View Journal

Home . Journals

Driving Economic Prosperity through the Influence of Industrialization: Evidence from Nigerian Economy

Abayomi Olusegun Ogunsanwo, Azeez Akanni Oyelekan & Ibrahim Abolore Popoola, Volume 5 Issue 1, July 2024 Pages 170-182, Published: 2024-07-03


This study examines the relationship between industrialization and economic growth in Nigeria from 1981 to 2020, with a specific focus on variables such as Gross Domestic Product (GDP), industrial output, Foreign Direct Investment (FDI), interest rates, and inflation rates. Data for this period were sourced from the Central Bank of Nigeria and the World Bank. Through a rigorous econometric analysis employing the Autoregressive Distributed Lag (ARDL) bound test, a significant long-term relationship among these economic indicators was established. The Error Correction Model (ECM) indicated that past GDP levels significantly affect economic growth, with a positive and statistically significant impact. However, industrial output and interest rates exhibited a negative influence on long-term economic growth, while the impact of FDI was minimal. In contrast, inflation demonstrated a positive effect. Granger causality tests suggested a bidirectional causality between industrial output and GDP, highlighting a reciprocal predictive relationship. The study achieved an R-squared of 0.708747, indicating that about 71% of the variations in GDP can be explained by the model's independent variables. Based on these findings, the study recommends enhancing the industrial sector, promoting foreign investment, and managing inflation effectively to foster sustainable economic growth