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 at 45%, due to challenges like poor infrastructure, high production costs, and low technology. Regression analysis indicates that inflation reduces capacity utilization while exchange rates, loans, and per capita income positively impact utilization.
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.
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.
Electricity crisis and manufacturing productivity in nigeria (1980 2008)Alexander Decker
This document summarizes a study that evaluated the impact of electricity crisis on manufacturing productivity in Nigeria from 1980-2008. The study found that:
1) Electricity generation during this period negatively impacted manufacturing productivity growth due to unnecessary government spending on non-productive sectors.
2) Capacity utilization had a positive relationship with manufacturing productivity, while government capital expenditure and electricity generation had negative relationships.
3) Inadequate and irregular electricity supply increased production costs and reduced manufacturing productivity in Nigeria.
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
Challenges Adversely Affecting the Performance of the Manufacturing Sector of...Dr. Amarjeet Singh
The manufacturing sector of Ghana is bedeviled with many challenges, both external and internal, ranging from poor regulatory environment to inadequate level of skilled labour. Manufacturing firms in Ghana were surveyed, using a sample size of 120, based on purposive sampling. The study was poised to determine those variables that were available and those that were not available in the firms and were a setback. In addition a rating scale was used to determine those that were more critical and could adversely affect the performance of the sector. The results revealed there were high rent costs (84.2%) and influx of foreign products (87.5%) as well as inadequate level of skilled labour (77.5). The study was also intended to determine which variable was critically challenging and its absence could affect the performance of the sector. Clearly, poor regulatory environment was ranked the highest on the part of external challenges while inadequate skilled labour was rank the highest on the part of internal challenges. It is therefore recommended that skills development should be the priority of manufacturing firms, with the aim of closing manufacturing skills gap. Further, the government should make conscious attempt to regulate the influx of foreign products into the country.
The document provides an overview of the construction and infrastructure industry in Kenya. It outlines the objective to conduct research on the construction market in Kenya and opportunities in the insurance sector. The methodology involves secondary research using sources like company websites, reports, and news publications. It then covers Kenya's geo-political and macroeconomic environment, key sectors, investment rationale, and segments of the construction market like office, retail, industrial, and residential.
Productivity Growth in Indian Manufacturing sectorSparsh Banga
This document summarizes research on productivity growth in the Indian manufacturing sector. It discusses various approaches to measuring total factor productivity (TFP), including index number, growth accounting, and econometric approaches. Empirical studies on TFP in Indian manufacturing are reviewed, finding mixed results on whether TFP growth accelerated or decelerated after economic reforms in 1991. While reforms had a positive impact, other factors like declining agriculture growth and lower capacity utilization in industry may have slowed TFP growth. The document aims to measure TFP in Indian manufacturing using growth accounting and analyze reasons for challenges in achieving desired results.
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.
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.
Electricity crisis and manufacturing productivity in nigeria (1980 2008)Alexander Decker
This document summarizes a study that evaluated the impact of electricity crisis on manufacturing productivity in Nigeria from 1980-2008. The study found that:
1) Electricity generation during this period negatively impacted manufacturing productivity growth due to unnecessary government spending on non-productive sectors.
2) Capacity utilization had a positive relationship with manufacturing productivity, while government capital expenditure and electricity generation had negative relationships.
3) Inadequate and irregular electricity supply increased production costs and reduced manufacturing productivity in Nigeria.
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
Challenges Adversely Affecting the Performance of the Manufacturing Sector of...Dr. Amarjeet Singh
The manufacturing sector of Ghana is bedeviled with many challenges, both external and internal, ranging from poor regulatory environment to inadequate level of skilled labour. Manufacturing firms in Ghana were surveyed, using a sample size of 120, based on purposive sampling. The study was poised to determine those variables that were available and those that were not available in the firms and were a setback. In addition a rating scale was used to determine those that were more critical and could adversely affect the performance of the sector. The results revealed there were high rent costs (84.2%) and influx of foreign products (87.5%) as well as inadequate level of skilled labour (77.5). The study was also intended to determine which variable was critically challenging and its absence could affect the performance of the sector. Clearly, poor regulatory environment was ranked the highest on the part of external challenges while inadequate skilled labour was rank the highest on the part of internal challenges. It is therefore recommended that skills development should be the priority of manufacturing firms, with the aim of closing manufacturing skills gap. Further, the government should make conscious attempt to regulate the influx of foreign products into the country.
The document provides an overview of the construction and infrastructure industry in Kenya. It outlines the objective to conduct research on the construction market in Kenya and opportunities in the insurance sector. The methodology involves secondary research using sources like company websites, reports, and news publications. It then covers Kenya's geo-political and macroeconomic environment, key sectors, investment rationale, and segments of the construction market like office, retail, industrial, and residential.
Productivity Growth in Indian Manufacturing sectorSparsh Banga
This document summarizes research on productivity growth in the Indian manufacturing sector. It discusses various approaches to measuring total factor productivity (TFP), including index number, growth accounting, and econometric approaches. Empirical studies on TFP in Indian manufacturing are reviewed, finding mixed results on whether TFP growth accelerated or decelerated after economic reforms in 1991. While reforms had a positive impact, other factors like declining agriculture growth and lower capacity utilization in industry may have slowed TFP growth. The document aims to measure TFP in Indian manufacturing using growth accounting and analyze reasons for challenges in achieving desired results.
GDP measures the value of goods and services produced in a country. India has one of the fastest growing economies in the world, with GDP growth of 9.4% in 2006-2007. The services sector contributes over half of India's GDP and grew at 10.7%, driven by industries like trade and finance. The industrial sector, led by manufacturing, contributes around a quarter of GDP and grew at 8.9%. Agriculture contributes about 17% of GDP but grew slower than other sectors at 2.6%, hampered by issues like uneven rainfall. GDP growth over the period 2003-2007 averaged 8.6% annually.
The document provides background on Nigeria's economic challenges since the 1980s oil market crash, including high exchange rates, unemployment, underutilized manufacturing capacity, and declining agricultural sector and living standards. It discusses how the manufacturing sector can help diversify the economy and generate jobs and exports. The study aims to evaluate the manufacturing sector's contribution to economic growth by analyzing its performance and limitations, and recommending policies to improve productivity and growth. It will cover 1980-2014 and assess factors like manufacturing production, capacity utilization, exchange rates, government spending, and GDP.
