This study examined the effects of exchange rate fluctuation on the Industrial Output Growth in Nigeria using time series data sparring from the period 1986 to 2015. Johansen’s Co-Integration model was employed to explore the long-run relationship among the variables used, while the Vector Error Correction model (VECM) was used to evaluate the short and long-run dynamic among the variables and the Granger Causality used to measure contemporaneous relationship among the endogenous variables. The dynamic correlation of the variables was captured by the analyses of impulse response and variance decomposition. The results of the analysis indicate a unidirectional causality from Exchange rate to Industrial output. The response of industrial output to the shock from exchange rate was positive and significant; more specifically in the initial years, while response to shock from other variables was little in magnitude and not as significant as exchange rate. From the Forecast Error Variance Decomposition (FEVD), the study revealed that although the main source of variance in output are own shocks, innovation in the exchange rate accounted for a higher proportion in the variation of industrial output than that of other associated variables (Inflation, Interest rate and Net Export). The study concluded that exchange rate has potentials of causing significant changes in industrial output in Nigeria. Against this backdrop, the study recommended the need for more macroeconomic policy attention to the proper management of the exchange rate, and the need to strengthen the link between agriculture and the industrial sector to reduce the reliance of the sector on import of inputs to a reasonable level.
A survey of foreign exchange rate determinants in nigeriaAlexander Decker
The document presents a study that investigates factors that determine foreign exchange rates in Nigeria over the period 1960-2011. Regression analysis was used to analyze the relationship between the foreign exchange rate and several independent macroeconomic variables including GDP, balance of payments, external reserves, inflation, deposit rates, and lending rates. The results of the regression showed no statistically significant relationship between the foreign exchange rate and any of the independent variables over the time period analyzed.
Effecto exchange rate fluctuations on manufacturing sector in nigeriaAlexander Decker
This document summarizes a research paper that examines the effects of exchange rate fluctuations on Nigeria's manufacturing sector from 1985 to 2010. It uses variables like manufacturing GDP, foreign investment, employment, and exchange rates. The study found that exchange rates and foreign investment have a positive impact on manufacturing GDP. It recommends that the government promote export diversification, restrict imports of goods also made in Nigeria, and maintain a stable exchange rate to improve the manufacturing sector performance. The paper provides context on Nigeria's fluctuating exchange rates over time and reviews several other studies that also found exchange rates influence economic growth and agricultural exports.
11.[27 40]the impact of macroeconomic variables on non-oil exports performanc...Alexander Decker
This document summarizes a study that investigated the impact of macroeconomic variables (exchange rate, interest rate, government capital expenditure, government recurrent expenditure) on non-oil exports, the agricultural sector, manufacturing sector, and GDP in Nigeria from 1986-2010. The study used ordinary least squares regression and cointegration analysis. The results showed that exchange rate, government capital expenditure, and government recurrent expenditure were positively related to non-oil exports, agriculture, manufacturing, and GDP, while interest rate was negatively related. Based on these findings, the study recommends increasing investment in non-oil exports, agriculture, and manufacturing, as well as decreasing interest rates and increasing government expenditures.
Exchange Rate Deregulation and Nigeria’s Industrial Output (1970-2015)AJHSSR Journal
The study examined the effect of exchange rate deregulation on the industrial output of Nigeria
over the period 1970 – 2015. Data for the study comprising Nigeria‟s Industrial Sector‟s Output, Exchange Rate,
Capacity Utilization and Inflation Rate were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin
2015 edition. The data were analyzed using Error Correction Model and Ordinary Least Squares technique. The
result of the analysis revealed that exchange rate deregulation impacted positively and significantly on Industrial
output over the long run period. The dummy variable, which was introduced in the data to segment pre-SAP and
post-SAP periods also showed that exchange rate deregulation was beneficial to the industrial sector. In
conclusion, the study recommended that exchange rate should continue to be deregulated and closely monitored
to discourage rent-seekers and price arbitrage. Also, the government should support export-led growth,
particularly in provision of incentives and soft loans to aid in the export of locally produced industrial outputs.
In addition, government should create a favorable and enabling environment for production such as constant
supply of electricity and good road networks.
Monetary Policy and Trade Balance in NigeriaYogeshIJTSRD
Nigeria apex bank Central Bank of Nigeria CBN has continued to battle with the job of reviving the ailing economy and putting it on the path of growth. The economy has witnessed unprecedented job loss, rising poverty level, accelerating inflation, sluggish economic growth and disequilibrium in the balance of trade. The study therefore examine the effect of monetary policy on trade balance in Nigeria. Specifically the study ascertained the extent to which inflation, demand deposit, liquidity ratio, exchange rate and interest rate have influenced trade balance in Nigeria using an econometric regression model of the Ordinary Least Square OLS . From the result of the OLS, it is observed that monetary policy rate, demand deposit, liquidity ratio and exchange rate have a significant positive impact on foreign trade in Nigeria. This means that increases in monetary policy rate, demand deposit, liquidity ratio and exchange rate, will lead to increase in foreign trade in Nigeria. On the other, inflation rate and interest rate has a significant negative impact on foreign trade in Nigeria, meaning that as inflation rate and interest rate increases, will be bring about a decline in foreign trade in Nigeria. Based on the findings of this study, the study recommends that the government should employ a contractionary monetary policy to fight inflation by reducing the money supply in the country through decreased bond price. inflation, demand deposit, liquidity ratio, exchange rate and interest rate have influenced trade balance in Nigeria. The government should intervene in the foreign exchange market in order to build reserves for themselves or provide them to the bank to help stabilize the exchange rate. The government should strive to improve trade performance in the short and long run. They should also reduce government spending and tax capital inflow. Edokobi, Tonna David | Okpala, Ngozi Eugenia | Okoye, Nonso John "Monetary Policy and Trade Balance in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45080.pdf Paper URL: https://www.ijtsrd.com/management/public-sector-management/45080/monetary-policy-and-trade-balance-in-nigeria/edokobi-tonna-david
Monetary Policy Shocks and Agricultural Output Growth in Nigeriaiosrjce
This document summarizes a research paper that investigated the transmission of monetary policy shocks to agricultural output growth in Nigeria from 1970 to 2012. The study used a vector autoregressive (VAR) model to analyze the data. The results showed that:
1) Both monetary policy shocks transmitted through interest rates and increases in production costs from inflation have significant impacts on agricultural output growth in Nigeria.
2) Monetary policy shocks transmitted through interest rate channels were found to be more effective at influencing agricultural output than other transmission mechanisms.
3) The study recommends Nigerian monetary policy focus more on using differential interest rates and other tools to revitalize the agricultural sector.
This document analyzes economic growth and productivity in Vietnam between 1985-2006 as the country transitioned to a market economy. It finds that:
1) Vietnam experienced remarkable economic growth since initiating economic reforms in 1986, with real GDP per capita doubling between 1992-2005.
2) Productivity growth was largely driven by the industrial sector. Technical progress contributed around 20% to economic growth over the study period.
3) The document aims to provide a more detailed analysis of productivity growth, economic growth, and production efficiency for Vietnam and its economic sectors during 1985-2006 using a stochastic frontier production function framework.
The performance of manufacturing sector and utilization capacity in nigeriaorlhawahlay
This document is a research paper on the performance of Nigeria's manufacturing sector and capacity utilization between 1985-2009. It aims to assess capacity utilization in the manufacturing sector and identify factors influencing it. The paper finds that capacity utilization has declined in Nigeria, currently around 45%, due to challenges like poor infrastructure, high costs, and macroeconomic instability. Regression analysis indicates that inflation reduces capacity utilization while exchange rates, loans, and per capita income positively impact utilization. The paper concludes Nigeria must address infrastructure, costs, and policies to restore the manufacturing sector.
A survey of foreign exchange rate determinants in nigeriaAlexander Decker
The document presents a study that investigates factors that determine foreign exchange rates in Nigeria over the period 1960-2011. Regression analysis was used to analyze the relationship between the foreign exchange rate and several independent macroeconomic variables including GDP, balance of payments, external reserves, inflation, deposit rates, and lending rates. The results of the regression showed no statistically significant relationship between the foreign exchange rate and any of the independent variables over the time period analyzed.
Effecto exchange rate fluctuations on manufacturing sector in nigeriaAlexander Decker
This document summarizes a research paper that examines the effects of exchange rate fluctuations on Nigeria's manufacturing sector from 1985 to 2010. It uses variables like manufacturing GDP, foreign investment, employment, and exchange rates. The study found that exchange rates and foreign investment have a positive impact on manufacturing GDP. It recommends that the government promote export diversification, restrict imports of goods also made in Nigeria, and maintain a stable exchange rate to improve the manufacturing sector performance. The paper provides context on Nigeria's fluctuating exchange rates over time and reviews several other studies that also found exchange rates influence economic growth and agricultural exports.
11.[27 40]the impact of macroeconomic variables on non-oil exports performanc...Alexander Decker
This document summarizes a study that investigated the impact of macroeconomic variables (exchange rate, interest rate, government capital expenditure, government recurrent expenditure) on non-oil exports, the agricultural sector, manufacturing sector, and GDP in Nigeria from 1986-2010. The study used ordinary least squares regression and cointegration analysis. The results showed that exchange rate, government capital expenditure, and government recurrent expenditure were positively related to non-oil exports, agriculture, manufacturing, and GDP, while interest rate was negatively related. Based on these findings, the study recommends increasing investment in non-oil exports, agriculture, and manufacturing, as well as decreasing interest rates and increasing government expenditures.
Exchange Rate Deregulation and Nigeria’s Industrial Output (1970-2015)AJHSSR Journal
The study examined the effect of exchange rate deregulation on the industrial output of Nigeria
over the period 1970 – 2015. Data for the study comprising Nigeria‟s Industrial Sector‟s Output, Exchange Rate,
Capacity Utilization and Inflation Rate were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin
2015 edition. The data were analyzed using Error Correction Model and Ordinary Least Squares technique. The
result of the analysis revealed that exchange rate deregulation impacted positively and significantly on Industrial
output over the long run period. The dummy variable, which was introduced in the data to segment pre-SAP and
post-SAP periods also showed that exchange rate deregulation was beneficial to the industrial sector. In
conclusion, the study recommended that exchange rate should continue to be deregulated and closely monitored
to discourage rent-seekers and price arbitrage. Also, the government should support export-led growth,
particularly in provision of incentives and soft loans to aid in the export of locally produced industrial outputs.
In addition, government should create a favorable and enabling environment for production such as constant
supply of electricity and good road networks.
Monetary Policy and Trade Balance in NigeriaYogeshIJTSRD
Nigeria apex bank Central Bank of Nigeria CBN has continued to battle with the job of reviving the ailing economy and putting it on the path of growth. The economy has witnessed unprecedented job loss, rising poverty level, accelerating inflation, sluggish economic growth and disequilibrium in the balance of trade. The study therefore examine the effect of monetary policy on trade balance in Nigeria. Specifically the study ascertained the extent to which inflation, demand deposit, liquidity ratio, exchange rate and interest rate have influenced trade balance in Nigeria using an econometric regression model of the Ordinary Least Square OLS . From the result of the OLS, it is observed that monetary policy rate, demand deposit, liquidity ratio and exchange rate have a significant positive impact on foreign trade in Nigeria. This means that increases in monetary policy rate, demand deposit, liquidity ratio and exchange rate, will lead to increase in foreign trade in Nigeria. On the other, inflation rate and interest rate has a significant negative impact on foreign trade in Nigeria, meaning that as inflation rate and interest rate increases, will be bring about a decline in foreign trade in Nigeria. Based on the findings of this study, the study recommends that the government should employ a contractionary monetary policy to fight inflation by reducing the money supply in the country through decreased bond price. inflation, demand deposit, liquidity ratio, exchange rate and interest rate have influenced trade balance in Nigeria. The government should intervene in the foreign exchange market in order to build reserves for themselves or provide them to the bank to help stabilize the exchange rate. The government should strive to improve trade performance in the short and long run. They should also reduce government spending and tax capital inflow. Edokobi, Tonna David | Okpala, Ngozi Eugenia | Okoye, Nonso John "Monetary Policy and Trade Balance in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45080.pdf Paper URL: https://www.ijtsrd.com/management/public-sector-management/45080/monetary-policy-and-trade-balance-in-nigeria/edokobi-tonna-david
Monetary Policy Shocks and Agricultural Output Growth in Nigeriaiosrjce
This document summarizes a research paper that investigated the transmission of monetary policy shocks to agricultural output growth in Nigeria from 1970 to 2012. The study used a vector autoregressive (VAR) model to analyze the data. The results showed that:
1) Both monetary policy shocks transmitted through interest rates and increases in production costs from inflation have significant impacts on agricultural output growth in Nigeria.
2) Monetary policy shocks transmitted through interest rate channels were found to be more effective at influencing agricultural output than other transmission mechanisms.
3) The study recommends Nigerian monetary policy focus more on using differential interest rates and other tools to revitalize the agricultural sector.
This document analyzes economic growth and productivity in Vietnam between 1985-2006 as the country transitioned to a market economy. It finds that:
1) Vietnam experienced remarkable economic growth since initiating economic reforms in 1986, with real GDP per capita doubling between 1992-2005.
2) Productivity growth was largely driven by the industrial sector. Technical progress contributed around 20% to economic growth over the study period.
3) The document aims to provide a more detailed analysis of productivity growth, economic growth, and production efficiency for Vietnam and its economic sectors during 1985-2006 using a stochastic frontier production function framework.
The performance of manufacturing sector and utilization capacity in nigeriaorlhawahlay
This document is a research paper on the performance of Nigeria's manufacturing sector and capacity utilization between 1985-2009. It aims to assess capacity utilization in the manufacturing sector and identify factors influencing it. The paper finds that capacity utilization has declined in Nigeria, currently around 45%, due to challenges like poor infrastructure, high costs, and macroeconomic instability. Regression analysis indicates that inflation reduces capacity utilization while exchange rates, loans, and per capita income positively impact utilization. The paper concludes Nigeria must address infrastructure, costs, and policies to restore the manufacturing sector.
