This paper examined the relationship between manufacturing output and economic growth using Nigeria's data set for empirical testing. The study adopts cointegration technique, error correction mechanism and granger causality test to investigate the long run, short run dynamics and causal relationship between manufacturing output and economic growth. The key variables employed in the estimation are technology, domestic investment, lending rate to private investors, foreign direct investment inflows, capacity utilization rate, foreign exchange rate and price movement. The cointegration tests suggests that long run relationship exists among the variables employed in the estimation. Findings from the long run and short run estimation shows that gross fixed capital formation, capacity utilization rate, foreign direct investment inflows, price movement, technology and lending rate to private investors are credible determinants of manufacturing output in Nigeria. The causality test suggests a unidirectional relationship between economic growth and observed manufacturing output. Policy direction is instructive towards achieving sustainable industrial growth and development.
This study contributes to the existing literature by pooling together all the credible variables identified as determinants of manufacturing output and also establish the relationship between economic growth and manufacturing output in Nigeria. The study uses new econometrics techniques to analyze the variables used in the model and also originates new formula for generating observed manufacturing output in Nigeria.
Manufacturing output, Economic growth, Cointegration, Error correction, Granger causality, Nigeria.
This study received no specific financial support.
The author declares that there are no conflicts of interests regarding the publication of this paper.