Structure of industries PPT MBA INDUSTRIAL MANAGEMENT Babasab Patil
The document discusses the structure and development of industries in India under various Five Year Plans since independence. It notes that at independence, India's industrial structure was imbalanced and underdeveloped. The Five Year Plans aimed to industrialize the economy by prioritizing the development of basic and heavy industries as well as infrastructure. Over time, the industrial sector grew in importance and diversified, though growth rates varied across plans. The role of the public sector in industrialization has also declined with increased privatization.
This document provides an overview of the Indian economy and trade dependencies course taught by Dr. Bhati Rakesh at Sinhgad Institute of Business Administration & Computer Application. The course covers 5 units: introduction to the Indian economy and alternative development strategies since 1991; planning and economic development; Indian industries; foreign trade and capital; and India's role in the global economy. Key topics discussed include trends in national income, growth, and economic structure since India's 1991 economic reforms, the country's shift from a regulated to liberalized economy, and strategies to increase India's national income level and growth rate through developing agriculture, industry, infrastructure, and raising investment.
11.growth of industrial production in selected indian manufacturing industriesAlexander Decker
This document analyzes the growth of industrial production in selected Indian manufacturing industries between 1979-2004 to determine if it was driven by productivity growth or input accumulation. The key findings are:
1) Output growth in industries like steel, aluminum, cement, fertilizer, chemicals, and paper was mainly driven by input accumulation rather than productivity growth.
2) The growth rate of total factor productivity declined in most industries, especially during the post-reforms period of 1991-2004.
3) Economic reforms in the 1990s may have contributed to the changing pattern from productivity-driven growth to input-accumulation driven growth in these key Indian manufacturing sectors.
Growth of industrial production in selected indian manufacturing industriesAlexander Decker
This document summarizes a research article that examines the sources of output growth (productivity growth vs. input accumulation) in selected Indian manufacturing industries from 1979-2004. The study finds that:
1) Output growth in the industries studied was mainly driven by inputs accumulation, while the contribution of productivity growth was minimal or negative.
2) The growth rate of total factor productivity declined over time, especially during the post-reforms period beginning in 1991.
3) The changing pattern of output growth may be due to economic liberalization policies undertaken in the 1990s.
An Empirical Investigation of Factors Affecting Construction Sector Labour Pr...inventionjournals
The construction industry plays a strategic role in developing countries like Zimbabwe. This research seeks to empirically determine the main factors affecting construction labour productivity in Zimbabwe. Questionnaires comprising of structured and unstructured questions were used to for data collection. The research employed heterogeneous sampling to select the target population, and fifty (50) questionnaires were completed and analyzed. Using a simple ordinal scale, based on a 5-point Likert Scale; contractors, consultants and professionals expressed their views on the relative importance of twenty-two (22) pre-selected factors on construction labour productivity. Data was analyzed using the Relative Importance Index (RII). The results show that late and or non-payment of wages and salaries, suitability and/or adequacy of capital, non-payment to suppliers, availability of experienced labour as well as education and training are amongst the top thirteen (13) most important factors impinging construction labour productivity in Zimbabwe. Timeous payment of salaries and wages as well as investment in staff training and development are amongst the recommended intervention strategies to improve construction labour productivity in Zimbabwe.
Effect of Foreign Exchange Rate Volatility on Industrial Productivity in Nige...ijtsrd
Effect of exchange rate volatility on industrial productivity has been a controversial debate among academia and experts. This study examines effect of exchange rate volatility on industrial productivity, many studies have mixed results on the direction of exchange rate volatility and the scope of the thesis covers 35years 1981 2015 , the pre and post Structural Adjustment Programme while primary and secondary data gathered from the Nigeria industrial sector by questionnaire and time series obtained from the Central Bank of Nigeria statistical bulletin, 2014 2016 were used. The data were estimated using descriptive statistical methods chi square and mean scores and Phillip Perron and Augmented Dickey Fuller used to determine the unit roots and non stationarity among the variables. ARDL and Bound test was applied to determine short and long run co integration among independent and dependent variables. Diagnostic and Normality test applied to test for stability. The F statistics is 159.3 and the R squared is 99.7 shown that variables are jointly significant and model a good fit. The Durbin Watson of 3.04 showed no serial correlation. The results shown that foreign exchange rate has a positive relationship with industrial performance, however, the exchange rate volatility crumbled industrial production as machinery and raw materials are imported for the industry productions, while bank lending rates, FDT, Inflation and PCI have negative coefficient. The ADRL and Bound test revealed a long run relationship among the variables at 5 significance level. The government should pursue currency appreciation as exporter of mono product and encourages non oil exports and discourage Nigerian cosmopolitan pattern of consumptions. Olaleye John Olatunde | Ojomolade Dele Jacob ""Effect of Foreign Exchange Rate Volatility on Industrial Productivity in Nigeria, 1981- 2015"" 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/ijtsrd22910.pdf
Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/22910/effect-of-foreign-exchange-rate-volatility-on-industrial-productivity-in-nigeria-1981--2015/olaleye-john-olatunde
This document discusses the future of industrialized India and opportunities for engineers. It notes that India has a large and growing population and economy, and is among the largest producers globally in several industries like steel, textiles, and chemicals. The budget for 2014-15 aims to promote initiatives like smart cities and increased FDI. This industrial growth will provide many opportunities for engineers to play a key role in improving manufacturing process efficiency, analyzing facility layouts and workflows, recommending methods to reduce waste and improve worker efficiency, and estimating production costs. The role of industrial engineers is important for maximizing efficiency and supporting company improvement goals.
This document discusses productivity, how it is measured, why it is important, and trends in Canada over recent decades. Productivity is a measure of economic output per unit of input, usually measured as GDP per hour worked. It is important because higher productivity leads to higher standards of living and competitiveness. While Canada saw strong productivity growth from 1961-1975, its growth has slowed since then, averaging 1.4% annually from 1982-1991. This weaker growth has contributed to Canada losing some competitive advantage internationally in recent years. However, some industries and sectors have maintained stronger productivity, and recent signs suggest productivity may be improving again.
A research paper prepared by me on the Manufacturing Sector In India. It contains a SWOT analysis and possible outcomes in the future for the industry.
The document discusses several key internal and external factors that influence a country's industrial pattern and development. Internally, factors include industrial policies that support certain sectors, competitive conditions, and availability of skilled labor and technology. Externally, factors include contingent events, taxation and public expenditures, and international trade policies. Government policies play an important role in promoting industries and technologies where the country has comparative advantages.