The document presents an empirical study investigating the nexus between Nigeria's agricultural sector export base and economic growth from 1980 to 2017. It finds that:
1) A cointegrating relationship exists between economic growth, agricultural raw material exports, and food exports in the long run.
2) In the long run, agricultural raw material exports have an inverse effect on economic growth, while food exports have a positive effect.
3) In the short run, positive dynamic influences run from both agricultural raw material and food exports to economic growth.
This document summarizes a research thesis that assesses Nigeria's trade policy between 1984 and 2011. It begins by providing background on Nigeria's pursuit of trade as an engine for development and the historical shifts in its trade policies from protectionism to liberalization. It describes the country's import substitution strategy in early independence, followed by a shift towards exports promotion in 1981. Further policy changes introduced greater trade restrictions and licensing in the 1980s in response to economic pressures. Recent trade policies under NEEDS since 2003 have aimed to gradually liberalize the trade regime while ensuring domestic adjustment costs do not outweigh benefits. However, the research finds that trade policies over this period have not significantly contributed to Nigeria's development.
Working capital management and the performance of selected quoted manufacturi...Alexander Decker
This study examines the relationship between working capital management and the performance of selected quoted manufacturing companies in Nigeria from 2000-2009. Secondary data was collected from annual reports of 60 companies and analyzed using descriptive and inferential statistics. The results showed that average collection period and average payment period were positively related to profitability, while inventory turnover days and cash conversion cycle were negatively related. This implies reducing cash conversion cycle, inventory days, and net trading cycle can increase profits, while increasing average collection and payment periods can also boost profits. In conclusion, efficient working capital management affects the performance of manufacturing firms in Nigeria.
This document discusses the relationship between export and economic growth in Nigeria. It begins with an abstract noting that while some economists argue export competition improves productivity, others argue it can negatively impact local industries. The document aims to empirically test the relationship between export and GDP in Nigeria. It provides background on Nigeria's economic history, including a reliance on oil exports. It reviews theories on how export can impact growth, including Ricardo's comparative advantage model. Tables show Nigeria's weak manufacturing exports as a percentage of total exports. The document aims to analyze problems with Nigeria's exports and propose solutions to strengthen manufacturing exports and economic growth.
Impact of exports on economic growth of ecowas countries a comparative analys...Jean Michel Kodjané
This document is a project report submitted in partial fulfillment of a Master of Business Administration degree. It examines the impact of exports on economic growth in ECOWAS countries through a comparative analysis. The report includes a declaration by the author, a certificate from the project supervisor, acknowledgements, table of contents, list of abbreviations and an abstract. It provides an overview of ECOWAS and profiles key member countries including Benin, Burkina Faso, Cape Verde and Cote d'Ivoire. The report analyzes the composition and contribution of exports in these countries' economies.
Economic Environment and Performance of Food and Beverage Sub-Sector of a Dev...paperpublications3
Abstract: This paper examines the implications of economic environment on the performance of food and beverage sub-sector of Nigeria. The economic environment is an embodiment of dynamic variables characterized by significant challenges impacting on the food and beverage sub-sector. Performance in this sector is measured in terms of profitability, exchange rate, interest rate, current asset, turnover, market share and return on investment among others. This study therefore serves as report of investigation into the implications of these variables on the performance of food and beverage sub sector. The ordinary least square technique is adopted in the methodology and the result reveals a significant relationship between economic environmental variables and the food and beverage sub-sector. The study advocates a strong public private partnership between government and the sector as well as encouragement of stable exchange rate so as to foster economic growth.
The document discusses inflation in India, including its types, causes, measurement, and current trends. It provides details on key inflation indices like the wholesale price index and consumer price index. Recent inflation in India has fallen towards zero inflation due to several factors: a large drop in international crude oil prices, stagnant food prices, compressed demand from lower rural wages and spending, and tight monetary policy from the RBI. However, the document notes this decline may not be sustainable as the key drivers of falling prices are volatile and outside monetary policy control.
- The document analyzes the relationship between export, import, and economic growth in Sri Lanka from 1970 to 2010.
- It finds that export and import have a significant positive relationship with each other and both have a significant impact on economic growth. Export and import are associated at 98%, indicating a strong positive association.
- The study uses time series analysis and regression analysis on data from 1970 to 2010. The results show export and import significantly influence economic growth in Sri Lanka.
Public policy and trade liberalisation in nigerian economic developmentAlexander Decker
This document discusses public policy and trade liberalization in Nigerian economic development. It provides background on Nigeria's trade policies since 1986, which centered on greater market openness and integration into the global economy. It analyzes the impacts of specific trade liberalization policies like trade openness, privatization, investment flows, and import tariffs on Nigeria's economic development. The analysis finds that trade liberalization has not had a positive impact on Nigeria's economic development. Accountability, transparency, and good governance are recommended to improve economic policy and encourage self-reliance through export promotion and import substitution.
impact of monetary policy on economic growth: a case study of south Africa
ini hasil diskusi bersama untuk menyelesaikan studi kasus makroekonomi, khususnya kebijakan moneter
Agricultural Export, Oil Export and Economic Growth in Nigeria: Multivariate ...Agriculture Journal IJOEAR
Abstract—Sustaining of nation’s economic growth for better footing and outlook is very crucial for the globe of recent, most especially for developing countries like Nigeria. The country as a vivid example of a developing nation is oil based economy, which adopts export promotion policy as the essentialtactic for growth. Yet the nation has not maximized her abundance of resources to aids growth, despite notable economic growth being experienced. In this view, there is an attempt to examine the relationship among agricultural export, oil export and output growth in Nigeria. The causal relationship among the variables was investigated by using times series data for the period between 1981 and 2014. All the macroeconomic variables were found to be stationary. The study revealed that there is significant relationship between economic growth and the agricultural export and oil export. Based on the findings, government of the country is being advised to initiate new and re-defined old policies that will diversify the export base. Likewise, policies that will improveand aid the nation’s domestic production is being encouraged, since long run relationship has been established among the macroeconomic variables.
This document is a term paper submitted by Khadija Sohail to the Head of the Department at Lahore College for Women University. The paper examines the factors affecting food inflation in Pakistan. It begins with an introduction that defines food inflation and discusses its impact. Section 2 provides a literature review of previous studies on food inflation. Section 3 discusses the theoretical framework. Section 4 covers the methodology and data analysis. The paper aims to determine the key factors driving food price increases in Pakistan and examine the relationship between food prices, monetary factors, and administrative prices. It tests the hypotheses that monetary expansion and weak administrative factors have contributed to food inflation.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Trade Liberalization and Trade Flows in Nigeria An Aggregated Analysisijtsrd
This study examines the impact of trade liberalization and trade flows in Nigeria using an econometric regression model of the Ordinary Least Square OLS . From the result of the OLS, it is observed that trade flows and export subsidies have a positive relationship with economic growth. This means that when trade flows and export subsidies are increasing, it will bring about more growth in Nigerian economy. On the other hand, import tariffs, import quotas and export taxes have a negative impact on economic growth in Nigeria. This means that if import tariffs, import quotas and export taxes are falling, there will be increase in economic growth. From the empirical work reviewed, some authors argued that trade liberalization and trade flows is positively related to economic growth while some authors argued that it is negatively related. The findings of the study also show that trade flows, import tariffs, import quotas and export taxes are statistically significant in explaining the Nigerian economy while export subsidy is statistically insignificant. The study therefore recommends that government should encourage import liberalization through reduction in tariff rates, gradual removal of Non-Tariff Barriers NTB , outright banning of certain goods which will ensure that our imports, following trade liberalization, is directed mainly on intermediate and capital goods. Imports of consumables would be brought to nil and therefore there would be a corresponding increase in the production of competitive import. Finally, the government should vigorously seek to improve the international stand of the economy with other economies of the world so as to enlarge the market for Nigerian exports. It should also re-orient its policy towards the external sector and ensure that the sector contribute optimally to output growth. Anionwu, Carol "Trade Liberalization and Trade Flows in Nigeria: An Aggregated Analysis" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-2 | Issue-6 , October 2018, URL: http://www.ijtsrd.com/papers/ijtsrd18911.pdf
Empirical study of the relationship between available forms of finance and pe...Alexander Decker
This document reports on a study that investigated the relationship between available forms of finance and the performance of intermediate cocoa processing firms in Lagos State, Nigeria. The study found a strong association (R=0.916) between available forms of finance and cocoa export performance. Available forms of finance were able to account for 84% of changes in cocoa export performance. Funds sourced through commercial banks in the form of loans had a strong effect on changes in firm performance, while retained profits had a moderate effect. Funding sourced from development banks had a less than satisfactory effect. The study recommends that policymakers route intervention funds through commercial banks but monitor interest rates charged.
The CII ASCON Industry Survey found diverging growth trends in Q2 FY17 compared to the same quarter last year. The share of sectors with excellent growth (>20%) increased from 7.5% to 15.1%, while sectors with high growth (10-20%) declined slightly from 16.1% to 15.1%. Meanwhile, sectors with moderate growth (0-10%) fell from 46.2% to 29.0%, and sectors with low growth (<0%) rose from 30.1% to 40.9%. Overall, growth remains concentrated in a few sectors rather than broad-based. Going forward, continued urban consumption and rural revival could boost sector growth and revive private investment.
This document analyzes the relationship between inflation and economic growth in Qatar from 1980 to 2016. It finds that inflation and economic growth are cointegrated, indicating a long-run relationship. A Granger causality test shows causality runs from inflation to economic growth. The study uses time series analysis methods including unit root tests, Johansen cointegration, and Granger causality tests. Unit root tests show inflation and economic growth are non-stationary in levels but stationary in first differences. Johansen cointegration finds the variables are cointegrated, implying a long-run equilibrium relationship. The Granger causality test then finds causality runs from inflation to economic growth in the long-run.
1) The document analyzes Japan's economic growth under an export-oriented economy using data from 1996-2015.
2) It finds a long-term cointegrating relationship between GDP and exports, imports, FDI through unit root and cointegration tests. GDP has a positive long-term relationship with exports and negative relationships with imports and FDI.
3) The results indicate exports have played a significant role in Japan's economic growth, more so than imports or FDI, confirming the success of Japan's export-oriented development strategy since the 1860s.
Foreign trade and economic growth in nigeria (1980 2010)Alexander Decker
1. The document discusses foreign trade and economic growth in Nigeria from 1980-2010. It analyzes how foreign trade has impacted Nigeria's economy and growth over this period.
2. Nigeria traditionally relied on agricultural exports like cocoa, palm oil, and groundnuts, but since the 1960s oil has dominated exports. Oil exports now account for over 90% of total exports.
3. While foreign trade can promote growth, Nigeria still faces economic instability and import dependence. The heavy reliance on oil exports has also neglected development of other sectors like agriculture.
The agricultural sector in Eswatini is viewed as an engine to foster economic growth, reduce poverty and eradicate inequality. The purpose of the study was to investigate the effects of monetary policy on the agriculture Gross Domestic Product (GDP) in Eswatini using annual data for the period starting from 1980 to 2016. Using the Vector Error Correction model (VEC), the empirical results indicated that in the long run, agriculture GDP, exchange rate, interest rate, inflation, broad money supply, and agriculture credit have a negative effect on agriculture GDP in Eswatini. In the short run the study indicated that the variation in agriculture GDP is largely significant caused by the lagged agricultural GDP, interest rate, exchange rate as well as inflation. Money supply and agriculture credit contribute 0.46% and 0.55%, respectively to the variation in agricultural GDP. The study recommends that programs aimed at availing affordable credit to farmers should be prioritized to cushion the agriculture sector against adverse monetary policy shocks in the short to medium term, specifically interest rates, to ensure continuous production.
The study gauged the influence of exchange rate fluctuations on the Performance of the Nigerian Economy over the time from of 1986 to 2016, utilizing secondary data tracked from the statistical report of the Apex Nigerian bank, and utilizing techniques such as Unit root test, Generalized autoregressive conditional heteroscedasticity (GARCH), Impulse-Response Output and Variance-Decomposition Test to evaluate variables such as Interest rate, inflation rate, exchange rate against a sole indicator of Economic Performance I.e. Gross Domestic Product Growth rate (GDPGR), it was discovered that despite the short run influx of the spill over volatility of Interest rate and inflation rate, there exist no long run volatility influence of interest rate on Economic Performance in Nigeria. It was therefore recommended that the apex financial institution and relevant policy makers should ensure an interest rate system and status that could stimulate growth or production and the nation should endeavour to utilize her interest rate in controlling its output level as it motivates Economic Performance (GDPGR).
This study examined the effect interest rate on economic growth in Nigeria. Augmented Dickey – Fuller (ADF), Bound Test and Autoregressive Distributed Lag (ARDL) were employed to examine the effect of impact of interest rate on economic growth in Nigeria. The unit root test showed gross domestic product was 1(0) while interest rate, investment and gross capital formation were 1(1). The result of the Bound Test indicated long run relationship among the macroeconomic variables employed in the study. The result of the ARDL indicated that interest rate had negative effect on economic growth both in short run and long run. However, in the long run investment and gross capital formation were established to have positive effect on economic growth with gross capital formation being insignificant. It was concluded that interest rate has a macroeconomic tool is not effective in stimulating economic growth in Nigeria. It was recommended that the level of interest rate should be adequately controlled for the purpose of stimulating economic growth without inflationary pressure. Finally, robust macroeconomic policies aimed at ensuring economic stability should be formulated in order to increase capital formation and attract investment in order to promote economic growth.
