate the impact of import growth on development of industrial sector in Nigeria.

 1.3 Research questions 

The following question were posed to guide the study

1. How does import growth impact on the industrial development in Nigeria?

1.4 Objectives of the study

The broad objective of the study is to determine the impact of import growth on the development of industrial sector in Nigeria.

In specific terms, the objective of this study is to:

  1. Estimate the impact of import growth on industrial output in Nigeria.
    1. Research hypothesis

1. Import growth does not impact on the industrial development in Nigeria.

1.6 Significance of the study

This study aims at investigating the impact of industrial sector development on Nigeria import growth at large and hence, its impact cannot be over-emphasized. The study will be of great importance to policy makers, government and its agencies, private individuals and firms at large.  The study will be also of great importance to students of economics and other researchers who may have interest in industrial sector or industrialization and its impact on Nigeria economy. Finally, the findings of this study would add to the stock of economics literature of Nigeria.

1.7 Scope of the study

The scope of this study will be centered on the Nigerian economy with particular emphasis on the industrial sector between 1981 -2015. The industrial sector as used in this context refers to the sector of the economy that involves deliberate and sustained application and combination of suitable technology, management techniques and other resources to move the economy from the traditional low level of production to a more automated and efficient system of mass production of goods and services (Ayodele and Falokun, 2003).

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The Impact Of Import Growth On The Development Of Industrial Sector In Nigeria