International Journal of Engineering Research and Development (IJERD)IJERD Editor
journal publishing, how to publish research paper, Call For research paper, international journal, publishing a paper, IJERD, journal of science and technology, how to get a research paper published, publishing a paper, publishing of journal, publishing of research paper, reserach and review articles, IJERD Journal, How to publish your research paper, publish research paper, open access engineering journal, Engineering journal, Mathemetics journal, Physics journal, Chemistry journal, Computer Engineering, Computer Science journal, how to submit your paper, peer reviw journal, indexed journal, reserach and review articles, engineering journal, www.ijerd.com, research journals,
yahoo journals, bing journals, International Journal of Engineering Research and Development, google journals, hard copy of journal
The Future of U.S. Manufacturing: A Change ManifestoCognizant
The document discusses factors that could lead to a resurgence of US manufacturing, including rising costs in China, the potential benefits of co-locating production and R&D, and the strengths of US manufacturing like productivity, innovation, and skilled workforce. It argues US manufacturing is well-positioned for growth if companies invest in new technologies and policymakers address issues like taxes and regulations.
The document discusses China's economic development and challenges with overreliance on investment and credit-driven growth. It notes that while investment drove significant GDP growth from 2000-2008, the impact of new loans on GDP growth declined from 2009-2011, suggesting diminishing returns. It argues that continuing to prop up growth through easy monetary policies will likely fail and could lead to asset bubbles or inflation. Instead, it advocates for China to shift toward an innovation-driven model of development to achieve more sustainable growth.
Ethiopia’s export performance with major trade partners a gravity model approachAlexander Decker
This document analyzes factors that determine Ethiopia's export flows to major trading partners using a gravity model approach. It examines both supply-side factors like a country's production capacity as well as demand-side factors like market access conditions. The study uses data from 1995-2010 for 14 importing countries and employs a random effects gravity model. The model results show that per capita GDP, population size, and distance between countries significantly impact Ethiopia's export levels, while the effects of Ethiopia's population size and bilateral exchange rates are insignificant or opposite of what was hypothesized.
India has experienced significant economic growth since independence, transitioning from a primarily agricultural economy to one with a growing services and industrial sector. However, it still faces challenges such as widespread poverty, inadequate infrastructure, and high fiscal deficits. Key economic indicators show GDP growth around 8-9% annually in recent years, but inflation and external debt are still of concern. Major industries include textiles, food processing, chemicals, cement, steel, software and mining. The future outlook is positive if India can maintain high growth, but challenges include rising global competition, developing infrastructure, improving education and skills training, and reducing social issues like poverty and corruption.
This document summarizes a study that examined factors affecting foreign direct investment (FDI) flows to Ethiopia from 1990 to 2011. The study used a multiple regression model to analyze the relationship between FDI inflows as a percentage of GDP (the dependent variable) and five independent variables: market size, trade openness, inflation rate, infrastructure, and human capital. Time series data from 1990 to 2011 on these variables was obtained from the World Bank and analyzed. The findings showed that trade openness and inflation rate had a significant impact on FDI flows to Ethiopia, while no clear relationship was found for market size, infrastructure, and human capital.
Effect of international trade on economic growth in kenyaAlexander Decker
This document analyzes the effect of international trade on economic growth in Kenya from 1960 to 2010. It uses a multiple linear regression model to examine the relationship between GDP growth rate and several independent variables including exchange rate, inflation, and final government consumption. The findings show that exchange rate had no significant effect on GDP growth, while inflation had a negative and significant effect. Final government consumption had a positive effect on GDP growth in Kenya. The study recommends policies to promote exports, maintain low inflation, and encourage government expenditure on development projects.
The growth and development of any nation is highly dependent on the level of infrastructure. Infrastructural decay has taken a big toll on the economic development of most Sub- Saharan African nations. This paper investigated the effect infrastructural decay on the growth of the manufacturing sector in Sub- Saharan Africa with particular reference to the Nigerian situation. The data necessary for this study were obtained from secondary sources. The results of unit root suggest that all the variables in the model are stationary. The ordinary least square regression with a coefficient of 0.92 revealed a strong positive relationship between the variables of interest. A co-integration test was performed on these variables to determine the long-run relationship between the variables. The results of causality tests suggest that electricity supply, transport infrastructure and inflation rate (the explanatory variables) jointly explain changes in the manufacturing sector performance. The result also reveals a one-way causation running from interest rate to manufacturing sector performance. The Johansen cointegration result reveals the existence of a common trend among the variables of interest. Electricity decay was found to have the greatest negative impact on the manufacturing sector’s financial performance and output followed by inflation and transportation. The government is therefore enjoined to continue the reform programmes across the infrastructural segments of the economy.
Macroeconomic Variables and Manufacturing Sector Output in Nigeriaijtsrd
Management of macroencomic variables has been noted as instrumental to a well performing manufacturing sector. This study thus examined the effect of macroencomic variables on the manufacturing sector in Nigeria within a liberalised economic era of 1986 to 2018. The Autoregressive Distributive Lag model was employed for data analysis. The results revealed that macroeconomic variables has 93 significant short run policy effect but no significant long run effects on manufacturing sector output in Nigeria. The endogenous dynamics of manufacturing sector previous year outputs exerted a significance influence on the macroeconomic variables long run relationship effect on current year. The explanatory variables suggested that money supply M2 , interest rate INTR and credit to private sector CPS exerted positive effects on manufacturing sector output at short term trends. The study thus posits that macroeconomic variables have varying levels of effects on the manufacturing sectors of Nigerian economy. The monetary authority should employ the monetary policy stance in a pattern that increases money supply in order to boost investment in manufacturing sector which would eventual bring about improved output to Nigeria. Dr. Loretta Anayo Ozuah "Macroeconomic Variables and Manufacturing Sector Output in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-2 , February 2021, URL: https://www.ijtsrd.com/papers/ijtsrd38420.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/38420/macroeconomic-variables-and-manufacturing-sector-output-in-nigeria/dr-loretta-anayo-ozuah
GDP measures the value of goods and services produced in a country. India has one of the fastest growing economies in the world, with GDP growth of 9.4% in 2006-2007. The services sector contributes over half of India's GDP and grew at 10.7%, driven by industries like trade and finance. The industrial sector, led by manufacturing, contributes around a quarter of GDP and grew at 8.9%. Agriculture contributes about 17% of GDP but grew slower than other sectors at 2.6%, hampered by issues like uneven rainfall. GDP growth over the period 2003-2007 averaged 8.6% annually.