The document presents an empirical study investigating the nexus between Nigeria's agricultural sector export base and economic growth from 1980 to 2017. It finds that:
1) A cointegrating relationship exists between economic growth, agricultural raw material exports, and food exports in the long run.
2) In the long run, agricultural raw material exports have an inverse effect on economic growth, while food exports have a positive effect.
3) In the short run, positive dynamic influences run from both agricultural raw material and food exports to economic growth.
This document summarizes a research thesis that assesses Nigeria's trade policy between 1984 and 2011. It begins by providing background on Nigeria's pursuit of trade as an engine for development and the historical shifts in its trade policies from protectionism to liberalization. It describes the country's import substitution strategy in early independence, followed by a shift towards exports promotion in 1981. Further policy changes introduced greater trade restrictions and licensing in the 1980s in response to economic pressures. Recent trade policies under NEEDS since 2003 have aimed to gradually liberalize the trade regime while ensuring domestic adjustment costs do not outweigh benefits. However, the research finds that trade policies over this period have not significantly contributed to Nigeria's development.
Working capital management and the performance of selected quoted manufacturi...Alexander Decker
This study examines the relationship between working capital management and the performance of selected quoted manufacturing companies in Nigeria from 2000-2009. Secondary data was collected from annual reports of 60 companies and analyzed using descriptive and inferential statistics. The results showed that average collection period and average payment period were positively related to profitability, while inventory turnover days and cash conversion cycle were negatively related. This implies reducing cash conversion cycle, inventory days, and net trading cycle can increase profits, while increasing average collection and payment periods can also boost profits. In conclusion, efficient working capital management affects the performance of manufacturing firms in Nigeria.
This document discusses the relationship between export and economic growth in Nigeria. It begins with an abstract noting that while some economists argue export competition improves productivity, others argue it can negatively impact local industries. The document aims to empirically test the relationship between export and GDP in Nigeria. It provides background on Nigeria's economic history, including a reliance on oil exports. It reviews theories on how export can impact growth, including Ricardo's comparative advantage model. Tables show Nigeria's weak manufacturing exports as a percentage of total exports. The document aims to analyze problems with Nigeria's exports and propose solutions to strengthen manufacturing exports and economic growth.
Impact of exports on economic growth of ecowas countries a comparative analys...Jean Michel Kodjané
This document is a project report submitted in partial fulfillment of a Master of Business Administration degree. It examines the impact of exports on economic growth in ECOWAS countries through a comparative analysis. The report includes a declaration by the author, a certificate from the project supervisor, acknowledgements, table of contents, list of abbreviations and an abstract. It provides an overview of ECOWAS and profiles key member countries including Benin, Burkina Faso, Cape Verde and Cote d'Ivoire. The report analyzes the composition and contribution of exports in these countries' economies.
Economic Environment and Performance of Food and Beverage Sub-Sector of a Dev...paperpublications3
Abstract: This paper examines the implications of economic environment on the performance of food and beverage sub-sector of Nigeria. The economic environment is an embodiment of dynamic variables characterized by significant challenges impacting on the food and beverage sub-sector. Performance in this sector is measured in terms of profitability, exchange rate, interest rate, current asset, turnover, market share and return on investment among others. This study therefore serves as report of investigation into the implications of these variables on the performance of food and beverage sub sector. The ordinary least square technique is adopted in the methodology and the result reveals a significant relationship between economic environmental variables and the food and beverage sub-sector. The study advocates a strong public private partnership between government and the sector as well as encouragement of stable exchange rate so as to foster economic growth.
The document discusses inflation in India, including its types, causes, measurement, and current trends. It provides details on key inflation indices like the wholesale price index and consumer price index. Recent inflation in India has fallen towards zero inflation due to several factors: a large drop in international crude oil prices, stagnant food prices, compressed demand from lower rural wages and spending, and tight monetary policy from the RBI. However, the document notes this decline may not be sustainable as the key drivers of falling prices are volatile and outside monetary policy control.
- The document analyzes the relationship between export, import, and economic growth in Sri Lanka from 1970 to 2010.
- It finds that export and import have a significant positive relationship with each other and both have a significant impact on economic growth. Export and import are associated at 98%, indicating a strong positive association.
- The study uses time series analysis and regression analysis on data from 1970 to 2010. The results show export and import significantly influence economic growth in Sri Lanka.
Public policy and trade liberalisation in nigerian economic developmentAlexander Decker
This document discusses public policy and trade liberalization in Nigerian economic development. It provides background on Nigeria's trade policies since 1986, which centered on greater market openness and integration into the global economy. It analyzes the impacts of specific trade liberalization policies like trade openness, privatization, investment flows, and import tariffs on Nigeria's economic development. The analysis finds that trade liberalization has not had a positive impact on Nigeria's economic development. Accountability, transparency, and good governance are recommended to improve economic policy and encourage self-reliance through export promotion and import substitution.
impact of monetary policy on economic growth: a case study of south Africa
ini hasil diskusi bersama untuk menyelesaikan studi kasus makroekonomi, khususnya kebijakan moneter
Agricultural Export, Oil Export and Economic Growth in Nigeria: Multivariate ...Agriculture Journal IJOEAR
Abstract—Sustaining of nation’s economic growth for better footing and outlook is very crucial for the globe of recent, most especially for developing countries like Nigeria. The country as a vivid example of a developing nation is oil based economy, which adopts export promotion policy as the essentialtactic for growth. Yet the nation has not maximized her abundance of resources to aids growth, despite notable economic growth being experienced. In this view, there is an attempt to examine the relationship among agricultural export, oil export and output growth in Nigeria. The causal relationship among the variables was investigated by using times series data for the period between 1981 and 2014. All the macroeconomic variables were found to be stationary. The study revealed that there is significant relationship between economic growth and the agricultural export and oil export. Based on the findings, government of the country is being advised to initiate new and re-defined old policies that will diversify the export base. Likewise, policies that will improveand aid the nation’s domestic production is being encouraged, since long run relationship has been established among the macroeconomic variables.
This document is a term paper submitted by Khadija Sohail to the Head of the Department at Lahore College for Women University. The paper examines the factors affecting food inflation in Pakistan. It begins with an introduction that defines food inflation and discusses its impact. Section 2 provides a literature review of previous studies on food inflation. Section 3 discusses the theoretical framework. Section 4 covers the methodology and data analysis. The paper aims to determine the key factors driving food price increases in Pakistan and examine the relationship between food prices, monetary factors, and administrative prices. It tests the hypotheses that monetary expansion and weak administrative factors have contributed to food inflation.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Trade Liberalization and Trade Flows in Nigeria An Aggregated Analysisijtsrd
This study examines the impact of trade liberalization and trade flows in Nigeria using an econometric regression model of the Ordinary Least Square OLS . From the result of the OLS, it is observed that trade flows and export subsidies have a positive relationship with economic growth. This means that when trade flows and export subsidies are increasing, it will bring about more growth in Nigerian economy. On the other hand, import tariffs, import quotas and export taxes have a negative impact on economic growth in Nigeria. This means that if import tariffs, import quotas and export taxes are falling, there will be increase in economic growth. From the empirical work reviewed, some authors argued that trade liberalization and trade flows is positively related to economic growth while some authors argued that it is negatively related. The findings of the study also show that trade flows, import tariffs, import quotas and export taxes are statistically significant in explaining the Nigerian economy while export subsidy is statistically insignificant. The study therefore recommends that government should encourage import liberalization through reduction in tariff rates, gradual removal of Non-Tariff Barriers NTB , outright banning of certain goods which will ensure that our imports, following trade liberalization, is directed mainly on intermediate and capital goods. Imports of consumables would be brought to nil and therefore there would be a corresponding increase in the production of competitive import. Finally, the government should vigorously seek to improve the international stand of the economy with other economies of the world so as to enlarge the market for Nigerian exports. It should also re-orient its policy towards the external sector and ensure that the sector contribute optimally to output growth. Anionwu, Carol "Trade Liberalization and Trade Flows in Nigeria: An Aggregated Analysis" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-2 | Issue-6 , October 2018, URL: http://www.ijtsrd.com/papers/ijtsrd18911.pdf
Empirical study of the relationship between available forms of finance and pe...Alexander Decker
This document reports on a study that investigated the relationship between available forms of finance and the performance of intermediate cocoa processing firms in Lagos State, Nigeria. The study found a strong association (R=0.916) between available forms of finance and cocoa export performance. Available forms of finance were able to account for 84% of changes in cocoa export performance. Funds sourced through commercial banks in the form of loans had a strong effect on changes in firm performance, while retained profits had a moderate effect. Funding sourced from development banks had a less than satisfactory effect. The study recommends that policymakers route intervention funds through commercial banks but monitor interest rates charged.
The CII ASCON Industry Survey found diverging growth trends in Q2 FY17 compared to the same quarter last year. The share of sectors with excellent growth (>20%) increased from 7.5% to 15.1%, while sectors with high growth (10-20%) declined slightly from 16.1% to 15.1%. Meanwhile, sectors with moderate growth (0-10%) fell from 46.2% to 29.0%, and sectors with low growth (<0%) rose from 30.1% to 40.9%. Overall, growth remains concentrated in a few sectors rather than broad-based. Going forward, continued urban consumption and rural revival could boost sector growth and revive private investment.
This document analyzes the relationship between inflation and economic growth in Qatar from 1980 to 2016. It finds that inflation and economic growth are cointegrated, indicating a long-run relationship. A Granger causality test shows causality runs from inflation to economic growth. The study uses time series analysis methods including unit root tests, Johansen cointegration, and Granger causality tests. Unit root tests show inflation and economic growth are non-stationary in levels but stationary in first differences. Johansen cointegration finds the variables are cointegrated, implying a long-run equilibrium relationship. The Granger causality test then finds causality runs from inflation to economic growth in the long-run.
1) The document analyzes Japan's economic growth under an export-oriented economy using data from 1996-2015.
2) It finds a long-term cointegrating relationship between GDP and exports, imports, FDI through unit root and cointegration tests. GDP has a positive long-term relationship with exports and negative relationships with imports and FDI.
3) The results indicate exports have played a significant role in Japan's economic growth, more so than imports or FDI, confirming the success of Japan's export-oriented development strategy since the 1860s.
Foreign trade and economic growth in nigeria (1980 2010)Alexander Decker
1. The document discusses foreign trade and economic growth in Nigeria from 1980-2010. It analyzes how foreign trade has impacted Nigeria's economy and growth over this period.
2. Nigeria traditionally relied on agricultural exports like cocoa, palm oil, and groundnuts, but since the 1960s oil has dominated exports. Oil exports now account for over 90% of total exports.
3. While foreign trade can promote growth, Nigeria still faces economic instability and import dependence. The heavy reliance on oil exports has also neglected development of other sectors like agriculture.
The agricultural sector in Eswatini is viewed as an engine to foster economic growth, reduce poverty and eradicate inequality. The purpose of the study was to investigate the effects of monetary policy on the agriculture Gross Domestic Product (GDP) in Eswatini using annual data for the period starting from 1980 to 2016. Using the Vector Error Correction model (VEC), the empirical results indicated that in the long run, agriculture GDP, exchange rate, interest rate, inflation, broad money supply, and agriculture credit have a negative effect on agriculture GDP in Eswatini. In the short run the study indicated that the variation in agriculture GDP is largely significant caused by the lagged agricultural GDP, interest rate, exchange rate as well as inflation. Money supply and agriculture credit contribute 0.46% and 0.55%, respectively to the variation in agricultural GDP. The study recommends that programs aimed at availing affordable credit to farmers should be prioritized to cushion the agriculture sector against adverse monetary policy shocks in the short to medium term, specifically interest rates, to ensure continuous production.
The study gauged the influence of exchange rate fluctuations on the Performance of the Nigerian Economy over the time from of 1986 to 2016, utilizing secondary data tracked from the statistical report of the Apex Nigerian bank, and utilizing techniques such as Unit root test, Generalized autoregressive conditional heteroscedasticity (GARCH), Impulse-Response Output and Variance-Decomposition Test to evaluate variables such as Interest rate, inflation rate, exchange rate against a sole indicator of Economic Performance I.e. Gross Domestic Product Growth rate (GDPGR), it was discovered that despite the short run influx of the spill over volatility of Interest rate and inflation rate, there exist no long run volatility influence of interest rate on Economic Performance in Nigeria. It was therefore recommended that the apex financial institution and relevant policy makers should ensure an interest rate system and status that could stimulate growth or production and the nation should endeavour to utilize her interest rate in controlling its output level as it motivates Economic Performance (GDPGR).
This study examined the effect interest rate on economic growth in Nigeria. Augmented Dickey – Fuller (ADF), Bound Test and Autoregressive Distributed Lag (ARDL) were employed to examine the effect of impact of interest rate on economic growth in Nigeria. The unit root test showed gross domestic product was 1(0) while interest rate, investment and gross capital formation were 1(1). The result of the Bound Test indicated long run relationship among the macroeconomic variables employed in the study. The result of the ARDL indicated that interest rate had negative effect on economic growth both in short run and long run. However, in the long run investment and gross capital formation were established to have positive effect on economic growth with gross capital formation being insignificant. It was concluded that interest rate has a macroeconomic tool is not effective in stimulating economic growth in Nigeria. It was recommended that the level of interest rate should be adequately controlled for the purpose of stimulating economic growth without inflationary pressure. Finally, robust macroeconomic policies aimed at ensuring economic stability should be formulated in order to increase capital formation and attract investment in order to promote economic growth.
