THE IMPACT OF INDUSTRIALIZATION ON NIGERIA’S ECONOMIC DEVELOPMENT

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  • Name: THE IMPACT OF INDUSTRIALIZATION ON NIGERIA’S ECONOMIC DEVELOPMENT
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ABSTRACT

The industrial sector remains a strong sector of any economy, be it developed or developing. The developed countries are noted for their high industrial performance. The effect of the industrial activities on the economy of underdeveloped or developing nation si still under contention. It’s a fact that the economy will not grow without its industrial activities. These activities include: agriculture, manufacturing, mining and mineral processing and export opportunities for manufacturers. This study specifically analyze the impact of industrialization to economic development. It postulate that inspite of the effort of Nigerian government, Nigeria still show a stunted growth because of some constraints. In order to redress these problems, it was suggested that government should ensure policy consistency by allowing fiscal and monetary policies to work themselves out before a counter policy is introduced, also, industrial policy must be designed, reviewed and implemented in such a way that it will facilitate and not discourage investment in the sector. Based on the above, the prosperity of the nation to a large extent dependents on the development and sustenance of the industrial sector.

TABLE OF CONTENTS

Title Page – – – – – – – – – – i Certification – – – – – – – – – ii Dedication – – – – – – – – – iii Acknowledgment – – – – – – – – iv Table of Contents – – – – – – – – v Abstract – – – – – – – – – – vi CHAPTER ONE: INTRODUCTION 1.0 Background of the Study – – – – – – 1 1.1 Statement of the Problem – – – – – – 5 1.2 Objective of the Study – – – – – – 6 1.3 Hypothesis of the Study – – – – – – 6 1.4 Significant of the Study – – – – – – 7 1.5 Scope of the Study – – – – – – – 8 1.6 Limitations of the Study – – – – – – 8 CHAPTER TWO 2.0 Literature Review – – – – – – – 10 2.1 Theoretical Literature – – – – – – 10 2.1.1 Industrial Sector and Nigerian Economy – – – 15 2.1.2 The Rationale/Reasons for Increased Industrial Output 19 2.1.3 Problems of Industrial Development in Nigeria – – 21 2.1.4 Government Incentives/Policy Measures to the Industrial Sector – – – – – – – – – 26 2.2 Empirical Literature – – – – – – – 32
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2.3 Limitations of the Previous Study – – – – 37 CHAPTER THREE: RESEARCH METHODOLOGY 3.0 Methodology – – – – – – – – 39 3.1 Model Specification – – – – – – – 40 3.2 Method of Evaluation – – – – – – 42 3.3 Model Justification – – – – – – – 44 3.4 Data Sources and the Econometric Software – – 44 CHAPTER FOUR 4.0 Presentation and Analysis of Result – – – – 45 4.1 Regression Result – – – – – – – 45 4.2 Result Interpretation – – – – – – – 46 4.2.1 Economic A Priori Criteria – – – – – – 46 4.2.2 Statistical Criteria – – – – – – – 47 4.2.3 Econometric Criteria – – – – – – – 51 4.3 Policy Implications – – – – – – – 57 CHAPTER FIVE 5.0 Summary – – – – – – – – – 58 5.1 Policy Recommendation – – – – – – 60 5.2 Conclusion – – – – – – – – 61 References – – – – – – – – 62

