Impact of Investments on the Performance of Manufacturing Sector in Nigerian Economy: An Empirical Analysis.
Keywords:Foreign investment, domestic investment, manufacturing sector, value added, enabling environment, JEL Classification: B22, B26, D31, F65
The study examined the impact of investments on the performance of the manufacturing sector of the Nigerian economy from 1998 – 2021. Data for the study were obtained from Central Bank of Nigeria (CBN) annual reports and accounts and National Bureau of Statistics (NBS) publications on Manufacturing Value Added (MVA) being the dependent variable, Foreign Direct Investment (FDI) and Domestic Investment (DI) as the independent variables of the study. The analysis of the data was done using Augmented Dickey-Fuller (ADF) unit root test, Autoregressive Distributed Lag (ARDL), Multiple regression and t-statistics techniques. The results of ADF revealed that the variables were non-stationary at different orders of Integration. Further, the ARDL result in a long-term relationship as the F statistics value of 11.43128 is greater than the lower and upper critical bounds values at 10 percent, 2.5 percent, and 1 percent levels of significance. The calculated t-statistics value of 2.550164 and 2.065759 for FDI and DI respectively are greater than the table value of t-statistics at 1.96 at a 5 percent level of significance and therefore all the null hypotheses of the study are rejected. The regression result showed that 42 percent variation in MVA is explained by the combined effect of FDI and DI implying a significant impact of the variables on MVA. The study recommended among others that government should encourage investment in the manufacturing sector of the Nigerian economy through the creation of an enabling environment in terms of adequate provision of electricity, water and tackling the issue of insecurity in Nigerian society. Enabling environment triggers confidence of investors in survival and growth of enterprises in the country.
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