Currency fluctuations and inflation are the natural norm for most major economies. Numerous factors influence economic growth, including a country’s exchange rate system performance, the outlook for inflation, and interest rate differentials. These are the most significant factors that hinder the economic growth of every nation. As a result, this analysis investigates the impact of exchange rate and inflation on Nigeria’s growth performance from 1986 to 2021. Impulse response and variance decomposition were estimated. The real gross domestic product (RGDP) was used as a proxy for growth performance, while the inflation rate (IFNR), real exchange rate (REXR), and interest rate (INTR) were also used as proxies. The results of impulse response and variance decomposition estimates in the short-run (third quarter) and long-run (tenth quarter) show that real exchange rate D(REXR), INTR, and IFNR all have a positive impact on RGDP variation, with values of 13.38%, 31.88%, and 22.40%, respectively, in the third quarter. In the long run (the 10th quarter), REXR contributed approximately 28.76% of the variation in RGDP. The interest rate contributed 24.14%, while the IFNR has contributed about 28.27% of the variation in RGDP in the long run. Therefore, summing the contributions of REXR, INTR, and INFR to RGDP, these variables contributed about 81.17% of the variation in RGDP in the long run. Hence, the research concluded that REXR, INTR, and IFNR have a positive effect on growth performance as proxied by RGDP in Nigeria within the period of the research. The research recommended that the government should provide a policy that will reduce the excess growth of aggregate demand (AD) in the economy, which will reduce inflationary pressure, in order to achieve the sustainable development goals (SDGs) of 2030 in Nigeria, which include restoring economic growth and macroeconomic stability through macroeconomic variables such as the exchange rate, inflation, and other significant variables.
Exchange Rate Fluctuation and Real Sector Output in Nigeria A Disaggregated A...ijtsrd
This study examined the effect of exchange rate fluctuation on real sector output in Nigeria. It is the goal of every economy to have a stable rate of exchange with its trading partners. In Nigeria, this goal was not attained in spite of the fact that the country embarked on devaluation to promote export and stabilize the rate of exchange. Despite various efforts by the government to maintain a stable exchange rate, the Naira has depreciated throughout the 1980s to date. It is worrisome to note that Nigerian economy is under industrialized and its capacity utilization is also low. Specifically, this study examined the effect of exchange rate fluctuation on agricultural, industrial, building and construction, and trade sector outputs. It employed an ex post facto research design and the main statistical was the Auto Regressive Distributive Lag ARDL estimation technique using secondary data sourced from the Central bank of Nigeria statistical bulletins from 1986 2021. The result of the analyses revealed that exchange rate fluctuation had significant negative effect on agricultural sector output. Also, exchange rate was found to have a significant and negative effect on industrial, building and construction, and also trade sector output in Nigeria even though these effects were negative. The study concludes that although foreign exchange had significant effect on the real sector, such effect were negative thus displaying an inverse relationship. Sequel to these findings, there is a need for government at all levels federal, state, and local to actually invest in agriculture in an effort to match domestic demand and export to compete with crude oil for foreign exchange earnings. The Central Bank of Nigeria CBN is to provide foreign exchange relief measures for the acquisition of raw commodities that the nation naturally lacks while maintaining minimal exchange rate fluctuation to encourage local production by industries. Chrisphyna Ugochi Ahaneku | Ikenna Cyprain Egungwu | Amalachukwu Chijindu Ananwude "Exchange Rate Fluctuation and Real Sector Output in Nigeria: A Disaggregated Analysis (1986 - 2021)" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-1 , February 2023, URL: https://www.ijtsrd.com/papers/ijtsrd53838.pdf Paper URL: https://www.ijtsrd.com/economics/international-economics/53838/exchange-rate-fluctuation-and-real-sector-output-in-nigeria-a-disaggregated-analysis-1986---2021/chrisphyna-ugochi-ahaneku
Extant literature revealed that international trade plays a key role to address the economic phenomena and can help to earn foreign exchange. Despite the accruable benefits from international trade and the countrys huge oil export that account for about 90 of its foreign exchange earnings, Nigerias trade balance and exchange rate remain unfavourable. The persistent rise in Nigerias exchange rate and unfavourable trade balance in recent time warrants an empirical probe. This study therefore examines the effect of exchange rate, domestic income, foreign income, consumption expenditure, money supply and interest rate on trade balance using a secondary time series data covering a period of thirty years from 1991 2020. The study employed a regression technique of the Ordinary Least Square OLS . All data used were secondary data obtained from the statistical bulletin of Central Bank of Nigeria CBN and National Bureau of Statistics NBS annual publications. After determining stationarity of the study variables using the ADF Statistic, it was discovered that the variables were all integrated at level, first and second difference, and found out to be stationary at their first difference. The study also using Johansen Cointegration Test, found that there is a long run relationship between the variables. Hence, the implication of this result is that there is a long run relationship between trade balance and other variables used in the model. From the result of the OLS, it is observed that exchange rate, domestic income, foreign income and money supply have a positive and significant impact on trade balance in Nigeria. The study recommends that the government should fixed or peg on the exchange rate through the central bank. This will enable the government to buy and sell its own currency against the currency to which it is pegged. The government should strive to reduce inflation to make exports more competitive. The government should also enhance supply side policies to increase long term competitiveness. Edokobi, Tonna David | Okpala, Ngozi Eugenia | Okoye, Nonso John "Exchange Rate and Trade Balance Nexus" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45079.pdf Paper URL: https://www.ijtsrd.com/management/public-sector-management/45079/exchange-rate-and-trade-balance-nexus/edokobi-tonna-david
Determinants of Business Performance in the Nigerian Manufacturing Sectorijtsrd
This document summarizes a study that examined the determinants of business performance in Nigeria's manufacturing sector between 1980-2018. The study used secondary data from the Central Bank of Nigeria and an econometric model to analyze the impact of various macroeconomic variables (financial intermediation, infrastructure, market size, exchange rate, interest rate, and inflation rate) on business performance. The results found that financial intermediation, infrastructure, and market size had a positive impact on manufacturing, while exchange rate, interest rate, and inflation had a negative impact. All variables conformed to the study's expectations except infrastructure and inflation rate, and most were statistically significant, indicating they are good determinants of business performance in Nigerian manufacturing. The study recommends over
Stock market and economic growth the nigerian experienceAlexander Decker
This document analyzes the relationship between the stock market and economic growth in Nigeria. It specifically examines the effects and causal relationship between market capitalization (a measure of stock market size) and gross domestic product (GDP, a measure of economic growth) in Nigeria from 1981 to 2008.
The study employs an error correction model and Granger causality tests to analyze the interaction between stock market and economic growth. The results show there is unidirectional causality from economic growth to the stock market in the short run, with the stock market having a negative effect on economic growth. However, in the long run the stock market has a positive effect on economic growth. The study concludes the Nigerian stock market can stimulate economic growth
Effect of Monetary Policy on Economic Growth in Nigeriaijtsrd
"The chequered history of the Nigeria monetary policy has created a visible asymmetry in the two known monetary regimes before and after SAP in the country. Years after the Structural Adjustment Programme SAP , the Nigeria economy grew to become the strongest economy in Africa and suddenly plunging into recession, a situation that have adversely affected the growth and development of the economy by ways of rising unemployment rate, soaring poverty and swollen external debt, thus suggesting that the failure of the monetary policy in curbing price instability has caused growth instability as Nigeria's record of growth and development has become very poor. This study therefore examines the effect of monetary policy on economic growth in Nigeria using secondary data covering the period of 1980 2017 that were sourced from the Central Bank of Nigeria statistical bulletin. The model's estimates were estimated via multiple econometric model of the ordinary least square to ascertain the effect of money supply, credit in the economy, interest rate on credit, infrastructure, inflationary rate, external debts, price index on growth in Nigeria. The results show that money supply, interest rate on credit, infrastructure and external debt were statistically significant in explaining its impacts on economic growth while other variables used in the study were all found to be statistically insignificant in explaining the growth rate of the Nigerian economy. The study recommends among others that for effective operation of the monetary policy measures in the Nigerian economy, the Central Bank of Nigeria should be granted full autonomy on its monetary policy functions. Partial autonomy should be replaced with full autonomy for the central banks in the developing economies at large which is invariably subjected to government interference and its politics. Onwuteaka, Ifeoma Cecilia | Okoye, P. V. C | Molokwu, Ifeoma Mirian ""Effect of Monetary Policy on Economic Growth in Nigeria"" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-3 , April 2019, URL: https://www.ijtsrd.com/papers/ijtsrd22984.pdf
Paper URL: https://www.ijtsrd.com/humanities-and-the-arts/economics/22984/effect-of-monetary-policy-on-economic-growth-in-nigeria/onwuteaka-ifeoma-cecilia"
Effect of Government Policies on Price Stability in Nigeriaijtsrd
This study examined the effect of monetary and fiscal policies on price stability in Nigeria using a data rich framework spanning from 1986 2020. The main problem with the macro economic policies that prompted this study was the fact that despite the series of the CBN Monetary Policy Committee decisions and government tax and expenditure implementation there is apparently no useful effect on inflation price . The study employed Auto regression Distributed Lag ARDL Bound Test for Co integration of data analysis depending upon the time series properties of the data that confer mixed order of integration in addition to the conduct of the unit root test and Error Correction Model ECM estimation. The ADF test revealed that LNCPI, EXR, GSDMD, GEXP, GTX and M2 were stationary at 1 1 while RIR, MPR and BOP at 1 0 . Pesaran, Shin and Smith 2001 established that the ARDL bounds technique allows a mixture of 1 1 and 1 0 variables as regressors. Hence, we proceed to perform the ARDL bounds test for integration. The results of the ARDL bounds revealed that the null hypotheses were all rejected implying that a long run effect exists among monetary and fiscal policies variables and CPI in a multivariate framework. ECM coefficient of 0.2942 conforms with expectation. Durbin Watson statistic 0f 1 9925 revealed that the model seems not to have any case of autocorrelation. The result of our analysis shows that fiscal policy rather than monetary policy exerts a more potent effect on price stability in Nigeria. The study recommends that both monetary and fiscal policies should be complementary in order to be effective in taming inflation in Nigeria. Onehi, Damian Haruna | Ibenta, Steve Nkem | Adigwe, Patrick, K. | Emejulu, Ikenna Justin "Effect of Government Policies on Price Stability in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-1 , February 2023, URL: https://www.ijtsrd.com/papers/ijtsrd52766.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/52766/effect-of-government-policies-on-price-stability-in-nigeria/onehi-damian-haruna
Analyzing the Effect of Government Expenditure on Inflation Rate in Nigeria 1...ijtsrd
Nigeria is a developing economy with active participation of the federal government in various economic sectors not only to promote economic growth and development but also to instill fiscal and economic discipline in the economy. Government participation in the economy means greater funding of economic activities and this is expected to impact on economic indicators. This study analyses the effect of government expenditure on inflation rate in Nigeria within a period of 39 years spanning 1981 2019 . The study specifically seek to ascertain, determine, explore and assess the extent to which government expenditures on key sectors of agriculture, education, health and telecommunications respectively affect inflation rate in Nigeria. In line with the specific objectives of this study, four research questions are raised and four hypotheses duly formulated. Data used for this study were collected from the Central Bank of Nigeria CBN Statistical Bulletin. Government Expenditure on Agriculture GOA , Government Expenditure on Education GOE , Government Expenditure on Health GOH and Government Expenditure on Telecommunication GOT are the independent variables while inflation rate INF is the dependent variable. Descriptive statistics, diagnostic test employing the Augmented Dickey Fuller and a multivariate regression based on Johanson Cointegration and Error Correction Model ECM are used to analyze the data. Our findings indicate that government expenditures on education and agriculture have positive but insignificant effect on inflation rate and on the other hand, government expenditure on health and government expenditure on telecommunications have positive and significant effect on inflation rate. Based on our findings, the study recommends that government should increase its allocation to the health and education sectors to trigger increased skills and healthcare of economic operators for enhanced human capital development and economic productivity. Government should also provide adequate infrastructures to facilitate economic growth and reduce high inflation rate. Mbanefo, Patrick Amaechi | Atueyi, Chidi Leonard "Analyzing the Effect of Government Expenditure on Inflation Rate in Nigeria (1981-2019)" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-2 , February 2022, URL: https://www.ijtsrd.com/papers/ijtsrd49237.pdf Paper URL: https://www.ijtsrd.com/management/management-development/49237/analyzing-the-effect-of-government-expenditure-on-inflation-rate-in-nigeria-19812019/mbanefo-patrick-amaechi
Long run relations between the financial institutional reforms and the nigeri...Alexander Decker
This document summarizes a research paper that investigates the impact of financial institutional reforms on manufacturing performance in Nigeria from 1970 to 2005. It provides background on financial institutional reforms in Nigeria and discusses constraints on the manufacturing sector. The paper aims to examine the relationship between financial institutional reforms and manufacturing sector performance. It reviews several other studies that have analyzed the linkages between financial reforms and economic growth indicators.
The Nigerian Government both previous and present has introduced several policies and programmes to reduce or proffer remedial measures to militate against the negative impact of high inflationary levels on the Nigerian economy. All these measures have not led to a productive result as the inflation rate has continued to sour higher over the years. This paper aimed at examining the economic influence of the determinant factors that influence inflationary trends that are multi-dimensional and dynamic which continue to defy solutions. The data used for this work was sourced from the National Bureau of Statistics and Central Bank of Nigeria, from 1983 to 2020. The ordinary least square approach was used to analyze the data and the result shows that consumer’s price index, interest rate and total export has a positive effect on Nigeria inflation, but only the Consumer’s Price Index (CPI) have a statistically significant effect on the Nigeria inflation at 99% confidence interval. Result also shows that the exchange rate, foreign reserve, money supply, real GDP, real income and total imports has a negative effect though not statistically significant on the Nigeria inflation rate. The result of the granger causality test shows exchange rate and total imports to granger cause Nigeria inflation. It is recommended that Government should improve locally manufacture products to meet international demands to reduce total imports.