The document provides background on Nigeria's economic challenges since the 1980s oil market crash, including high exchange rates, unemployment, underutilized manufacturing capacity, and declining agricultural sector and living standards. It discusses how the manufacturing sector can help diversify the economy and generate jobs and exports. The study aims to evaluate the manufacturing sector's contribution to economic growth by analyzing its performance and limitations, and recommending policies to improve productivity and growth. It will cover 1980-2014 and assess factors like manufacturing production, capacity utilization, exchange rates, government spending, and GDP.
Structure of industries PPT MBA INDUSTRIAL MANAGEMENT Babasab Patil
The document discusses the structure and development of industries in India under various Five Year Plans since independence. It notes that at independence, India's industrial structure was imbalanced and underdeveloped. The Five Year Plans aimed to industrialize the economy by prioritizing the development of basic and heavy industries as well as infrastructure. Over time, the industrial sector grew in importance and diversified, though growth rates varied across plans. The role of the public sector in industrialization has also declined with increased privatization.
This document provides an overview of the Indian economy and trade dependencies course taught by Dr. Bhati Rakesh at Sinhgad Institute of Business Administration & Computer Application. The course covers 5 units: introduction to the Indian economy and alternative development strategies since 1991; planning and economic development; Indian industries; foreign trade and capital; and India's role in the global economy. Key topics discussed include trends in national income, growth, and economic structure since India's 1991 economic reforms, the country's shift from a regulated to liberalized economy, and strategies to increase India's national income level and growth rate through developing agriculture, industry, infrastructure, and raising investment.
11.growth of industrial production in selected indian manufacturing industriesAlexander Decker
This document analyzes the growth of industrial production in selected Indian manufacturing industries between 1979-2004 to determine if it was driven by productivity growth or input accumulation. The key findings are:
1) Output growth in industries like steel, aluminum, cement, fertilizer, chemicals, and paper was mainly driven by input accumulation rather than productivity growth.
2) The growth rate of total factor productivity declined in most industries, especially during the post-reforms period of 1991-2004.
3) Economic reforms in the 1990s may have contributed to the changing pattern from productivity-driven growth to input-accumulation driven growth in these key Indian manufacturing sectors.
Growth of industrial production in selected indian manufacturing industriesAlexander Decker
This document summarizes a research article that examines the sources of output growth (productivity growth vs. input accumulation) in selected Indian manufacturing industries from 1979-2004. The study finds that:
1) Output growth in the industries studied was mainly driven by inputs accumulation, while the contribution of productivity growth was minimal or negative.
2) The growth rate of total factor productivity declined over time, especially during the post-reforms period beginning in 1991.
3) The changing pattern of output growth may be due to economic liberalization policies undertaken in the 1990s.
An Empirical Investigation of Factors Affecting Construction Sector Labour Pr...inventionjournals
The construction industry plays a strategic role in developing countries like Zimbabwe. This research seeks to empirically determine the main factors affecting construction labour productivity in Zimbabwe. Questionnaires comprising of structured and unstructured questions were used to for data collection. The research employed heterogeneous sampling to select the target population, and fifty (50) questionnaires were completed and analyzed. Using a simple ordinal scale, based on a 5-point Likert Scale; contractors, consultants and professionals expressed their views on the relative importance of twenty-two (22) pre-selected factors on construction labour productivity. Data was analyzed using the Relative Importance Index (RII). The results show that late and or non-payment of wages and salaries, suitability and/or adequacy of capital, non-payment to suppliers, availability of experienced labour as well as education and training are amongst the top thirteen (13) most important factors impinging construction labour productivity in Zimbabwe. Timeous payment of salaries and wages as well as investment in staff training and development are amongst the recommended intervention strategies to improve construction labour productivity in Zimbabwe.
Effect of Foreign Exchange Rate Volatility on Industrial Productivity in Nige...ijtsrd
Effect of exchange rate volatility on industrial productivity has been a controversial debate among academia and experts. This study examines effect of exchange rate volatility on industrial productivity, many studies have mixed results on the direction of exchange rate volatility and the scope of the thesis covers 35years 1981 2015 , the pre and post Structural Adjustment Programme while primary and secondary data gathered from the Nigeria industrial sector by questionnaire and time series obtained from the Central Bank of Nigeria statistical bulletin, 2014 2016 were used. The data were estimated using descriptive statistical methods chi square and mean scores and Phillip Perron and Augmented Dickey Fuller used to determine the unit roots and non stationarity among the variables. ARDL and Bound test was applied to determine short and long run co integration among independent and dependent variables. Diagnostic and Normality test applied to test for stability. The F statistics is 159.3 and the R squared is 99.7 shown that variables are jointly significant and model a good fit. The Durbin Watson of 3.04 showed no serial correlation. The results shown that foreign exchange rate has a positive relationship with industrial performance, however, the exchange rate volatility crumbled industrial production as machinery and raw materials are imported for the industry productions, while bank lending rates, FDT, Inflation and PCI have negative coefficient. The ADRL and Bound test revealed a long run relationship among the variables at 5 significance level. The government should pursue currency appreciation as exporter of mono product and encourages non oil exports and discourage Nigerian cosmopolitan pattern of consumptions. Olaleye John Olatunde | Ojomolade Dele Jacob ""Effect of Foreign Exchange Rate Volatility on Industrial Productivity in Nigeria, 1981- 2015"" 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/ijtsrd22910.pdf
Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/22910/effect-of-foreign-exchange-rate-volatility-on-industrial-productivity-in-nigeria-1981--2015/olaleye-john-olatunde
This document discusses the future of industrialized India and opportunities for engineers. It notes that India has a large and growing population and economy, and is among the largest producers globally in several industries like steel, textiles, and chemicals. The budget for 2014-15 aims to promote initiatives like smart cities and increased FDI. This industrial growth will provide many opportunities for engineers to play a key role in improving manufacturing process efficiency, analyzing facility layouts and workflows, recommending methods to reduce waste and improve worker efficiency, and estimating production costs. The role of industrial engineers is important for maximizing efficiency and supporting company improvement goals.
This document discusses productivity, how it is measured, why it is important, and trends in Canada over recent decades. Productivity is a measure of economic output per unit of input, usually measured as GDP per hour worked. It is important because higher productivity leads to higher standards of living and competitiveness. While Canada saw strong productivity growth from 1961-1975, its growth has slowed since then, averaging 1.4% annually from 1982-1991. This weaker growth has contributed to Canada losing some competitive advantage internationally in recent years. However, some industries and sectors have maintained stronger productivity, and recent signs suggest productivity may be improving again.
A research paper prepared by me on the Manufacturing Sector In India. It contains a SWOT analysis and possible outcomes in the future for the industry.
