ABSTRACT
The study empirically examined the impact of capital market on industrial
development of Nigeria using a time series data covering a period of 16years
(2000-2015). The industrial sector was proxied by Real gross domestic product
of the industrial sector, industrial loan and average capacity utilization rate
of the manufacturing sector. Capital market variables considered include annual
market capitalization of the industrial sector and value of traded securities
of the industrial sector while inflation rate was included as a control
variable. The ordinary least square (OLS) regression model was used to analyze
the data collected. In addition, the simple and multiple regression models were
used with the aid of statistical package for social science (SPSS) software
package. The study revealed that annual market capitalization has a positive
and significant impact on the gross domestic product of the industrial sector.
Value of traded securities has a positive and significant effect on the gross
domestic product of the industrial sector. Value of traded securities and
annual market capitalization jointly predicts industrial loan issued, but none
impacted significantly. Finally, the value of traded securities, annual market
capitalization and inflation rate are all joint predictors of average
manufacturing capacity utilization rate of the industrial sector, but none impacted
significantly. Based on the findings of this study, it was recommended among
others that government should put in place necessary infrastructures and policy
reforms that will enable the Nigerian capital market to effectively and
efficiently mobilize long-term funds for the development of the industrial
sector.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Industrialization
can be seen as the backbone for economic advancement in any nation, be it
capitalist, socialist or a mixed economy. The possession of industrial
capabilities by an economy is considered an important potential for improved
economic growth and development. It can be viewed as a veritable channel of
attaining the lofty and desirable conception and goals of improved quality of
life for the populace. This is because industrial development involves
extensive technology-based development of the productive (manufacturing) system
of the economy. In other words, it could be seen as a deliberate and sustained
application and combination of suitable technology, management techniques and
other resources to move the economy from the traditional low level of
production to a more automated and efficient system of mass production of goods
and services ( Ayodele & Falokun, 2003).
According
to Kayode (2015), While Nigeria and most other developing countries are still
struggling to catch up with the developed countries, in terms of
industrialization, the world has since moved from the age of industrial
revolution to globalization! Nigeria has performed poorly and far below
expectation, in the area of industrialization, when compared to some regional
and global counterparts. For instance, in the United States, Brazil, China,
India and South Africa, the manufacturing sector contributes 13 per cent, 15
per cent, 30 per cent, 14 per cent and 15 per cent to their Gross Domestic
Product, while employing 13 million, 15 million, 100 million, 30 million and
1.5 million people respectively. In Nigeria, the manufacturing sector
contributes a meager four per cent to their GDP, while employing only two
million people.
In
modern world, manufacturing sector is regarded as a basis for determining a
nation's economic efficiency. Industrial sector in advanced economies, serves
as the vehicle for the production of goods and services, the generation of
employment and the enhancement of incomes. Hence, Kayode (1989) described
industry and in particular the manufacturing sub-sector, as the heart of the
economy.
Nigeria has employed several strategies which were aimed at enhancing the
productivity of the sector in order to bring about economic growth and
development. For instance, the country adopted the import substitution
industrialization strategy during the First National Development Plan
(1962-1968) which aimed at reducing the volume of imports of finished goods and
encouraging foreign exchange savings by producing locally some of the imported
consumer goods (CBN, 2003). The country consolidated her import substitution
industrialization strategy during the second National Development Plan Period
(1970-1974) which actually fell within oil boom era. After the discovery of
crude oil in Nigeria, the nation has shifted from its preeminent developing
industrial production base and placed heavy weight on crude oil production, not
only has this jeopardized its economic activities, it also aggravated the
nation's level of unemployment. Various policy measures were adopted to
ameliorate the above situation, such as the stabilization measures of 1982, the
restrictive monetary policy and stringent exchange control measures of 1984,
all proved abortive. This led to the introduction of the Structural Adjustment
Programme (SAP) in 1986 (CBN,2003). However, despite the introduction of SAP
and series of deregulation policies introduced since 1986 by successive
governments to facilitates industrialization process in an economically
conducive manufacturing environment, the performance of the industrial sector
remains undesirable, and the contribution of the manufacturing sub-sector to
Gross Domestic Product (GDP) has declined steadily without yielding the desired
result. Nigeria as a.....
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Item Type: Postgraduate Material | Attribute: 79 pages | Chapters: 1-5
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