The impact of interest rates on the development of an emerging market empiric...Alexander Decker
This document summarizes a journal article about the impact of interest rates on the development of emerging markets, using Nigeria as an empirical case study. It acknowledges people who assisted with the research. The abstract indicates that interest rates are difficult to forecast and impact borrowing costs for businesses. While higher rates could encourage savings in the long-run, current high rates in Nigeria of 12% are negatively impacting growth. The literature review discusses how inflation can stimulate or deter human capital formation and how interest rates influence savings, investment, and financial intermediation. It recommends Nigeria adopt pragmatic policies to reduce lending rates to single digits to boost the economy.
This document examines the relationship between capital market development and economic growth in Nigeria from 2008 to 2018. It uses market capitalization, interest rate, and inflation rate as proxies for capital market development and GDP as the measure of economic growth. Multiple regression analysis is employed to analyze the data. The results suggest that the stock market has a positive but insignificant effect on economic growth in Nigeria. It is recommended that capital market regulators be more flexible to promote innovation without compromising investor protection. The government should also improve infrastructure to create a better business environment and boost productivity and economic activity.
Effect of nigerian macro economic and macro-environment related factors on a...Alexander Decker
The document analyzes the effect of Nigerian macroeconomic and environmental factors on agribusiness output between 1970 and 2007. It finds that nominal interest rates, price instability, and government debt had negative relationships with output, while government spending and foreign private investment had positive relationships. The greatest growth in output occurred from 1994 to 2001, corresponding to increases in the foreign exchange rate and decreases in interest rates and inflation. The study concludes that macroeconomic policies aimed at price stability, lower interest rates, and increased investment and spending can promote growth in the agribusiness sector.
Modeling the effect of capital market empirical evidence from nigeria.Alexander Decker
This study examines the relationship between capital market activities and economic growth in Nigeria from 2001 to 2010. The capital market variables of annual market capitalization and total volume of transactions were analyzed in relation to gross domestic product as a proxy for economic development. The findings revealed a positive but not statistically significant relationship between capital market activities and GDP. It is recommended that building investor confidence through transparency, fair trading, political stability, and adequate publicity of the capital market could make the impact of the capital market on the economy more significant.
TECHNOLOGY-BASED FDI, MANUFACTURING OUTPUT AND ECONOMIC GROWTH: A COMPARATIVE...IAEME Publication
The inflow of technology-based FDI into a country helps to develop the manufacturing
sector which brings about an increase in aggregate output which boosts economic growth. It
is against this backdrop that this study examined the link between technology-based FDI,
manufacturing output and economic growth in Nigeria and Malaysia, using the Vector
Autoregression (VAR) model, pointing out the lessons Nigeria can learn from the Malaysian
economy. The secondary data used in this study was obtained from the World Bank and the
United Nations Conference on Trade and Development (UNCTAD) spanning between 1980
and 2017. The result from this study showed that Malaysia’s FDI inflows are directed towards
the manufacturing sector than the Nigerian economy, and this explains why the Malaysian
manufacturing sector is more developed than that of Nigeria. Therefore, the study
recommended that Nigeria should direct FDI to the manufacturing sector, as this will boost
the growth rate of the economy
This study examined the relationship between interest rate and economic growth in Nigeria, using secondary time series panel data for the period 1985 – 2014. Data was collected from various issues of the Central Bank of Nigeria Statistical Bulletin and the National Bureau of Statistics. The study employed Augmented Dicker-Fuller (ADF) unit root tests as well as Johansen co-integration test followed by Error Correlation Model (ECM) approach. The ADF unit root test results indicated that the variables are all stationary at first difference. The variables were integrated of order one (1) which implies that the null hypothesis of non-stationary for all the variables of interest is rejected. The Johansen co-integration test result revealed the existence of two co-integrating relationship between the variables at 5% level of significance. The study proceeded to perform the ECM approach and found that interest rate is inversely related to economic growth, but the relationship is statistically insignificant. The recommended that monetary authorities should adopt appropriate polices that would promote and stimulate economic growth in Nigeria.
Similar to Exchange Rate Fluctuation and Industrial Output Growth in Nigeria (20)
This study examined the influence of the characteristics of the audit committee on Palestinian firms’ value. The research explores precisely the effect on the Audit Committee characteristics’ efficiency, namely, independence, expertise, evaluating the relationship among dependent and independent variables. Secondary data collected from a list of companies were registered in the Palestine Stock Exchange from 2011 to 2018. Individual variables considered are the independence & expertise of the audit committee, whereas the ROA is employed as the dependent variable as an indicator of a firm’s value. The results showed that the Audit Committee’s independence & expertise substantially positive with ROA. The study concluded that the audit committee’s characteristics are enhancing firm performance. The implications of this study’s findings can be used by decisions and policymakers, the firm’s management, and other stockholders’ interests to create reliable ties between agents and the principals.
There is increasing acceptability of emotional intelligence as a major factor in personality assessment and effective human resource management. Emotional intelligence as the ability to build capacity, empathize, co-operate, motivate and develop others cannot be divorced from both effective performance and human resource management systems. The human person is crucial in defining organizational leadership and fortunes in terms of challenges and opportunities and walking across both multinational and bilateral relationships. The growing complexity of the business world requires a great deal of self-confidence, integrity, communication, conflict, and diversity management to keep the global enterprise within the paths of productivity and sustainability. Using the exploratory research design and 255 participants the result of this original study indicates a strong positive correlation between emotional intelligence and effective human resource management. The paper offers suggestions on further studies between emotional intelligence and human capital development and recommends conflict management as an integral part of effective human resource management.
This paper examines the role of loan characteristics in mortgage default probability for different mortgage lenders in the UK. The accuracy of default prediction is tested with two statistical methods, a probit model and linear discriminant analysis, using a unique dataset of defaulted commercial loan portfolios provided by sixty-six financial institutions. Both models establish that the attributes of the underlying real estate asset and the lender are significant factors in determining default probability for commercial mortgages. In addition to traditional risk factors such as loan-to-value and debt servicing coverage ratio lenders and regulators should consider loan characteristics to assess more accurately probabilities of default.
This study examined the impact of financial innovation on money demand in Nigeria, using quarterly time series for the period 2009-2019. The dependent variable was money demand, represented by broad money, while the independent variable was financial innovation represented by modern payment channels such as volume of Automated Teller Machines (ATMs) transactions, volume of Point of Sales (POS) transactions, volume of Internet banking transactions, and volume of Mobile banking transactions. The study employed the ordinary least squares (OLS) regression technique as the estimation method within the cointegration, granger causality, and error correction modeling. The result obtained showed that financial innovation has mixed impact on money demand in Nigeria during the period of analysis. For instance, financial innovation has positive impact on money demand through volume of ATM transactions in the current period, two periods lagged of volume of mobile banking transactions, current period and one period lagged of volume of internet banking transactions, and current period’s volume of Point of Sales (POS) transactions in Nigeria. On the other hand, financial innovation has negative impact on money demand through one period lagged of volume of point of sales in Nigeria. On the stability of the demand for money function, the result of the stability tests based on the CUSUM test and CUSUM of squares test showed that the demand for money function was stable during the evaluation period. The study recommended that monetary policy strategy of the central bank of Nigeria (CBN) should be fine-tuned to ensure it is well suited to deal with the challenges posed by financial innovation by way of proliferation of sophisticated payment channels.
Equity financing is one of the sources of funding available to non-bank financial institutions which is quite prevalent in developed financial markets for small or start-up firms. This study empirically determined the effect of the Equity Financing Scheme on a sustainable increase in productivity of agro-allied small businesses in Nigeria. Data for this study were elicited through the use of a questionnaire structured in a five-point likert scale. The evaluation of the relationship between the dependent and independent variables was performed using the Ordinary Least Square regression technique. The study revealed that the equity financing scheme had a positive and significant effect on the sustainable productivity of agro-allied small businesses in South-South Nigeria. The study recommended that efforts should be made to educate the small business entrepreneurs on the benefits of equity financing as a viable option towards business growth and expansion and that the government through the various intervention agencies should restructure the long-term loan policies to give access to more growth-oriented agro-allied businesses, to increase their presently low capacity to procure heavy-duty technology to increase productivity and achieve food security in Nigeria. Small business owners should take advantage of the membership of cooperative societies and as well maintain good business relationships with suppliers; this will guarantee a continuous supply of needed materials and uninterrupted operations of the business.
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In Bangladesh, migrant worker’s remittances constitute one of the most significant sources of external finance. This paper investigates the existence of relation between remittance inflow and GDP and the causal link between them in Bangladesh by employing the Granger causality test under a VECM framework. Using time series data over a 38 year period, we found that growth in remittances does lead to economic growth in Bangladesh. In addition to the relationship, this paper also points out some issues that are working as impediments in getting remittance and give some recommendations to overcome those impediments.
In the context of the 4.0 revolution, technology applications, especially cloud computing will have strong impacts on all areas, including accounting systems of enterprises. Cloud computing contributes to helping the enterprise accounting apparatus become compact, help automate the input process, improve the accuracy of the input data. Besides, the issur of accounting, reporting, risk control and information security also became better, contributing to improving the effectiveness of accounting. However, besides the positive impacts, businesses also face many difficulties in deploying and applying cloud computing. However, this application requirement will become an inevitable trend contributing to improving the operational efficiency of enterprises. To promote this process requires from the State as well as businesses themselves must have awareness and appropriate decisions. Breakthroughs in information technology have dramatically changed the accounting industry and the creation of financial statements. The Internet and the technologies that use the power of the Internet are playing an important role in the management and accounting activities of businesses - who always tend to be ready to receive and use public innovations technology in collecting, storing, processing and reporting information.
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The profitability of commercial banks is influenced by a number of internal and external factors. This paper attempts to identify the internal factors which significantly influence the profitability of commercial banks in Bangladesh. In this study, profitability is measured by ROA and ROE which may be significantly influenced by the internal factors such as IRS, NIM, CAR, CR, DG, LD, CTI and SIZE of the bank. Data are collected from published annual reports during 2014--2018 of 23 commercial banks. Using simple regression model, it is found that CR has significant effect on the profitability and CAR has significant influence on ROA only. In addition to this, DG has significant effects on PCBs’ profitability (ROE only) where as IRS and CTI have significant influence on profitability (ROA only) of ICBs. Further, none of these variables have significant effects on the profitability of SCBs but CAR and CR are correlated with profitability (ROA only) and the causes may be the nature of services provided by SCBs to its clients. The internal policy makers should manage the influential internal factors of the banks in order to increase their profitability so that they can meet stakeholders’ expectations.
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This paper investigates if forecasting models based on Machine Learning (ML) Algorithms are capable to predict intraday prices in the small, frontier stock market of Romania. The results show that this is indeed the case. Moreover, the prediction accuracy of the various models improves as the forecasting horizon increases. Overall, ML forecasting models are superior to the passive buy and hold strategy, as well as to a naïve strategy that always predicts the last known price action will continue. However, we also show that this superior predictive ability cannot be converted into “abnormal”, economically significant profits after considering transaction costs. This implies that intraday stock prices incorporate information within the accepted bounds of weak-form market efficiency, and cannot be “timed” even by sophisticated investors equipped with state of the art ML prediction models.
Applying the Arrow-Debreu-Mundell-Fleming model as an economic standard model, with combining axiological framework and epistemological model, it is proposed to analyze economic policies with using a synthetic model, where interest, exchange and tax rates are integrated together. Except normal monetary and fiscal policies mainly via interest and tax rates, there are feasible ways to utilize modified strategies via exchange and tax rates. When ones need to simulate national local market, ones can raise the exchange rate. Otherwise, when ones need to promote international global trade, ones may lower the exchange rate. It is found that tax reduction is good policy when tax rate is higher than normal and that tax increase is good social policy when tax rate is lower than normal, during economic depression. Also it is revealed that tax reduction is good social policy when tax rate is lower than normal, and that tax increase is good policy when tax rate is higher than normal, during economic overheat. While economic system seeks efficiency and social system pursues equality, common interest modifications with elastic exchange and tax rates could be applied for balancing efficiency and equality.
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The article illustrates the results of the economic development of the first fifteen years of the XXI century under the conditions of unprecedented economic freedom, globalization and the appearance of new informational sectors up to and including the first attempts at revising liberalism. The analysis of statistical data demonstrates an obvious increase in the percentage of well-off people in many countries as well as the increased economic capabilities of small, medium and large businesses, whose assets are distributed among an ever-increasing number of owners. This provides the impetus to review our collective approach to liberalization and globalization, as well as to view its unexpected strong sides that make human progress possible.
This paper investigates the relationship between working capital management and financial performance of Pharmaceuticals and Textile firms listed at the Dhaka Securities Exchange in Bangladesh. The data analysis was carried on ten Pharmaceuticals and Textile firms for a period of 2013 to 2017. Secondary Data was analyzed by applying Descriptive Statistics, Regression and Correlation analysis to findthe relationship of current ratio, inventory conversion period and average payment period with Return on Asset. The findings indicate that the Pharmaceuticals and Textile firms’ performance is influenced by the variables relating to working capital. There is a positive relationship between profitability and current ratioand Inventory Turnover period shows a negative relationship with profitability but Average payment period shows insignificant impact on profitability. The study concludes that there exists a relationship between working capital managementand financial performance of Pharmaceuticals and Textile firms in Bangladesh. The study recommends that for the Pharmaceuticals and Textile firms to remain profitable, they should employ working capital management practice that will help in making decisions about investment mix and policy, matching investment to objective, asset allocation for institution and balancing risk against profitability.
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Exchange Rate Fluctuation and Industrial Output Growth in Nigeria
1. International Journal of Economics and Financial Research
ISSN(e): 2411-9407, ISSN(p): 2413-8533
Vol. 4, Issue. 5, pp: 145-158, 2018
URL: http://arpgweb.com/?ic=journal&journal=5&info=aims
Academic Research Publishing
Group
*Corresponding Author
145
Original Research Open Access
Exchange Rate Fluctuation and Industrial Output Growth in Nigeria
Dr. Akinmulegun Sunday O.*
Department of Banking & Finance, Faculty of Social & Management Sciences, Adekunle Ajasin University,
Akungba Akoko, Ondo State, Nigeria
Falana Olajide E.