The document discusses several key internal and external factors that influence a country's industrial pattern and development. Internally, factors include industrial policies that support certain sectors, competitive conditions, and availability of skilled labor and technology. Externally, factors include contingent events, taxation and public expenditures, and international trade policies. Government policies play an important role in promoting industries and technologies where the country has comparative advantages.
International Journal of Engineering Research and Development (IJERD)IJERD Editor
journal publishing, how to publish research paper, Call For research paper, international journal, publishing a paper, IJERD, journal of science and technology, how to get a research paper published, publishing a paper, publishing of journal, publishing of research paper, reserach and review articles, IJERD Journal, How to publish your research paper, publish research paper, open access engineering journal, Engineering journal, Mathemetics journal, Physics journal, Chemistry journal, Computer Engineering, Computer Science journal, how to submit your paper, peer reviw journal, indexed journal, reserach and review articles, engineering journal, www.ijerd.com, research journals,
yahoo journals, bing journals, International Journal of Engineering Research and Development, google journals, hard copy of journal
The Future of U.S. Manufacturing: A Change ManifestoCognizant
The document discusses factors that could lead to a resurgence of US manufacturing, including rising costs in China, the potential benefits of co-locating production and R&D, and the strengths of US manufacturing like productivity, innovation, and skilled workforce. It argues US manufacturing is well-positioned for growth if companies invest in new technologies and policymakers address issues like taxes and regulations.
The document discusses China's economic development and challenges with overreliance on investment and credit-driven growth. It notes that while investment drove significant GDP growth from 2000-2008, the impact of new loans on GDP growth declined from 2009-2011, suggesting diminishing returns. It argues that continuing to prop up growth through easy monetary policies will likely fail and could lead to asset bubbles or inflation. Instead, it advocates for China to shift toward an innovation-driven model of development to achieve more sustainable growth.
Ethiopia’s export performance with major trade partners a gravity model approachAlexander Decker
This document analyzes factors that determine Ethiopia's export flows to major trading partners using a gravity model approach. It examines both supply-side factors like a country's production capacity as well as demand-side factors like market access conditions. The study uses data from 1995-2010 for 14 importing countries and employs a random effects gravity model. The model results show that per capita GDP, population size, and distance between countries significantly impact Ethiopia's export levels, while the effects of Ethiopia's population size and bilateral exchange rates are insignificant or opposite of what was hypothesized.
India has experienced significant economic growth since independence, transitioning from a primarily agricultural economy to one with a growing services and industrial sector. However, it still faces challenges such as widespread poverty, inadequate infrastructure, and high fiscal deficits. Key economic indicators show GDP growth around 8-9% annually in recent years, but inflation and external debt are still of concern. Major industries include textiles, food processing, chemicals, cement, steel, software and mining. The future outlook is positive if India can maintain high growth, but challenges include rising global competition, developing infrastructure, improving education and skills training, and reducing social issues like poverty and corruption.
This document summarizes a study that examined factors affecting foreign direct investment (FDI) flows to Ethiopia from 1990 to 2011. The study used a multiple regression model to analyze the relationship between FDI inflows as a percentage of GDP (the dependent variable) and five independent variables: market size, trade openness, inflation rate, infrastructure, and human capital. Time series data from 1990 to 2011 on these variables was obtained from the World Bank and analyzed. The findings showed that trade openness and inflation rate had a significant impact on FDI flows to Ethiopia, while no clear relationship was found for market size, infrastructure, and human capital.
Effect of international trade on economic growth in kenyaAlexander Decker
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The growth and development of any nation is highly dependent on the level of infrastructure. Infrastructural decay has taken a big toll on the economic development of most Sub- Saharan African nations. This paper investigated the effect infrastructural decay on the growth of the manufacturing sector in Sub- Saharan Africa with particular reference to the Nigerian situation. The data necessary for this study were obtained from secondary sources. The results of unit root suggest that all the variables in the model are stationary. The ordinary least square regression with a coefficient of 0.92 revealed a strong positive relationship between the variables of interest. A co-integration test was performed on these variables to determine the long-run relationship between the variables. The results of causality tests suggest that electricity supply, transport infrastructure and inflation rate (the explanatory variables) jointly explain changes in the manufacturing sector performance. The result also reveals a one-way causation running from interest rate to manufacturing sector performance. The Johansen cointegration result reveals the existence of a common trend among the variables of interest. Electricity decay was found to have the greatest negative impact on the manufacturing sector’s financial performance and output followed by inflation and transportation. The government is therefore enjoined to continue the reform programmes across the infrastructural segments of the economy.
Macroeconomic Variables and Manufacturing Sector Output in Nigeriaijtsrd
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conclusion, the study recommended that exchange rate should continue to be deregulated and closely monitored
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Ethiopia’s Manufacturing Industry Opportunities, Challenges and Way Forward: ...CrimsonpublishersNTNF
This document provides an overview of Ethiopia's manufacturing industry, including its opportunities, challenges, and way forward. Some key points:
- Ethiopia has experienced rapid economic growth in recent decades, but manufacturing makes up a small portion of GDP and is underdeveloped compared to other sectors.
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manufacturing industries in Nigeria between 1980 and 2012. The variables in the model include, manufacturing
productivity index (as dependent variable) while electricity generation, capacity utilization rate, government
capital expenditure on infrastructures and exchange rate (represent the explanatory variables). The study
employed the ordinary least square multiple regression to analyze the time series data between 1980 and 2012.
The result of the study shows that electricity generation and supply in Nigeria under the viewed periods
impacted positively on the manufacturing productivity growth, but the coefficient is very low due to inadequate
and irregular supply of electricity especially to manufacturing subsector in the economy resulting from
government’s unnecessary spending on non-economic and unproductive sectors. In view of the findings, the
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allocated for the development of the electricity subsector are prudently utilized, and to ensure that the ongoing
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The Nigerian economy is projected to grow at 7.98% in 2011, up slightly from 7.85% growth in 2010. This growth will be driven by the non-oil sector expanding at 8.84% compared to 8.49% in 2010, powered by continued strong growth in wholesale/retail trade, finance/insurance, telecommunications, and construction. The oil sector is expected to see stable growth of 3.40% as peace in the Niger Delta region continues supporting oil production. Risks include adverse effects of global warming on agriculture and potential political instability surrounding elections.
