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Industrialization in Nigeria has gone through various strategies and policy measures so as to achieve economic growth. Despite the adoption of import substitution strategy, export promotion strategy, local resource utilization, indigenization policies have failed to achieve their objectives. This study tries to investigate the impact of industrialization on economic growth in Nigeria employing certain variables such as growth rate of industrial output and growth rate of agricultural output. This study was done with the Ordinary Least Squares (OLS) method using annual data from 1981 to 2015. The study found out that there is a positive relationship between industrialization and economic growth in Nigeria. Augmented Dickey-Fuller unit root test showed that all variables are stationary at level, more so it was found that there is no long run relationship between the variables.  This research supports the neo-classical growth theory, which believes that output growth results from increase in labour, capital and improvement in technology. One of the major findings of this study is that Industrialization is the key factor to achieve economic growth. Among the recommendation of this study, Nigerians should patronize “Made in Nigeria” products.












1.1.      Background to the Study

It is the aspiration of every national economy to achieve the fundamental macro-economic goals, which include; attainment of full employment level, favourable balance of payment, and non-inflationary economic growth (price stability and economic growth). Nigeria has invariably been pursuing the achievement of these broad economic goals. The national economic development aspiration of the Nigerian economy has been that of altering the structure of production and consumption activities, so as to diversify the economic base, reduce dependence on oil and imports, all in a bid to put the economy back on a path of self-sustaining, inclusive and non-inflationary economic growth, thereby reducing poverty (Ajakaiye, 2003). Economic growth is the appreciation in the real per-capita income (income per head) of an economy for a given period of time. Some scholars believe that proper pursuit of industrialization leads to growth of the national output. Industrialization as defined by Obioma and Ozughalu (2004) is the introduction and/or expansion of industries in a place, region, country, etc. According to the duo, industrialization brings about economic growth through the increase in productivity and enlargement in market size. In his book, “Growth and Development”,(1994) Thirlwall said, the importance attached to industrialization by developing countries (Nigeria inclusive), lies in the close association that appears to exist between industrialization and real per-capita-income and between the growth of output as a whole. This latter observed relationship is summed up in the maxim “manufacturing as the engine of growth”. As also noted by Uwubanwen (2002), developing nations strive to industrialize their economies for many reasons, among these are the desire to increase national income, productivity and hence the capacity of the economic system to deliver higher levels of wealth and welfare to the people, secure further employment, expand the market for local raw materials, and improve the stability of foreign exchange position through proper import substitution and export promotion industries. It is in recognition of the important roles played by industrialization in the structural transformation of the economy, that the Nigerian government at different times regards genuine industrialization (as shown in the different national development plans) as a mover of the economy towards that state of economic independence (freedom). Hence, over the years, a number of policies, measures and strategies, like the restrictive import tariffs on commodities majorly consumed by individuals, creation of export zone area; import substitution strategy; local content initiative; granting of pioneer status to some industries; tax holidays (Tax amnesty), etc, have been embarked upon to encourage industrial development within the ambit of the available resource

For instance the import substitution strategy remained the major policy stance of the Nigerian economy until the mid 1980s. The strategy was to reduce import as a means of achieving economy independence and as a measure to converse foreign exchange. Credit incentive, high protective measures, tax amnesty, local content initiative, indigenization policies etc was embarked upon to reduce importation of consumer goods, increase industrial activities performed locally as many heavy industries were established during 1970s and 1980s, and there was  also increase in government revenue through high tariff and custom duties. Therefore, the research is focused on examining how the activities of industrialization impact on Nigeria’s economic growth.

1.2       Statement of the Problem

Industrialization has been said to give a country and its people a feeling of greater control over the economy. It is a means of reducing dependence on import, hence overcoming foreign exchange challenges by expanding and diversifying the import base. Therefore, industrialization leads to improved productivity and the economic growth, and sustained economic growth enhances structural transformation of the economy (economic development). The risk of industrializing the Nigerian economy has been accepted by successive government of this country. However, as noted by Ekpo (2004), Nigeria has made several efforts at industrialization, yet poverty and unemployment are increasing and income in-equalities widening. At the early period of independence, Nigeria, Singapore, Malaysia, Indonesia, Ghana and South Korea were at the same level of development. But today these countries are industrialized and their citizens are enjoying quality lives; moving towards full employment levels, but Nigeria is still being referred to as a developing nation, struggling to provide basic amenities to more than 70% of its citizens while, these new industrialized countries are building a knowledge based economy. Therefore, it is important for Nigeria’s growth process to be critically appraised, viz-a-viz, the significant impact of industrialization on economic growth and as a consequence, economic development of the country. Also as a tool/means of diversifying the oil dependent economy, it therefore becomes the problem of this research to empirically examine, using the available data, the significance of industrialization (if any) on the growth of the Nigerian economy.

1.3.      Research Questions

Following the statement of the study, the research question will be the following:

  1. Does industrialization have any impact on Nigerian Economic growth?
  2. Is there any long run relationship between industrialization and economic growth?
  • Do other factors influence growth of Nigerian economy?

1.4       Objectives of the Study

The main objective of this study is to examine the significance of industrialization in the growth process of the Nigerian economy.

The broad objective can thus be stated as follows:

  1. To examine the impact of industrialization on Nigeria economy.
  2. To determine if there is a long run relationship between industrialization and economic growth in Nigeria
  • To determine, empirically, the influence of other factors on growth of the Nigerian economy.

1.5       Research Hypotheses

In pursuance of the objective of this study, the following hypotheses are formulated:

H₀       : Industrialization has no significant impact on Economic Growth in Nigeria.

H₁:      Industrialization has significant impact on Economic Growth in Nigeria.


H0:       There is no long run relationship between industrialization and economic growth.

H1:       There is a long run relationship between industrialization and economic growth.


H0:       Other factors do not influence growth of the Nigerian economy.

H1:       Other factors do influence growth of the Nigerian economy.





1.6       Significance of the Study

The significance of this study lies in the fact that it will expose the extent to which industrialization has contributed to economic growth of Nigeria. It will highlight some obstacles hindering increase in industrialization and industrial output in Nigeria.

The work will be relevant to entrepreneurs and government by directing them on the easiest means of embarking on industrial growth plan. The relevance of this work also lie in the fact that it adds to the already existing literature on the industrialization in Nigeria.

Furthermore, this research work will assist students of Economics, government and real potential industrialist, investors and others. Other future researchers will find this work a veritable material for reference.

1.7       Scope of the Study

The scope of this study is to empirically analyze Nigerian economy with respect to the significant impact of industrialization and perhaps the industrial output on growth in gross domestic products for the periods covering 1980-2015. This period has been chosen for this study, because it covers period of import substitution strategies, export promotion industrialization strategies, export promotion industrialization strategies and the period of de-industrialization of the Nigerian economy. It is the belief of the researcher that this choice of scope will allow for the most comprehensive analysis on the study.



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