Department of Banking & Finance, Faculty of Social & Management Sciences, Adekunle Ajasin University,
Akungba Akoko, Ondo State, Nigeria
Abstract
This study examined the effects of exchange rate fluctuation on the Industrial Output Growth in Nigeria using time
series data sparring from the period 1986 to 2015. Johansen‘s Co-Integration model was employed to explore the
long-run relationship among the variables used, while the Vector Error Correction model (VECM) was used to
evaluate the short and long-run dynamic among the variables and the Granger Causality used to measure
contemporaneous relationship among the endogenous variables. The dynamic correlation of the variables was
captured by the analyses of impulse response and variance decomposition. The results of the analysis indicate a
unidirectional causality from Exchange rate to Industrial output. The response of industrial output to the shock from
exchange rate was positive and significant; more specifically in the initial years, while response to shock from other
variables was little in magnitude and not as significant as exchange rate. From the Forecast Error Variance
Decomposition (FEVD), the study revealed that although the main source of variance in output are own shocks,
innovation in the exchange rate accounted for a higher proportion in the variation of industrial output than that of
other associated variables (Inflation, Interest rate and Net Export). The study concluded that exchange rate has
potentials of causing significant changes in industrial output in Nigeria. Against this backdrop, the study
recommended the need for more macroeconomic policy attention to the proper management of the exchange rate,
and the need to strengthen the link between agriculture and the industrial sector to reduce the reliance of the sector
on import of inputs to a reasonable level.
Keywords: Exchange rate; Industrial output; Net export; Gross domestic product; Inflation.
CC BY: Creative Commons Attribution License 4.0
1. Introduction
The growing potentials of Industrial sector of an economy is strategic to the macro-economic framework of such
a nation, to the extent that the sector plays a catalytic role and has many dynamic benefits that are crucial for
economic transformation. It is an avenue for increasing productivity in relation to import substitution and export
expansion, creating foreign exchange earning capacity, raising employment, promoting the growth of investment at a
faster rate than any other sector of the economy, as well as wider and more efficient linkage among different sectors
(Fakiyesi, 2005). In many economies, the performance of the Industrial Sector is the gauge for assessing the
effectiveness of macroeconomic policies. Government policies; particularly exchange rate policies can only be
deemed successful if they impact positively on the production and distribution of goods and services. A vibrant and
productive Industrial arm of the economy creates more linkages in the economy and promotes internal and external
balance. Variation in exchange rate is an important endogenous factor that affects economic performance, due to its
impact on macroeconomic variables like outputs, imports, export, prices, interest rate and inflation rate. A sound and
appropriate exchange rate policy is crucial condition for improving economic performance (Chang and Tan, 2008).
In practice, however, no exchange rate is pure float or completely determined by market forces. Rather, the
prevailing system is the managed float type, whereby there is periodic intervention by monetary authorities in the
foreign exchange market to attain strategic objectives (Mordi, 2006). A managed floating exchange rate regime has
been the most predominant in Nigeria since the introduction of Structural Adjuptment Programme in 1986.
The main objectives of exchange rate policy in Nigeria are to preserve the international value of the domestic
currency and maintain a favourable external reserve position. According to Obaseki (2001), the Central Bank of
Nigeria has implemented different techniques in the management of the exchange rate of the naira. Obadan (2002)
believed that past exchange rate policies have been designed with a bias towards demand management in Nigeria,
as the supply side has always been limited by the monoculture base of the economy, where foreign exchange inflow
is dominated by- oil export proceeds. The management of any country‘s foreign exchange market is carried out
within the ambit of a foreign exchange policy, which according to Obaseki (2001), is the sum total of the
institutional framework and measures put in place to gravitate the exchange rate towards desired levels in order to
stimulate the productive sectors, curtail inflation, ensure internal balance, improve the level of exports and attract
direct foreign investment and other capital inflows. The inability of the system to achieve the major objectives of
exchange rate policy led to the reversal of the policy in September 1986 to floating exchange regime with the
introduction of SAP. However, Nigerian industrial sector had since faced with the challenge of consistent fluctuating
2. International Journal of Economics and Financial Research
146
exchange rate due to the failure to realise the goals of SAP subjected the Nigerian Industrial sector to the challenge
of a constantly fluctuating exchange rate.
2.1. Statement of Problem
Following the depreciation of the Naira in 1986, a policy induced by the Structural Adjustment Programme
(SAP), the subject of exchange rate fluctuations has become a topical issue in Nigeria. This is because it is the goal
of every economy to have a stable rate of exchange with its trading partners. In Nigeria, this goal was not realized in
spite of the fact that the country embarked on devaluation to promote export and stabilize the rate of exchange. The
failure to realize this goal subjected the Nigerian industrial sector to the challenge of a constantly fluctuating
exchange rate. This was not only necessitated by the devaluation of the naira but the weak and narrow productive
base of the sector and the rising import bills also strengthened it (Opaluwa et al., 2010). In order to stem this
development and ensure a stable exchange rate, the monetary authority (i.e Central Bank of Nigeria) put in place a
number of exchange rate policies. However, very little achievement was made in stabilizing the rate of exchange.
Benson and Victor (2012) and Aliyu (2011) noted that despite various efforts by the government to maintain a stable
exchange rate, the naira has depreciated throughout the 80‘s to date. It is sad to note that Nigerian economy is under-
industrialized and its capacity utilization is also low. The industrial sector has become increasingly dependent on the
external sector for import of non-labour input (Okigbo, 1993). Exchange rate reforms according to Bakare (2011)
were expected to put the Nigerian economy on the path of macroeconomic stability, recovery and sustainable
development. But rather, the country has continued to be at disadvantage in terms of macroeconomic performances.
The different regimes have been accompanied by instability and uncertainties. Against this backdrop, this study
aimed to evaluate the impact of exchange rate fluctuation on industrial output growth in Nigeria between 1986-
2015.
2.2. Research Questions
Three main research questions addressed in this research work are as follows:
1. Does exchange rate fluctuation have any significant impact on Nigerian Industrial Output Growth?
2. Is there any contemporaneous relationship between Exchange rate fluctuation and Growth of Industrial
Output in Nigeria?
3. Are there other determinants of Exchange rate and Industrial Output Growth in Nigeria?
2.3. Objectives of the Study
The broad objective of this paper therefore is to explore the trend of exchange rate changes in the country and to
also empirically justify how the exchange rate fluctuations have impacted industrial output growth over the years.
Specifically, the study seeks to achieve the following objectives:
1. To examine the impact of exchange rate fluctuation on the growth of Industrial Output in Nigeria.
2. To investigate the contemporaneous relationship that exist is between Exchange rate fluctuation and
Growth of Industrial Output in Nigeria
3. To examine other determinants (economic fundamentals) of Domestic output Growth in Nigeria
2.4. Statement of Hypotheses
1. Hi: Exchange rate fluctuation has no significant effect on industrial output growth in Nigeria.
2. Hi: There is no contemporaneous relationship between Exchange rate fluctuation and Growth of Industrial Output
in Nigeria.
2. Literature Review and Theoretical Framework
The relationship between Exchange rate changes and Industrial performance has attracted attention in
Economics and Finance researches over the years. The introduction of Structural Adjustment Programme (SAP) in
1986 with the policy tenet of abolishing the fixed exchange rate system being replaced with flexible exchange rate
system marked the beginning of growing interest. Thus, the topic has attracted.
2.1. Conceptual Literature
Literarily, an exchange rate implies the price of one currency in terms of another (Oloyede, 2002). In the
Nigerian context, it is the units of naira needed to purchase one unit of another country‘s currency e.g the United
States dollar (Campbell, 2010). Ahmed and Zarma (1997) posited that exchange rate is an important decision making
variable in every nation, thus making it a crucial issue for any country desirous of economic growth. Exchange rate
is a reflection of the strength of a currency when measured against another country‘s currency; usually determined in
principle by the interplay of supply and demand in a free market environment. According to Onyeizugbe and
Umeagugesi (2014), no currency is allowed to float, so nation monetary authorities regulate currency between the
fixed and floating exchange rate systems and other regimes, such as dual managed. Fluctuations in exchange rate
will cause weak purchasing power and hence, negatively impact on investment in import of inputs. On the other
hand, changes in industrial output level will also affect investment in import of inputs and invariably the exchange
rate.
3. International Journal of Economics and Financial Research
147
Figure-1. Growth rate of real GDP, Industry GDP and Exchange Rate in Nigeria (1986-2015)
Trends in Exchange Rate Changes and Industrial Output Performances in Nigeria
Source: CBN statistical bulletins (several editions)
The Growth rate of real GDP, Industry GDP and Exchange Rate in Nigeria (on five-year basis) for the study
period (1986-2015) is shown in figure 1. Following the adoption of the Structural Adjustment Programme (SAP)
and the subsequent improvement in the management of the foreign exchange market, the persistent downward
pressure on the domestic currency was stemmed for a while. Some improvements were recorded in the growth of
GDP between 1986 and 1990. The average growth rate of the total GDP was negative between 1986 and 1987, it
picked in 1988 all through to 1990 with the highest rate of 12.8% occurring in 1990. The improved performance of
output during this period might be linked to the expansionary fiscal and monetary policies of the government during
this period. The total GDP growth rate however, dropped after 1990 with average growth rate of 0.5% between 1990
and 1995. It however, picked between 2001 and 2005 with an impressive average growth of over 10%. The growth
since 2006 to date has been on descending trend. The performance of Industry GDP followed almost the same trend
with total GDP. The Industry GDP went through an undulating growth since 1986 to date. There was a huge average
growth of 6.3% in 1986 and 1990 with the pick of 20.2% recorded in 1990, followed by a negative average of -1.3%
between 1991 and 1995. The period 2001 and 2005 also recorded an exciting average growth of 6.1%. However, the
year 2011 and 2015 was not the best period for Nigeria Industry as the growth rate plunged into a negative average
of -8.6 due largely to a huge negative growth rate of -46.1 recorded in 2014. Epileptic power supply, insecurity and
political instability affected the Industrial sector at this period.
Figure-2. Industrial Sector‘s Annual Contribution to Real GDP in Nigeria (1986-2015)
Source: CBN statistical bulletin (various issues)
Figure 2 explained the Nigerian Industrial sector annual contribution to the total GDP. The relationship
observed is quite revealing about the sensitivity of Nigeria Industrial sector to Exchange rate fluctuation. The
contribution of Industrial sector to total GDP has consistently followed a downward trend since the introduction of
SAP in 1986. Between 1986 and 1990, the Industrial sector contributed on the average 41.3% to the nation‘s total
GDP. The figure reduced marginally to 40.7% in the period 1991 & 1995, a further fall (38.1%) in 1996-2000. A
significant plunge was recorded in 2006-2010 with the contribution standing at 24.8% and falling to the lowest
figure of 16.9% between 2011and 2015.
2.2. Theoretical Framework
The output effect of exchange rate changes has been a subject of theoretical debate in the literature without
consensus as to the direction of the effects. The traditionalist argued that exchange rate depreciation would promote
trade balance, alleviate balance of payments difficulties and accordingly expand output and employment provided
the Marshall-Lernar conditions are met (that if the sum of price elasticity of demand for export and the price
elasticity of demand for imports is greater than unity). The monetarists on the other hand argued that exchange rate
changes have no effect on real variables in the long run. The monetarist view is that exchange rate devaluation affect
real magnitudes mainly through real balance effect in the short run but leaves all real variables unchanged in the long
4. International Journal of Economics and Financial Research
148
run (Domac, 1977). This approach is based on the assumption that the Purchasing Power Parity (PPP) holds. It
predicts that in the short run an increase in the exchange rate leads to increase in output and improves the balance of
payments but in the long run, the monetary consequence of the devaluation ensures that the increase in output and
improvement in BOP is neutralized by the rise in prices.
One other theoretical linkage between exchange rate and output in the literature is the IS-LM model. The main
advantage of this model over some other models is that it includes consumption, investment, government spending,
taxes, exports, imports, interest rate, exchange rate, current account, capital account and national output in a single
framework. In this model, exchange rate does not affect output directly, it affects it indirectly through the import-
export and the money supply channels. Depreciation is theoretically expected to have positive effect on export since
it makes domestic goods cheaper to foreign consumers.
The modified Mundell–Fleming IS-LM model, also known as the IS-LM-BoP model, adopted by Kandil (2004)
and Yaqub (2010) is the theoretical base of this study. This was an economic model first set forth (independently) by
Mundell (1963) and Fleming (1962). The model is an extension of the traditional IS-LM Model extended by Hicks
(1937) and Hansen (1953) as a mathematical representation of Keynesian macroeconomic theory. While the
traditional LM-SM deals with a closed economy, the Mundell–Fleming model describes an open economy and
portrays the short-run relationship between an economy's nominal exchange rate, interest rate, and output with the
assumption that output is demand determined. The demand side of the economy consists of three markets, namely;
the goods, money and the foreign exchange market, all of which must simultaneously be in equilibrium for the
economy to be in equilibrium.
The Mundell–Fleming model is based on the following equations.
The IS curve: Y = C + I + G + NX (1)
where NX is net exports.
The LM curve: M/P= L (i, Y) (2)
A higher interest rate or a lower income (GDP) level leads to lower money demand.
The BoP (Balance of Payments) Curve: BoP = CA +KA (3)
Where BoP is the balance of payments surplus, CA is the current account surplus, and KA is the capital account
surplus.
IS components C = C [Y-T(Y), I - E (π)] (4)
Where; E (π) is the expected rate of inflation. Higher disposable income or a lower real interest rate (nominal interest
rate minus expected inflation) leads to higher consumption spending.
