MACROECONOMIC PERFORMANCE AND MANUFACTURING OUTPUT GROWTH NEXUS IN NIGERIAN ECONOMY

Sola Oluwagbenle, Ojo Rufus Olawumi, Olusesan Samuel AFOLABI

Abstract

This research work examined the empirical relationship among macroeconomic performance, manufacturing sector output growth and economic growth in Nigeria for the periods spanning from 1981 to 2022 using Cointegration Technique and Error Correction Mechanism to ascertain the nexus. The results show that the output of the manufacturing sector contributed negatively and had an insignificant relationship with real gross domestic product growth, which was indicative of the fact that the manufacturing sector of the Nigerian economy is presently experiencing decay as a result of non-implementation of policies aimed at boosting the sector. However, the average manufacturing capacity utilization rate contributed positively and had a significant relationship with real gross domestic product growth while the exchange rate and interest rate did not contribute significantly to real gross domestic product growth, which shows a sign of macroeconomic instability. The inflation rate has positive relationship with real gross domestic product growth but, the insignificant nature of the inflation rate was indicative of the fact that the inflation in the Nigerian economy is not properly managed. In the same vein, government expenditure made a significant and positive contribution to economic growth. The study therefore, suggests that there should be an increase in government expenditure and proper management of the expenditure on manufacturing sector to ensure a stable growth in the economy. In addition, there should be a reduction in interest rate to encourage more investment in the economy which will boost the economic growth of Nigeria. There should also be moderation in exchange rate to encourage investments thereby ensuring stability in the economic growth of Nigeria and improvement in the productivity of the manufacturing sector by upgrading its technologies.

Keywords: Macroeconomic Performance, Manufacturing Output Growth, Economic Growth, Government Expenditure and Inflation Rate.