National Domestic Savings, Inflation, Exchange Rate and Manufacturing Sector in Nigeria: ARDL Approach

Abstract

This research work centered on national savings, exchange rate, inflation, and manufacturing sector
in Nigeria from 1985 to 2018, a period of 34years. Data was sourced from CBN statistical bulletin various
issues up until 2017 and National Bureau of Statistics (NBS), 2018 Statistical Bulletin, on manufacturing sector
output, national savings, Exchange Rate and inflation. Data were analyzed using Autoregressive Distribution
Lag (ARDL) to examine the effect of national savings, exchange rate and inflation on manufacturing sector.
The ARDL result revealed that national savings has no short run effect on the manufacturing sector output but
has effect on the longrun on the manufacturing sector. The exchange rate has a positive effect on the long run,
but a negative effect on the shortrun on the manufacturing output, while the inflation rate has a negative
relationship with the manufacturing sector output. The empirical findings showed that that national savings is
not enough to alleviate investment in the manufacturing sector. Hence, it was recommended that the
government comes up with policies that will encourage foreign direct investment in the manufacturing sector
and raw materials for this sector should be sort for domestically.