I =I (I - E (π), Y-1 (5)
where; Y-1 is GDP in the previous period. Higher lagged income or a lower real interest rate leads to higher
investment spending.
NX = NX (e, Y, Y*) (6)
Where; NX is net exports, e is the nominal exchange rate (the price of domestic currency in terms of units of the
foreign currency), Y is GDP, and Y* is the combined GDP of countries that are foreign trading partners.
2.3. Empirical Literature Review
Empirical evidences on the impact of exchange rate fluctuation on the relative performance of industrial sector
abound in the literature with contrasting results. While some studies found a significant effect of exchange rate
variation on domestic output (Gylfason and Schmid, 1983; Kamin and Klau, 1998; Kandil, 2004; Musa and Sanusi,
2013), others found no significant relationship (Eme and Johnson, 2012; Ubok-Udom, 1999).
Gylfason and Schmid (1983) constructed a log-linear macro model of an open economy for a sample of ten
countries, using different estimates of the key parameters of the model. Their results showed that devaluation was
expansionary in eight out of ten countries investigated. Devaluation was found to be contractionary in two countries
(the United Kingdom and Brazil). In the same vein, Kamin and Klau (1998) using an error correction technique
estimated a regression equation linking the output to the real exchange rate for a group of twenty seven countries.
They did not find that devaluations were contractionary in the long term. In addition, through the control of the
sources of spurious correlation, reverse causality appeared to alternate the measured contractionary effect of
devaluation in the short term although the effect persisted even after the introduction of controls.
Dhasmana (2015) explored the impact of real exchange rate changes on the performance of Indian
manufacturing firms over the period 2000– 2012, using Panel- VAR. The empirical analysis showed that real
exchange rate movements have a significant impact on Indian firms‘ performance but the impact varied across
different firm and industry characteristics. Results from Panel- VAR also proved that appreciation and depreciation
affect firms‘ performance differently.
Agenor (1991) using a sample of twenty-three developing countries, regressed output growth on
contemporaneous and lagged levels of the real exchange rate and on deviations of actual changes from expected ones
in the real exchange rate, government spending, the money supply, and foreign income. The results showed that real
exchange rate depreciation actually boosted output growth. Morley (1992) analyzed the effect of real exchange rates
on output for twenty eight developing countries that have devalued their currencies using a regression framework.
5. International Journal of Economics and Financial Research
149
After the introduction of controls for factors that could simultaneously induce devaluation and reduce output
including terms of trade, import growth, the money supply, and the fiscal balance, he discovered that depreciation of
the level of the real exchange rate reduced output level. Rogers and Ping (1995) estimated a five-variable VAR
model—output, government spending, inflation, the real exchange rate, and money growth—most variations in the
Mexican output resulted from ―own shocks. They however noted that exchange rate depreciations led to a decline
in output. However, in the work of Eichengreen and Leblang (2003) on 12 countries over a period of 120 years, they
found strong inverse relationship between exchange rate stability and growth.
Bakare (2011), conducted an empirical analysis of the consequences of the foreign exchange rate reforms on the
performances of private domestic investment in Nigeria using the ordinary least square multiple regression analytical
method. The multiple regression results showed a negative but significant relationship between floating foreign
exchange rate and private domestic investment in Nigeria.
Musa and Sanusi (2013) investigated the response of aggregate industrial output to relative change in prices and
exchange rate in Nigeria between 1970- 2011, using a Vector Error Correction (VEC) model. Their empirical
evidence indicated a significant relationship between exchange rate and industrial output; arguing that inflation and
exchange rate have the potentials of causing significant changes in industrial output in Nigeria. This study therefore
suggested that more policy attention should be given to proper management of the exchange rate and inflation.
Opaluwa et al. (2010), examined the impact of exchange rate fluctuations on the Nigerian manufacturing sector
during a twenty (20) year period (1986 – 2005), using Linear Regression tool. The result indicated an adverse but
statistically significant effect of exchange rate on manufacturing output.
Onyeizugbe and Umeagugesi (2014), examined how Exchange rate particularly devaluation of the naira affects
the survival of the industrial subsector in Nigeria during the period 1990-2013, using Ordinary Least Square (OLS)
regression method. The result showed that manufacturing capacity utilization has positive relationship with exchange
rate and export. The study thereby recommended that manufacturing firms should embark on production of quality
goods and the Government should encourage the development of local industrial subsector. Asher (2012) studied the
impact of exchange rate fluctuation on the Nigeria real economic growth for period of 1980 – 2010. The result
showed that real exchange rate has a positive effect on the real economic growth. In his work, Jongbo (2014)
evaluated the impact of real exchange rate fluctuation on industrial output of the Nigeria industrial sector using
ordinary least square (OLS) and revealed that real exchange rate play a significant role in determining the industrial
output.
It is important to mention the work of Odusola and Akinlo (2001) who examined the linkage among exchange
rate, inflation and output in Nigeria. A structural VAR model was employed which captured the interactions between
exchange rate and output. Evidence from the contemporaneous models showed a contractionary impact of the
parallel exchange rate on Industrial output only in the short term. Prices, parallel exchange rate and lending rate were
found to be important sources of perturbations in the official exchange rate. In addition, output and parallel exchange
rate were significant determinants of inflation dynamics in Nigeria.
Ubok-Udom (1999) examined the relationship between exchange rate variation and growth of the domestic
output in Nigeria (1971-1995); expressing growth of domestic output as a linear function of variations in the average
nominal exchange rate. He however used dummy variables to capture the periods of currency depreciation. The
empirical result showed that all coefficients of the major explanatory variables have negative signs. Eme and
Johnson (2012) investigated the effect of exchange rate movements on real output growth in Nigeria for the period
1986 – 2010. The result revealed that there is no evidence of a strong direct relationship between changes in
exchange rate and output growth. Rather, Nigeria economic growth has been directly affected by monetary variables.
3. Methodology
3.1. Description and Source of Data
The study employed time series data on Exchange rate (proxied by Annual Average Exchange rate) and
Industrial sector Output (proxied by Industry share of Real Gross Domestic Product at 2010 constant base prices).
The rate of exchange alone, stable or otherwise cannot influence output of the Industrial sector. Other variables:
Interest rate, Inflation Rate, and Net Export play important role. Therefore, the models used in this study were
estimated using annual time series Nigeria data on some macro-economic indicators, which includes Industrial
sector share of Real Gross Domestic Products (GDPI); Exchange Rate (EXR); Interest Rate (INR), Inflation Rate
(INF) and Net Export (NE) for the period 1986 – 2015. The data were sourced from various issues of the Central
Bank of Nigeria Statistical Bulletin and National Bureau of Statistics (NBS). The main type of data used in this
study is secondary; from 1986 being the year the monetary authority shifted from fixed exchange rate regime to
flexible exchange rate regime to 2015.
Table-1. Description of Variables
S/N Variable Description
1 Real GDP(Ind.) The Industry Share of Real GDP at 2010 constant basic prices
2 Exchange Rate(EXG) Annual Average Official rate of Naira vis-à-vis the United State‘s Dollar
3 Inflation (INF) Inflation (INF) is measured as the annual percentage change in the Consumer
Price Index (CPI)
4 Interest Rate(INT) The prime lending rate
5 Net Export(NE) The difference between total Export and total Import
6. International Journal of Economics and Financial Research
150
3.2. Model Specification
To provide an empirical insight into the response of aggregate industrial output change in exchange rate in
Nigeria, the multivariate VECM specifications of the variables employed in the study were presented in five
endogenous variables using GDP (Industrial) , EXG, INF, INT. and NE, formulate as follows:
GDP (Ind)t = αo+ EXGt α1 + INFt α2 +INTα3+NEα4 +ut (7)
Where αo is the constant and α1, α2, α3 and α4 are coefficient to be estimated and ut is an error term. GDP (Ind) is the
Industry share of GDP, EXG is the Average Annual official exchange rate, INF is the consumer price index (yearly
change in prices), INT is the interest rate and NE is the Net Export.
The General Basic Model of VAR has the Following Form:
Xt= m + Dt + B1 Xt -1 + B2 X t -2 …. Bk Xt –k + εt (8)
Where Xt is a column vector of five (5) variables, that is Xt = [GDP, EXG, INF, INT, NE]' modelled in terms of its
past values. Bi are (k x k ) matrix of coefficients to be estimated, m is a k x 1 vector of constants (vector of
deterministic terms) , Dt is a vector of nonstochastic variables such as economic intervention and seasonal dummies
and εt is a vector of white noise processes.
The VECM Form:
Yt = Yt-1 + Yt-1 + …+ Yt-k+1 + m+Dt + εt (9)
Where
In the VECM model, attention focuses on the (n× r ) matrix of cointegrating vectors , which quantify the ―long-
run‟ relationships between variables in the system, and the (n× r) matrix of error-correction adjustment coefficients
, which load deviations from the equilibrium (i.e. yt-1) to Yt for correction. coefficients in (9) estimate the
short-run effects of shocks onYt, and therefore allow the short-run and long run responses to differ. The term Yt-1
is the only one that includes I(1) variables. Hence, Yt-1 must also be I(0); thus, it contains the cointegrating
relations. The jS ( j = 1, . . . , k − 1) are often referred to as the short-run parameters, and Yt- 1 is sometimes
called the long-run or long-term part.
4. Empirical Results and Discussion
4.1. Descriptive Statistics of Variables
Table 2 below summarizes the basic statistical features of the data under consideration including the mean, the
minimum and maximum values, standard deviation, skewness, kurtosis and the Jarque-Bera test for the data.
Table-2. Descriptive Statistics
Source: Author‘s computation, 2016 (Eview-9.0)
From table 2, there seems to be evidence of significant variations as shown by the huge difference between the
minimum and maximum values for the variables under consideration. The skewness of the data series indicates
normal distribution for all the variables except for Exchange rate that has an asymmetric or non-normal distribution
as the series relatively deviates from normality maintaining negative skewness. The kurtosis statistic equally shows
that GDP, Exchange rate and Net Export are platykurtic in nature while Inflation and Interest Rate on the other hand
are leptokurtic. The Jarque-Bera test is a test of normality. The null hypothesis for the test is that the series under
consideration is normally distributed. Based on our results using the P-values associated with the Jarque-Bera
statistics, all the variables, except Inflation are normally distributed.
7. International Journal of Economics and Financial Research
151
4.2. The Formal Pre-Tests
4. 2.1. Unit Root Test
Before using the data in the estimation of VAR/VECM, we needed to know time series properties of all the
variables. Accordingly, a series of unit root test, such as Augmented Dickey and Fuller (1981) and Phillip and Perron
(1988) tests were used to determine the order of integration for each series. The ADF unit root tests used Akaike
information criterion for lag order selection and PP unit root tests lag length were decided based on VAR/VECM
method to apply. The null hypothesis for ADF and PP is that an observable time series is not stationary (i.e. has unit
root).
Table-3a. ADF and PP Test at Levels
Variables Constant Constant & Trend
ADF Test PP Test ADF Test PP Test
t-Statistic Prob t-Statistic Prob t-Statistic Prob t-Statistic Prob
IND.GDP -1.742921 0.400 -1.854433 0.3480 -0.821019 0.9518 -1.128151 0.0960
EXG 0.4533 0.6538 -0.1968 0.8454 -2.4337 0.3559 -2.4583 0.3446
INF -2.38774 0.1557 -2.5577 0.1131 -2.9828 0.1577 -3.6466 0.1376
INT 1.5520 0.9980 -2.5450 0.1157 -3.4464 0.6647 -3.4475 0.064
NE -1.3301 0.6018 -1.2140 0.6545 -2.3733 0.3845 -2.2845 0.4286
Table-3b. ADF and PP Test at first difference
The Augmented Dickey Fuller (ADF) and Philip Peron (PP) tests shown in tables 3a & b above, established that
all the variables are non stationary (possess unit roots) at their levels since each reported p-statistics greater than
5% (0.05) significance level ; meaning accepting the Null Hypothesis. However, there was evidence that the
variables were stationary after first differencing at 5% significance level. It follows that the variables in the model
followed I (1) process.
4.2.2. Johansen Co integration Test
Table-4. Cointegration Test Results
Unrestricted Cointegration Rank Test (Maximum Eigenvalue)
Hypothesized Max-Eigen 0.05
No. of CE(s) Eigenvalue Statistic Critical Value Prob.**
None * 0.994839 136.9326 33.87687 0.0000
At most 1 * 0.941859 73.96704 27.58434 0.0000
At most 2 * 0.854728 50.15781 21.13162 0.0000
At most 3 0.374352 12.19314 14.26460 0.1036
At most 4 0.055086 1.473186 3.841466 0.2248
Max-eigenvalue test indicates 3 cointegrating eqn(s) at the 0.05 level
* denotes rejection of the hypothesis at the 0.05 level
**MacKinnon-Haug-Michelis (1999) p-values
Variables Constant Constant & Trend
ADF Test PP Test ADF Test PP Test
t-Statistic Prob t-Statistic Prob t-Statistic Prob t-Statistic Prob
IND.GDP -4.6834 0.0009 -4.6840 0.0009 -5.0367 0.0019 -5.3035 0.0019
EXG -5.3501 0.0002 -5.3672 0.0001 -5.2169 0.0012 -5.1707 0.0014
INF -2.6557 0.0969 -5.3383 0.0002 -3.4976 0.0524 -5.1971 0.0013
INT -5.6210 0.0000 -5.9177 0.0000 -6.1307 0.0001 -6.1724 0.0001
NE -5.6210 0.0000 -5.9177 0.0000 -5.5233 0.0006 -5.6770 0.0004
8. International Journal of Economics and Financial Research
152
The co-integration analysis was done using Johansen Co-integration Test. The variables are Ind. GDP, EXG,
INF, INT and NE are found co-integrated. Results in Table 4 suggested that the maximum eigenvalues and trace test
statistics indicate that the hypothesis of no cointegration among the variables is rejected at the 5% significance level.
