Importation and manufacturing sector performance in Nigeria: An empirical analysis

Abstract

A profitable and robust manufacturing sector is a catalyst for any nation's sustainable growth and development. Although Nigeria’s manufacturing sub-sector has the potential to shift the economy from consumption-based to a production-drive, and to foster economic linkages, it appears to be gradually collapsing. This study examined the impact of importation on manufacturing sector performance in Nigeria from 1970 to 2019. Importation was categorized into imported capital goods, imported intermediate goods, and imported manufactured goods. Models formulated in the study were estimated using the Autoregressive Distributed Lag (ARDL) test. The ARDL bounds cointegration test revealed evidence of short-run and long-run relationships among manufacturing sector performance and importation variables. The result showed that imported intermediate, capital, and manufactured goods prevent or demote Nigeria's manufacturing sector export within the period of the study. The empirical result is in line with the import dependence theory which states that imported intermediate, capital, and manufactured goods significantly prevent or demote the manufacturing sector's export in Nigeria. Based on the findings of this study, it is recommended that the government should put in place measures that will significantly increase production of processed and manufactured goods for export or provoke transformation of the structure of exports from primary commodities to processed and manufactured goods.