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economic development of the Nigeria using secondary data from 1981 – 2012. A multiple regression approach
was used for the estimation. To determine the stability of the time series data used in the study, Augmented
Dickey–Fuller (ADF) and Philips–Perron (pp) unit root tests were adopted. The empirical results show
cointegration relations among Real GDP per capita (RGDPP), Agricultural contribution to RGDPP (ARG),
Industrial contribution to RGDPP (IND), Interest rate (INT) and Inflation rate (IFL) in the period under
investigation. Agricultural and industrial contributions to RGDPP are significant variables explaining
economic development in Nigeria. The overall result of the analysis indicates that these sectors have significant
positive effect on economic development of Nigeria both in the short-run and in the long-run. This research
therefore suggest that there is need for government and the private investors to focus their attention on these
sectors to boost the economy of the nation and efforts must be made to diversified the economy and focus should
be shifted away from export of crude oil only and more effort should be concentrated on agricultural and
industrial development. This would translate to meaningful development in these sectors which will trickle down
to create employment opportunities, enhance productivity and increase agricultural production for exports.
The petroleum industry in Nigeria is the largest industry and mean generator of Gross Domestic product (GDP) in the West African Nation. Inspite of the huge financial investment made by the Nigerian government in the oil and gas industry of the economy, it has not resulted in significant benefits for most Nigerians.
http://bonnylightcrudeoil.org
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Similar to The performance of manufacturing sector and utilization capacity in nigeria (20)
Economic globalization its impact on the growth of non oil supply in nigeria
The performance of manufacturing sector and utilization capacity in nigeria
1. NAME: JOLAYEMI OLAWALE SHERIF
MATRIC NO: 0927EC050
RESEARCHTOPIC: THE PERFORMANCE OF
MANUFACTURING SECTOR AND UTILISATION
CAPACITY IN NIGERIA
COURSE TITTLE: RESEARCH METHODS IN
ECONOMICS
LEVEL: 300LEVEL
DEPARMENT: ECONOMIC DEPARTMENT
LECTURER IN CHARGE: MR. OLALEKAN SALIU
1
2. THE PERFORMANCE OF MANUFACTURING SECTOR AND UTILIZATION
CAPACITY IN NIGERIA
Abstract
The study attempted to evaluates the performance of the manufacturing sector capacity
utilisation in Nigeria. The objectives of the study are to assess the capacity utilisation of
manufacturing sector in Nigeria and identify factors which influence capacity utilisation. The
secondary data used for the study cover 1985 – 2009.the sources for this data are statistical
bulletin. Annual report and statement account of account from federal office of statistics and
Central Bank of Nigeria. The data were analyzed using Ordinary least square method (OLSM) of
multiple regression models. The major factors that influences the level of capacity utilization are
inflation rate, exchange rate, interest rate, loan and advances, per capital income, electricity etc.
based on the finding that government should concentrate on macro economics stability that
relative low are of inflation. Government should give relief to manufacturer and improve
infrastructure to restore the glory of the nations manufacturing sector, and government should
adopt trade restriction on imported goods that are locally produced. The result showed that the
coefficient of determination R2 explains about 62 percent of the total variation in the capacity
utilization.
Introduction
Capacity utilization refers to the extent to which an enterprise or a nation actually uses its
installed productive capacity. thus it refer to the relationship between actual output produced and
potential output that could be produced with installed equipment, if the capacity was fully used,
one of the most used definitions of capacity utilization rate is that, the ratio of actual output to
the potential output. But the potential output can be defined at least two different ways. One is
the engineering or technical approach according to which potential output represents the
maximum amount of output that can be produced in the short-run with the existent stock of
capital (Nelson, 1989, p.273).
Johanson, (1968) defined capacity utilization as the ratio between the actual output of firms to
the maximum that could be produced per unit of time with existing plant and equipment. The
economics approach, on the other hand, defines the potential output as being the optimum level
of output from the economic point of view.
Before independence, agricultural production dominated Nigerian economy and accounted for
the major share of its foreign earnings. Early efforts in the manufacturing sector were oriented
towards the adoption of an import substitution strategy in which light industry and assembly
related manufacturing ventures were embarked upon by the former trading companies.
2
3. However, since the late 1960s, the Nigerian economy has been based mainly on the petroleum
industry. In the 1970s a series of increases in the international oil price generated substantial
windfall revenues for the government. It soon became apparent that these oil price shocks were,
at best, a mixed blessing. Like many other African countries, Nigeria early independence years
had seen an industrial strategy that relied heavily on import substitution.
According to the 2010 annual report of the Manufacturers Association of Nigeria, (MAN)
presented during the 39th Annual General Meeting of the association, the Nigerian
manufacturing sector only contributed 4.1 percent to the 2010 GDP, compared to 4.21 in 2009.
The decline also manifested in the capacity utilisation of industries in the country. According to
the report, average manufacturing capacity utilisation dropped from 47 percent in 2009 to 45 per
cent in 2010. Production output declined from N183.8 billion in the first half of 2009 to N165.7
billion in the same period of 2010. Investment profile in the first half of 2010 had a sharp decline
from N1 trillion in the first half of 2009 to N360 billion in the corresponding period of 2010.
Employment figures in the first half of 2010 dropped from 998,086 in January – June 2009 to
996,395 in the corresponding period of 2010. Business unplanned inventory increased from
N5.15 billion in the first half of 2009 to N11.4 billion in the same period of 2010.
The reason for their poor performance of the sector was as a result of the harsh economic
environment. Some of the challenges that led to the harsh economic environment are: acute state
of infrastructure deficiency, especially energy, general insecurity and perceived threat to political
and economic stability, smuggling and dumping of cheap and substandard goods which usually
suffocate local manufactured products, high cost of funds and inadequacy of long-term loan
windows to support long-gestation investments; multiple taxation which is threatening the
survival and growth of business in the country, weak demand as a result of low purchasing
power, among others.(MAN)
Failure of the sector since independence has been quite remarkable. Successful governments
over the years, realizing the potentials of the sector have put in place policies and established
institution to aid the development of the sector. In 1986 structural adjustment programme (SAP)
was initiated to stimulate domestic production, SAP brought with it escalation in exchange rate
resulting in high cost of raw materials and spare parts. The SAP programme ended up being a
failure. The harsh economic situation triggered a chain reaction, such as high cost of production,
scarcity of raw materials and spare parts and huge inventory of unsold goods due to low
purchasing power. All these factors impacted negatively on capacity utilization.
(Banjoko 2002).
Current governmental programmed aimed at reversing the economic trend are National
economic empowerment and development (NEEDS) and vision 2020, which according to the
proponents will put Nigeria among the first twenty (20) developed economies by the year 2020.