The results established that there are three cointegrated equations. Hence, provide strong evidence of long-run
equilibrium relationship among the variables in the study. The existence of a long-term equilibrium relationship
among the variables necessitated and justified the use of the VECM.
4.3. Granger Causality Test
Table-5. Granger Causality Test Results
From the granger causality test in table 5 , it was indicated that the Exchange rate does not Granger cause GDP
but GDP does Granger cause Exchange rate since their P-value are 0.5040 and 0.0490 respectively, the null
hypothesis is accepted, uni-directional causality that IND.GDP cause Exchange rate. The causality test results
suggested a bi-directional causation between the INT and INF. This implies that changes in interest rate may cause
changes in Inflation rate and vice versa. Some of the other variables suggested unidirectional causality. Some of
which are GDP granger cause Interest rate. In addition, there is uni-directional causality that Exchange rate granger
cause Interest rate. In the other words, there is no ―reverse causation‖. Furthermore, there is independence, ―no
causation‖ between the Inflation rate and GDP, Net Export and Ind.GDP, Inflation rate and Exchange rate. This is a
clear indication of the relative positive or negative (as the case may be) impact exchange rate and other monetary
policy indicators played on the Industrial output growth.
Pairwise Granger Causality Tests
Date: 07/07/16 Time: 11:50
Sample: 1986 2015
Lags: 3
Null Hypothesis: Obs F-Statistic Prob.
_EXG_ does not Granger Cause IND_GDP 27 0.80847 0.5040
IND_GDP does not Granger Cause _EXG_ 2.98000 0.0490
_INF_ does not Granger Cause IND_GDP 27 0.23884 0.8682
IND_GDP does not Granger Cause _INF_ 0.38925 0.7620
_INT_ does not Granger Cause IND_GDP 27 0.30628 0.8205
IND_GDP does not Granger Cause _INT_ 3.59456 0.0317
NE does not Granger Cause IND_GDP 27 1.06705 0.3853
IND_GDP does not Granger Cause NE 2.11100 0.1309
_INF_ does not Granger Cause _EXG_ 27 0.77474 0.5218
_EXG_ does not Granger Cause _INF_ 2.71506 0.0720
_INT_ does not Granger Cause _EXG_ 27 2.87458 0.0618
_EXG_ does not Granger Cause _INT_ 3.46395 0.0356
NE does not Granger Cause _EXG_ 27 2.21477 0.1179
_EXG_ does not Granger Cause NE 1.53216 0.2370
_INT_ does not Granger Cause _INF_ 27 4.60685 0.0131
_INF_ does not Granger Cause _INT_ 3.39403 0.0380
NE does not Granger Cause _INF_ 27 0.43265 0.7319
_INF_ does not Granger Cause NE 0.12957 0.9414
NE does not Granger Cause _INT_ 27 2.88192 0.0614
_INT_ does not Granger Cause NE 0.40396 0.7517
9. International Journal of Economics and Financial Research
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4.4. Estimated VECM
4.4.1. Response of Industrial Output to Exchange Rate and Associated Variables
Figure-3. Industrial Output Shock to Exchange Rate and Other variables
Source: Author‘s computation, 2016 (Eview-9.0)
The Cholesky One S.D figures 3, shows that the response of Industrial output (GDP) to exchange rate
fluctuation is positive, more specifically at third year but increase subsequent to another positive level which
continued even after the tenth year‘s period. This implies that Exchange rate has a positive significant influence on
Industrial Output variables. Other variables have weak positive or negative influence on Industrial output. The
hypothesis states that Exchange rate variation has no significant effect on Industrial output in Nigeria, but based on
the Cholesky One S.D figures, the study rejected the null hypothesis and concluded that exchange rate actually have
a significant impact on Industrial Output growth in Nigeria. It is also obvious from the results that the response of
Output to other variables seems to be small in magnitude and not as significant as with the response of the output to
exchange rate, but all the same, they all confirmed positive or negative of the Industrial output to shock in the
economic fundamentals under study.
-500
0
500
1,000
1,500
2 4 6 8 10
Response of IND_GDP to _EXG_
Response to Cholesky One S.D.Innovations
-500
0
500
1,000
1,500
2 4 6 8 10
Response of IND_GDP to _INF_
Response to Cholesky One S.D.Innovations
-1,000
-500
0
500
1,000
1,500
1 2 3 4 5 6 7 8 9 10
Response of IND_GDP to NE
Response to Cholesky One S.D. Innovations
-1,000
-500
0
500
1,000
1,500
1 2 3 4 5 6 7 8 9 10
Response of IND_GDP to _INT_
Response to Cholesky One S.D. Innovations
10. International Journal of Economics and Financial Research
154
4.1.2. VEC Model Forecast Error Variance Decomposition Results
Table-6. Variance Decomposition of Industrial Output
Source: Author‘s computation, 2016 (Eview-9.0)
Forecast Error Variance Decomposition (FEVD) in table 6 above explains the variation in an endogenous
variable that is accounted for by its own structural shocks as well as those from other endogenous variables in the
system. From the table, industrial GDP output accounted for its contemporary variance from its own innovations
with 100 per cent in the first year, although it shows gradual decline from 100% in the first year to about 69 % in the
tenth term. In the later periods, there were some variation caused by Exchange rate, Interest rate, Inflation Rate and
Net Export. In later periods, these other variables increasingly contributed to variations of industrial output with
more than 1%. It is readily seen that about 14.5% of the variation in real GDP was attributed to Exchange rate in the
peak period, while interest rate, inflation and Net Export accounted for around 11.5%, 2.5% and 2.1% respectively.
Thus, we infer that the exchange rate is critical to the variation in industrial output.
5. Summary, Conclusion and Recommendations
This study investigated the response of aggregate industrial output to exchange rate fluctuation in Nigeria using
a battery of techniques- The study used Johansen cointegration test to see if there is present of long-run relation
among the variables under study. The results of which provide evidence of long-run equilibrium relationship among
the variables. Since, there is evidence of long-run relationship among the variables, a vector error correction (VEC)
model was employed and the dynamic correlations of the variables were captured by the analyses of impulse
response and variance decomposition. For Impulse response function, the response of Industrial output (GDP) to
exchange rate innovations was positive more specifically at second year but reduced subsequent to another positive
level which continued even after the tenth year‘s period. From the Forecast variance decomposition, the study
revealed that although the main source of variance in output are own shocks, innovation in the exchange rate
accounted for a higher proportion in the variation of industrial output than other variables (I.e Interest rate ,
inflation rate and Net Export). The granger causality test established a unidirectional relationship between Industrial
Output and Exchange rate; meaning a limited impact of exchange rate on Industrial Output. The findings in this
study conformed to Musa and Sanusi (2013). Jongbo (2014) Opaluwa et al. (2010). The study concluded that
exchange rate fluctuation has the potentials of causing significant changes in industrial output in Nigeria. In addition,
other economic fundamental like Inflation rate, Interest rate and trade balance also have potentials of causing
changed in Industrial Output.
In view of the above findings, this study recommended that:
(1) The effort of the government should be geared towards maintaining a stable and sustainable exchange rates,
since the stability of this could enhance industrial output. In other words, more policy attention should be
given to proper management of the exchange rate in Nigeria. In addition, efforts must be put in place to
ensure the existence of consistent monetary and fiscal policy.
(2) There is need to strengthen the link between agriculture and the industrial sector through local sourcing of
raw materials thereby reducing the reliance of the sector on import of inputs to a reasonable level. More
also, efforts should be put in place to check the importation of goods that could be locally produced so as to
improve the performance of the manufacturing sector.
(3) The Nigerian government should encourage the export promotion strategies in order to maintain a surplus
balance of trade and also conducive environment, adequate security, effective fiscal and monetary policy, as
well as infrastructural facilities should be provided so that foreign investors will be attracted to invest in
Nigeria.
Variance Decomposition of IND_GDP:
Period S.E. IND_GDP _EXG_ _INF_ _INT_ NE
1 1448.792 100.0000 0.000000 0.000000 0.000000 0.000000
2 2084.799 96.91386 2.634042 0.358933 0.017011 0.076153
3 2440.663 84.87195 10.20265 0.289402 3.409008 1.226990
4 2658.694 76.82081 13.48258 0.273174 7.785749 1.637687
5 2835.824 72.99606 14.03435 0.767526 10.07578 2.126294
6 3053.526 72.59850 13.31455 2.055752 10.06327 1.967931
7 3345.785 73.14846 12.30309 2.877158 9.718547 1.952753
8 3610.541 72.78434 12.49452 2.772993 10.07629 1.871868
9 3808.934 71.13893 13.45877 2.575762 10.78817 2.038370
10 3938.238 69.34237 14.51222 2.522069 11.50198 2.121362
11. International Journal of Economics and Financial Research
155
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Appendix-2. GDP and Exchange Rate Annual Growth Rate (1986-2015)
Year
Real
GDP
N’Billion
Ind. Real
GDP
N’Billion
Ind. GDP
Annual
Growth rate
(%)
GDP Annual
Growth rate
(%)
Industry GDP
% contr. to
Total GDP
Exchange Rate
(EXR)-N/US$ 1.00
1986 15,237.99 6,234.41 -2.3 -8.8 40.91 2.02
1987 15,263.93 6,135.33 -1.6 -10.8 40.20 4.02
1988 16,215.37 6,474.98 5.5 7.5 39.93 4.53
1989 17,294.68 7,100.76 9.7 6.5 41.05 7.39
1990 19,305.63 8,531.59 20.2 12.8 44.19 8.04
1991 19,199.06 8,094.63 -5.1 -0.6 42.16 9.91
1992 19,620.19 8,170.47 0.9 0.4 41.64 17.30
1993 19,927.99 8,122.08 -0.6 2.1 40.76 22.05
1994 19,979.12 7,917.40 -2.5 0.9 39.62 21.89
1995 20,353.20 7,985.54 0.9 -0.3 39.23 81.02
1996 21,177.92 8,450.31 5.8 5.0 39.90 81.25
1997 21,789.10 8,561.92 1.3 2.8 39.29 81.65
1998 22,332.87 8,515.83 -0.5 2.7 38.13 83.80
1999 22,449.41 8,031.92 -5.7 0.5 35.77 92.69
2000 23,688.28 8,808.65 9.7 5.3 37.18 102.11
2001 25,267.54 9,351.86 6.2 4.4 37.01 111.94
2002 28,957.71 9,061.67 -3.1 3.8 31.29 120.97
2003 31,709.44 10,893.91 20.2 10.4 34.36 129.36
2004 35,020.55 11,418.60 4.8 33.7 32.61 133.50
2005 37,474.95 11,674.74 2.2 3.4 31.15 132.15
2006 39,995.50 11,481.76 -1.7 8.2 28.71 128.65
2007 42,922.41 11,332.36 -1.3 6.8 26.40 125.83
2008 46,012.51 11,068.22 -2.3 6.3 24.05 118.57
2009 49,856.10 11,353.42 2.6 6.9 22.77 148.88
2010 54,612.26 12,033.20 6.0 7.8 22.03 150.30
2011 57,511.04 12,874.25 7.0 4.9 22.39 153.86
2012 59,929.89 13,028.05 1.2 4.3 21.73 157.50
2013 63,218.72 13,014.51 -0.1 5.4 20.59 157.31
2014 67,152.79 7,011.81 -46.1 6.3 10.44 158.55
2015 69,144.89 6,649.96 -5.2 3.0 9.61 199.05
Source: Constructed by researcher from National Bureau of Statistics (NBS) and CBN Statistical Bulletin (various
editions)
Appendix-3. GDP and Exchange Rate Periodic Growth Rate (1986-2015)
Source: Constructed by researcher from National Bureau of Statistics (NBS) and CBN Statistical Bulletin (various editions)
Period Industry GDP Average
Annual Growth rate (%)
Real GDP Average
Annual Growth rate
(%)
Exchange Rate
Growth Rate (%)
Industrial Sector’s
contribution to Total
GDP (%)
1986-1990 6.3 1.4 62.1 41.3
1991-1995 -1.3 0.5 79.0 40.7
1996-2000 2.1 3.3 4.8 38.1
2001-2005 6.1 11.1 5.4 33.3
2006-2010 0.7 7.2 3.2 24.8
2011-2015 -8.6 4.8 1.4 16.9
14. International Journal of Economics and Financial Research
158
Appendix-4. Generalized impulse response functions.
Source: Author‘s computation, 2016 (Eview-9.0)
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
1 2 3 4 5 6 7 8 9 10
IND_GDP _EXG_ _INF_
_INT_ NE
A cc umulated Res pons e of IND_GDP to Choles ky
One S.D. Innov ations
-120
-80
-40
0
40
80
1 2 3 4 5 6 7 8 9 10
IND_GDP _EXG_ _INF_
_INT_ NE
A c c umulated Res ponse of _EXG_ to Choles ky
One S.D. Innovations
-20
-10
0
10
20
30
40
50
1 2 3 4 5 6 7 8 9 10
IND_GDP _EXG_ _INF_
_INT_ NE
A cc umulated Res pons e of _INF_ to Choles ky
One S.D. Innov ations
-30
-20
-10
0
1
0
2
0
3
0
1 2 3 4 5 6 7 8 9 10
IND_GDP _EXG_ _INF_
_INT_ NE
A c c umulated Res pons e of _INT_ to Cholesky
One S.D. Innov ations
-
4,000
-
2,000
0
2,000
4,000
6,000
8,000
1 2 3 4 5 6 7 8 9 10
IND_GDP _EXG_ _INF_
_INT_ NE
A ccumulated Response of NE to Choles ky
One S.D. Innov ations