Determinants of Industrial Development in Developing Countries: The Case of Nigeria
Keywords:Industrial Development; GDP; Population; FDI; Trade Openness
While examining various variables that could drive industrial development in Nigeria, this study verified the contributions of market size, agricultural output, GDP growth rate, exchange rate, foreign direct investment inflows and trade openness to industrial development via empirical investigation using annual data from 1990 to 2019. The study employed Fully Modified Ordinary Least Squares (FMOLS) alongside Granger causality test to analyse the collected data. It is important to report the following as the pertinent findings that came out of this study; market size, agricultural output, trade openness, GDP growth rate and exchange rate are not strong variables that have the capacity to drive industrial development in Nigeria. This implies that these factors are not drivers of industrial development in Nigeria. However, FDI inflows is a weak driver of industrial development in Nigeria. In another page, the Granger causality results submitted that among all the determining variables paired with industrial development, it is only availability of huge market that is a vital condition for industrial development in the country. In view of the above, the study makes these recommendations for the Nigerian policymakers that industrial development in Nigeria requires the expansion of the country`s market size, production of sufficient agricultural product with value addition, expansion of the country`s GDP, controlling exchange rate, export promotion and attraction of more inflows of FDI in the country. Therefore, policy measures should be put in place by the Nigerian policymakers to facilitate the implementation of these recommendations in the country.
Aderemi, T. A., Adeniran, B. G., Sokunbi, G.M. and Bako, Y. A. (2020). Determinant of Foreign Direct Investment Inflows: An Empirical Investigation, ACTA Universitatis Danubius (Economica), 16(3), 131-142.
Aiyedogbon, J. O., & Anyanwu, S. O. (2015).Macroeconomic Determinates of Industrial Development in Nigeria. Nile Journal of Business and Economics, 1, 37-46
Amoah, C., & Jehu-Appiah, J. (2022). Factors Driving Industrialization in Africa: A Panel Two-Stage Least Square Approach. Modern Economy, 13(2), 144-158.
CBN (2015). Statistical bulletin, 2015 Edition.
Downes, A. S. (2004). Arthur Lewis and Industrial Development in the Caribbean: An Assessment. Presented at a conference on ‘The Lewis Model after 50 years: Assessing Sir Arthur Lewis’ Contribution to Development Economics and Policy’, July 6-7, University of Manchester, United Kingdom.
Fashola, M. A. (2004). A Scheme for Nigeria’s Optimal Industrial Development in Industrialization, Urbanization and Development in Nigeria (1950-1999), ed: MOA Adejugbe.
Imhonopi, D. (2004). State, Politics and Industry. Lagos: New Image Publisher.
Imhonopi, D. & Urim, U. M. (2013). Terrorism, Boko Haram and industrial development in Nigeria. In D. Imhonopi & U. M. Urim (Eds.), A panoply of readings in social sciences: Lessons for and from Nigeria. Lagos: Department of Sociology, Covenant University.
Kothakapa, G., Bhupatiraju, S., & Sirohi, R. A. (2021). Revisiting the Link between Finan- cial Development and Industrialization: Evidence from Low and Middle Income Coun- tries. Annals of Finance, 17, 215-230.
Kumar, G., Batra, S., & Dixit, P. (2017). Factors Affecting Industrial Development of Punjab. Asian Journal of Research in Business Economics and Management, 7(3), 64-79.
Lawal, N. A., Adegun, E. A. Aderemi, T. A. and Dauda, R. O.S. (2022). Migrant Remittances, Growth and Poverty Reduction: ARDL-Bounds Test and Granger Causality Approach. Izvestiya Journal of verna University of Economics, 66(1-2), 74-90.
Maroof, Z., Hussain, S., Jawad, M., & Naz, M. (2019). Determinants of industrial development: a panel analysis of South Asian economies. Quality & Quantity, 53(3), 1391-1419.
Ndiaya, C., & Lv, K. (2018). Role of industrialization on economic growth: the experience of Senegal (1960-2017). American Journal of Industrial and Business Management, 8(10), 2072-2085.
Obiakor, R. T. Omoyele, O. S, Olanipekun, W. D. & Aderemi, T. A. (2021). Is Agriculture still a Strong Force in Employment Generation in Nigeria? An Empirical Investigation. Euro Economica, 40(2), 90-100
Omoyele, O.S., Lucas, B.O, Olanipekun, W.D. and Aderemi, T.A., (2021) `Globalization and industrial development in nigeria: A Curse or Cure?` Journal of Business and Economics, Publication of Department of Economics and Business, University of Oradea. 6 (2), 88-97.
Otalu, J. A., & Anderu, K. S. (2015). An assessment of the determinants of industrial sector growth in Nigeria. Journal of Research in Business and Management, 3(7), 1-9.
Ou, K. A. (2015). The effect of industrial development on economic growth (an empirical evidence in Nigeria 1973–2013). Eur. J. Bus. Soc. Sci, 4(02), 127- 140.
Samouel, B., & Aram, B. (2016). The determinants of industrialization: Empirical evidence for Africa. European Scientific Journal, 12(10), 219-239.
Singh, A. K., & Kumar, S. (2021). Assessing the Performance and Factors Affecting Industrial Development in Indian States: An Empirical Analysis. Journal of Social Economics Research, 8(2), 135-154.
Copyright (c) 2022 Ishola James Aransiola, Sunday Festus Olasupo, Cecilia Oluwakemi Ogunwole , Bamidele Pereowei Abalaba, Timothy Ayomitunde Aderemi
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.