It is against this background that it becomes imperative to access the effects of power supply and
some macroeconomic variables on capacity utilization of the Nigerian manufacturing industry.
3
4. OBJECTIVE OF THE STUDY
The aim of this paper is to appraise the performance of manufacturing sector and capacity
utilization in Nigeria between 1985-2009. Therefore the specific objectives of this paper are as
follows:
to assess the capacity utilization in manufacturing sector in Nigeria and indentify the
factors which influence capacity utilization
Identify lingering problems of the manufacturing sector
LITERATURE REVIEW
A lot of research have been carried out which identified several variables influencing capacity
utilization. Mojekwu and iwuji (2011, p.157-163) identified that power supply had positive and
significant impact on capacity utilization while inflation rate and interest rate had negative
impact on capacity utilization.
Eniola (2009) reported that Exchange rate, Inflation rate, Imports Federal capital expenditure,
foreign direct investment (FDI) and Real loans and advances accounted for 50 percent variation
in capacity utilization. Out of the six variables only inflation rate had a negative impact on
capacity utilization while the other five had positive impact. The finding also revealed that there
was a very strong positive and significant relationship between imported manufactures and
capacity utilization, showing that Nigeria is highly important dependent. From the study 1percent
change in imported manufactures resulted in 18.33 percent increase in capacity utilization,
indicating that Nigeria is highly important dependent.
According to Oladokun (1979), the proportion of labour employed in manufacturing has slowed
down greatly. This may be due to the under-utilization of capacity. In the manufacturing
industry, the capacity utilization in 1980 was 70.1 and by 2000, it was below 35%.
Awujola (2004) suggested that high productivity in the Nigerian manufacturing industry is
necessary conditions for the sector's recovery, achieving competitiveness, boosting GDP and
uplifting the standards of living of the people, require to attacks the problems of low level of
technology, low level of capacity utilization rate, low investments, high cost of production,
inflation and poor infrastructure. The capacity utilization and productivity remain very low
compared with other African manufacturing firms. In most Africa countries, performance in this
sector has been poor (UNIDO, 2002, p.6).
Omobowale (2010) revealed a number of problems confronting these local industries were
recorded. These include erratic power supply, cost of raw materials, level of automation, noise
pollution, occupational hazards, instability in government policies, marketability and a general
bias for machines fabricated locally.
Kayode (1987), made us to believe that the industrial sector and in particular, the manufacturing
sub-sector is the heart of any economy. He went further to confirm that faulty or poor industrial
development policies have long been recognized as major factors that adversely affect the well-
being and socioeconomic improvement of the people in developing countries. He argued that
such policies are the major contributing factors to low value added and low economic growth.
4
5. Obasi (2000), showed that the manufacturing sector is typically the most dynamic component of
the industrial sector and the degree of manufacturing is a measure of the extent to which the
other components of the industrial sector.
Söderbom and Francis (2002) the most frequently cited number-one problem for the firms is
physical infrastructure, followed by access to credit, insufficient demand, cost of imported raw
materials and lack of skilled labour.
Uzaoga (1981) also threw more light on the low performance of the manufacturing sector in
Nigeria. He made us to believe that Nigeria being a colony of Britain had to specialize on the
production of raw materials while Britain serves as the main supplier of manufactured goods.
According to him, this unfortunate pattern of investment promoted the theory based on a static
scheme of comparative advantage whereby diverting the Nigerian economy into activities that
offered little opportunity for technical progress. The few industries established depended on
foreign inputs. All these distortions according to him affected the performance of the industrial
sector in terms of its contribution to the gross domestic product, employment generation,
capacity utilization; export and value added which are indices for measuring the performance of
the manufacturing sub-sector.
FACTOR THAT CONSTITUTE TO POOR PERFORMANCES OF MANUFACTURING
SECTOR IN NIGERIA
The Manufacturing sector is also crucial for employment generation, wealth creation and raising
the quality of life of Nigerians. However, the sector remains weak due to some of challenges
including the poor state of the nation’s infrastructure which imposes high cost of production,
Weak technological support and low levels of innovation which lead to production of low quality
products.
Low Level of Technology: This is perhaps the greatest obstacle constraining productivity in
Nigeria as developments in technology and innovations are the primary forces propelling
industrialization today. Due to frequent breakdown reduction the capacity utilization rates, Low
technology is responsible for the inability of local industry to produce capital goods such as raw
materials, spare parts and machinery.
Poor Performing Infrastructure: Poor performance of infrastructural facilities, characterized
by frequent disruption in electric power and water supplies and high cost of transportation
systems, is a major constraint on productivity. As firms have to invest huge capital to provide
alternative infrastructural facilities to run their businesses, enterprises are forced to carry high
cost structure which reduces efficiency and results in loss of competitiveness for their products
Policy instability: Investment in manufacturing requires long range planning; consequently
stable and consistent macroeconomic policies are a pre-requisite for high performance in the
sector. However the increasing policy inconsistency resulting in instability in the macro-
economic environment, affects the corporate planning adversely.
5
6. Low Investments: Lack of funds has made it difficult for firms to make Investments in modern
machines, information technology and human resources development which are critical in
reducing production costs, raising productivity and improving competitiveness. Due to financial
constraints, industries in Nigeria are unable to acquire modern technologies. Consequently, the
equipment frequently breakdown and this reduces capacity utilization rates.
High Cost of Production: Since the introduction of SAP, high and increasing cost of production
has been recorded by most business organizations as a major constraint on their operations (CBN
Business Surveys). Increased cost, traced largely to poor performing infrastructural facilities,
high interest and exchange rates, has resulted into increased unit price of manufactures, low
effective demand for goods, liquidity squeeze and fallen capacity utilization rates.
Inflation: which can be described as persistent increase in the general price level constitutes a
disincentive to saving for future use and thereby retards investments and growth. It also
encourages speculative activities and diverts resources from productive ventures.
Lack of funding: Funding challenges have made it difficult for manufacturing firms to invest in
modern machines, Information Technology and human resources development, which are critical
to reducing production costs, raising productivity. High interest rates and the reluctance on the
part of financial institutions to comply with laid down lending guidelines tend to frustrate
corporate investment and fail to ensure protection and growth of local industries.