CHAPTER ONE

INTRODUCTION
1.0 BACKGROUND OF THE STUDY
Industrialization is regarded as a central object of economic
policy in most developing economies. They see industrialization and
agriculture as an integral part of development and structural
change. Some economic analyst are of the view that industries play
a vital role in the economic growth and development of any country.
In this research work, effort is made to analyze the impact of the
industrial sector to the economic development of Nigeria.
Generally, the industrial revolution which took place in Britain
between the late 18th and 19th centuries has gotten much to do with
the present set back on industrial development led to the factory
process that metamorphosised into industrial production. Thus,
history recorded that the industrial sector performance in Nigeria’s
economic growth is as old as the nation itself. It dates back to the
amalgamation of the southern parts of the country in 1914 to for
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the geographical land mass called Nigeria. By a representative of
the colonial administration of Britain Lord, Fr. Fredrick Lugard.
As soon as independence was over, the government of Nigeria
embarked on import substitution as an industrial strategy in order
to reverse the problem of deficit balance of trade and fasten
industrialization among other reasons.
Right from the first national development plan (1962-1968) to
the fourth national development plan (1981-1985) rapid
industrialization received priority in Nigeria’s development
objectives. The government sector for instance, the allocation of
16.2 percent of the budget plan to the manufacturing sector during
the third national development plan (1975-1980) was the highest.
The industrial policies and strategies of development were adoption
of import substitution strategy, expansion of indigenous equity
participation in foreign owned enterprises, provision of integration,
linkages and diversification of industrial increased domestic
resources content of industrial product and provision of financial
and manpower resources to promote research and adoption of
technology to encourage the small and medium scale industries and
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public sector participation and control of some large industrial
products such as iron.
To withstand the rising problems of the sector and economy in
general, Nigeria embarked on structural adjustment programme
(SAP) in 1986 on the assumption that structural adjustment
programme (SAP) would corrects these problems. It has important
implication on both the government and industry. It has brought
government re-appraised of the regulatory environment, the
structure of protection for local industries and the package of
incentives available. For the private sector and industrialist in
particular, SAP presented a new challenge which reported a more
serious effort to control costs, increase production efficiency and
remain competitive.
In the spirit of SAP, the second tier foreign exchange market
(SFEM) was introduced in 1987 to allow market forces determine
the foreign exchange rate, remove price distortions and thereby
effect a more efficient allocation of resources.
Because of inability of the existing policies to live up to
expectation, government therefore in 1988 adopted a new approach
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to industrial development, which gave prominence to the role of the
private sector. To give effect to this management approach,
government, in August 1988, established the national committee on
industrial development (NCID). The strategic management of
industrial development (SMID) or industrial master plan (IMP) is
predicted on the need to organize a network of sectors (referred to
as strategic consultative groups) around on industrial activities with
the aim of having a comprehensive and perception view of the
investment problems in particular line of industrial activity. The
(IMP) seeks to minimize the problems of policy and programme
consistency in the development of the nations industries.
A number of fiscal and monetary policies together with
institutional reform measures have been undertaken by the
Olusegun Obasanjo administration since transition in May 1999.
With these measures, it is envisioned that Nigeria will be
transformed into a major industrialized nation and an economic
power.

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1.1 STATEMENT OF THE PROBLEM
The industrial sector is known to be the strength of the value
added processes in many economies. Nigeria is wanting to
industrialize must encounter some problems which are militating
against industrialization for the purpose of this study, it is pertinent
to survey those problems which are forming obstacles to
industrialization.
Industrial sector encountered the problem of low price
elasticity of export and lack of comparative advantage. This means
that Nigeria share of foreign exchange market cannot appreciate
despite the numerous incentives granted to the industrial sector.
The absence of an indigenous entrepreneurship class couple
with other problems of multinational corporation affect the
structure and influence the nature of utilization of scientific and
technological labour for national development.
Realizing that industrialization can indeed have some adverse
effect on the economic growth and development of the country, one
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will logically ask low effective are the industrialization policies in
Nigeria?
1.2 OBJECTIVES OF THE STUDY
It has been observed that most industries in Nigeria have not
realized their economic development goal even with the existence of
manufacturing industries within the economy. Therefore this work
researches the following objectives.
i. To determine the role of manufacturing industry in the
economic development of Nigerian economy.
ii. To examine ways in which industrial sector in Nigeria can be
made to play a better role towards high productivity for
economic growth of Nigeria.
1.3 HYPOTHESES OF THE STUDY
The following hypotheses are tested on this study:
H0: The industrial sector contribution has no significant impact to
economic development of Nigeria.
Hi: The industrial sector contribution has significant impact to the
economic development of Nigeria.
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1.4 SIGNIFICANT OF THE STUDY
The significant of this study lies in the fact that it will expose
the extent to which industrialization has contributed to economic
development of Nigeria. It will highlight some obstacles hindering
increase in industrialization and industrial output in Nigeria.
This work will be relevant to entrepreneurs and government by
directing them on the easiest means of embarking on industrial
development plan. The relevance of this work also lies in the fact
that it adds to the already existing literature on industrial output.
Furthermore, this research work will assist students of
economics, government and real potential industrialist, investors
and other related coursed. Other researchers will see this work
veritable material in their field of study .
Finally, since no knowledge is a waste, readers of this work
will find it interesting to know that high industrialization is the
shortest route to economic development.

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1.5 SCOPE OF THE STUDY
This research work deals on the impact of industrialization on
Nigeria’s economic development. The date used is a secondary data,
which was obtained from the publication of the central bank of
Nigeria statistical bulletin and the amial report of accounts. The
analytical tools employed on this research include t-test and
regression analysis.
1.6 LIMITATIONS OF THE STUDY
A study of this nature cannot be done without some problems
and as such it was constrained by many factors namely:
TIME: While embarking on this detailed research work, the
researcher was having lectures, preparing for examinations,
engaging in such activities and domestic work as well. So time was
not enough for the researcher to perfect the work.
FINANCE: Financial inadequacy was the major limitation of this
work. The researcher was financially dependent as a student. The
need for materials, trips and logistics needed for this research was
not adequately provided.
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DATA: The controversial nature of the Nigeria data delayed this
work. It took the researcher a lot of time before the harmonization
of the data used in this research work.

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