The chart below shows the sectoral contributions to the GDP:
Nigeria’s GDP by sector 2008 (per cent
NAME OF SECTOR PERCENTAGE
CONTRIBUTE TO GDP
Whole sale, Hotel and Restaurant 18%
Crude petroleum and Natural Gas 41%
Building and construction 2%
Manufacturing 4%
Agriculture 18%
Other service 17%
Sources: Central Bank of Nigeria Bulletin 2009
percentage whole sales, Hotel
and Restaurants
Crude petroleum
and Natural gas
Building and
construction
Manufacturing
Agricultural
other services
6
7. The contribution of the industrial sector to the GDP in Nigeria is further compared with those of
selected countries to further emphasize the poor performance of the sector.
Nigeria’s manufacturing as percentage of GDP and those of Selected Countries
2004-2007.
Period Brazil China Egypt India Malaysia Nigeria Singapore Canada USA
2004 23 41 18 16 30 3.68 27 18 13
2005 23 42 17 16 29 3.79 27 18 13
2006 23 41 17 16 29 3.91 27 18 13
2007 23 43 17 16 29 4.03 27 18 13
Source National Bureau of Statistics 2009
In terms of capacity utilization, the capacity utilization in the manufacturing sector that was 73.3
per cent in 1984 fell to 54.3per cent by 2009.
Methodology
Secondary data were collected to determine capacity utilization in the Nigerian manufacturing
sector. Secondary data were collected form Central Bank of Nigeria publication, journals,
articles etc.
The paper employed ordinary least square method (OLS) of multiple regression analysis. This is
to establish the relationship between the capacity utilization as dependent variable and variables
that affect capacity utilization in the manufacturing sector, namely inflation rate, exchange rate,
interest rate, loan and advance, per capital to real GDP and electricity generation as independent
variables.
Models specification
The model used to explain manufacturing capacity utilization in Nigeria is seen below: this
model was borrowed from the literature reviewed and modified
Y = b0 + b1x1 + b2x2 + b3x4 + b5x5 + b6x6 + µ1
Where: Y = capacity utilization
Bo = intercept
X1 = inflation
X2 = exchange rate
7
8. X3 = interest rate
X4 = loan and advance
X5 = per capital at GDP
X6 = electricity generation
µ1 = error term
Discussion and interpretation of the results
Results of the regression model
Y = 41.9 – 0.04X1 + 0.10X2 – 0.09X3 + 7.48X4 + 9.54X5 – 0.01X6
R2 = 0.62
F = 4.82
Where X1 = inflation
X2 = exchange rate
X3 = interest rate
X4 = per capital at GDP
X5 = electricity generation
X6 = electricity generation
Y = capacity utilization
From the estimation equation, the R2 which is the coefficient of determination explains 62 per
cent of the total variation on the capacity utilization in the manufacturing sector as reflected in
the above results meaning that the regression line give a good fit to the observed data.
On the coefficients of the variables, X1 (inflation rate) is statistically significant and it has an
inverse relationship with the capacity utilization in the manufacturing sector. This means that
high inflation reduced, capacity utilization also increase while, increase in inflation rate lead to
low capacity utilization.
On the other hand, X2 (exchange rate) has a direct or positive relationship with capacity
utilization in manufacturing sector, this means that deregulation of the exchange rate policy of
the government really favoured the manufacturers to have favoured capacity utilization in this
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9. sector, availability of foreign exchange to manufacturing sector improves capacity utilization
hence; shortage of foreign exchange reduced capacity utilization in this sector.
The coefficient of interest rate X3 showed a negative relationship. This means that if interest rate
is reduced, productivity will increase, as many manufacturers we like to borrow and therefore
capacity utilization will also increase. On the other hand, if the interest rate is increase,
productivity will reduce and capacity utilization in manufacturing sector will also reduce because
the manufacturers are discouraged to borrow.
The coefficient of loan and advances X4 the relationship between capacity utilization and this
variable is positive, meaning that there is positive correlation between variable. If the
commercial bank makes the loan available at minimum interest rate has a positive impact in the
capacity utilization of the manufacturing sector that will increase their productivity
The coefficient of per capital X5 showed direct relationship with capacity utilization (positively
related). The implication is that, as real income increased, demand also increases. There will be
effective demand. The implication is that as purchasing power increased, standard of living
increased.
Finally, the relationship between capacity utilization and electricity generation indicated direct
relationship. The negative sign show that as power generation X6 reduced, manufacturer
productivity also reduced. Therefore low power generation reduced capacity utilization.
This result is in line with Awojola (2004), Mojekwu and Iwuji (2011) which show that, one of
the constraints of capacity utilization of the manufacturing sector is poor performance of
infrastructure such as road, transport, water, electricity etc.
CONCLUSION AND RECOMMENDATION
The sector remains weak due to some of challenges including the poor state of the nation’s
infrastructure which imposes high cost of production, Weak technological support and low levels
of innovation which lead to production of low quality products, lack of funding .To ensure
sustained growth in the manufacturing sector.
Recommendation and suggested as follows:
Government should give relief to manufacturer and improve infrastructure to restore the glory of
the manufacturing sector.
The manufacture sector must free from multiple taxes and levies in order to encourage
production
Aggregate demand of individuals should be raised to eliminate insufficient demand by increasing
the purchasing power of the individuals in Nigeria
Therefore, all the above problems need to be addressed urgently to put the economy back on the
path of growth.
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10. References:
Abayomi, A. (2010) “An appraisal of performance of the manufacturing sector and capacity
utilization in Nigeria”
Department of banking and fiancé university of Abuja Vol.2 p 96-105
Adenekan, S. (2010). “Low Capacity Utilisation, Bane of the Nigerian Manufacturing Sector”
[Online] Available: http://www.punchng.com/Articl.aspx?theartic=Art201001072339196.
(April 8, 2010)
Ajayi, D. D., “Recent trends and patterns in Nigeria’s industrial Development”
Development of social science Research in Africa, Vol. XXXII, N. 2 p139- 155
Loto, M. A.(2012) “Global economic downward and the manufacturing sector performance in
the Nigeria economy”
Emerging Trends in Economics and Management Sciences journal vol. 3 p38 -45
Malik, M; & Teal, F; and Baptist, S. (2006), “The Performance of Nigerian Manufacturing
Firms: Report on the Nigerian Manufacturing Enterprise Survey 2001”
UK: Centre for the Study of African Economies University of Oxford.
Mojekwu, J. N. and Iwuji, I. I. (2011),“factors affecting capacity utilization Decision in Nigeria”
Canadian centre of science and Education. Vol. 5, p157-163
Soderbom, M; & teal, F. (2002). “The Performance of Nigerian Manufacturing Firms: Report on
the Nigerian Manufacturing Enterprise Survey 2001”
UK: Centre for the Study of African Economies University of Oxford.
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