The Role Of Economic Policy In The Diversification In Nigeria Economy

The Role Of Economic Policy In The Diversification In Nigeria Economy

Chapter One

Preface

Background Of The Study

profitable policy refers to the conduct that governments take in the profitable field. It covers the systems for setting situations of taxation, government budgets, the plutocrat force and interest rates as well as the labor request, public power, and numerous other areas of government interventions into the frugality.

utmost factors of profitable policy can be divided into either financial policy, which deals with government conduct regarding taxation and spending, or financial policy, which deals with central banking conduct regarding the plutocrat force and interest rates.

similar programs are frequently told by transnational institutions like the International Monetary Fund or World Bank as well as political beliefs and the consequent programs of parties.

lately, government programs began to show further concern on the operation and enhancement of the frugality. Government over the times have embarked on colorful macroeconomic policy options to grow the frugality in terms of growth and development and the policy option employed is that of financial policy( Peter and Simeon, 2011). financial policy is the use of government profit collection( taxation) and expenditure( spending) to impact the frugality. The two main instruments of financial policy are government taxation and government expenditure. It can also be seen as government spending programs that impact macroeconomic conditions. These programs affect duty rates, interest rates and government spending, in an trouble to control the frugality.

The part of financial policy on the affair and capacity application of manufacturing assiduity in Nigeria has been a growing concern, despite the fact that the government had embarked on several programs aimed at perfecting the growth of the Nigerian frugality through the donation of manufacturing assiduity to the frugality and capacity application of the sector( Adebayo, 2010; Peter and Simeon, 2011 and Loto, 2012). Libanio( 2006) through the use of Kaldor’s first law defined manufacturing sector as the machine of growth of the frugality.

Manufacturing sector refers to those diligence which are involved in the manufacturing and processing of particulars and indulge or give free rein in either the creation of new goods or in value addition( Adebayo, 2010). To Dickson( 2010), manufacturing sector accounts for a significant share of the artificial sector in developed countries. The final products can either serve as finished goods for trade to guests or as intermediate goods used in the product process. Loto,( 2012) refers to manufacturing sector as an avenue for adding productivity

in relation to import relief and import expansion, creating foreign exchange earning capacity, raising employment and per capita income which causes unrepeatable consumption pattern. Mbelede( 2012) editorialized that manufacturing sector is involved in the process of adding value to raw accoutrements by turning them into products.

therefore, manufacturing diligence is the crucial variable in an frugality and motivates conversion of raw material into finished goods. In the work of Charles( 2012), manufacturing diligence creates employment which helps to boost husbandry and diversify the frugality on the process of helping the nation to increase its foreign exchange earnings.

Manufacturing diligence came into being with the circumstance of technological and socioeconomic metamorphoses in the Western countries in the 18th- 19th centuries. This period was extensively known as artificial revolution. It all began in Britain and replaced the labour ferocious cloth product with robotization and use of energies. Manufacturing sector are distributed into engineering sector, construction sector, electronics sector, chemical sector, energy sector, cloth sector, food and libation sector, essence- working sector, plastic sector, transport and telecommunication sector( CBN, 2012).

In recent times, some manufacturing diligence in Nigeria have been characterized by declining productivity rate, by extension employment generation, which is caused largely by shy electricity force, smuggling of foreign products into the country, trade liberalisation, globalisation, high exchange rate, and low government expenditure. thus, the slow performance of manufacturing sector in Nigeria is substantially due to massive importation of finished goods, shy fiscal support and other exogenous variables which has redounded in the reduction in capacity application and affair of the manufacturing sector of the frugality( Tomola, Adebisi and Olawale, 2012). Looking at the manufacturing sector share in the GDP in recent times( 1990- 2010), it has not been fairly stable. In 1990, it was about5.5 while it dropped to2.22 in 2010. Also at the same period, the overall manufacturing capacity application grew from40.3 in 1990 to58.92 in 2010( CBN, 2011). This may be attributed to the increase in government expenditure in recent times.

likewise, in Nigeria, the position of growth in manufacturing sector has been affected negatively because of high interest rate on lending and this high lending rate is responsible for high cost of product in the country’s manufacturing sector( Adebiyi, 2001 Adebiyi and Babatope, 2004; Rasheed, 2010). Okafor( 2012) further observed that the position of Nigerian manufacturing diligence ’ performance will continue to decline because of low perpetration of government budget and difficulties in assessing raw accoutrements .

These changes in the manufacturing share of the GDP and capacity application shows that enterprises that are effective can contribute to job creation, technology creation and as well insure indifferent distribution of profitable openings and the macroeconomic stability of the country.

Grounded on the nature and significance of the relationship between financial policy and manufacturing sector, the study becomes necessary in Nigeria, where affair and capacity application of manufacturing sector have suffered rapid-fire oscillations in recent times. Since government solicitations to increase total spending in the frugality with financial policy which can either increase its spending or reduce levies in maintaining manufacturing sector stability, it’s thus the experimenter’s interest to probe the impact of financial policy on the manufacturing sector of Nigerian frugality. therefore, this is the focus of this design.

Statement Of The Problem

Upon several government programs on the stability of Nigerian frugality through manufacturing assiduity, there have been a lot of challenges facing the growth of Nigerian manufacturing assiduity as linked by experimenters. These challenges include corruption and ineffective profitable programs( Gbosi, 2007); unhappy and ineffective programs( Anyanwu, 2007); lack of integration of macroeconomic plans and the absence of adjustment and collaboration of financial policy( Onoh, 2007); gross mismanagement/ misappropriations of public finances( Okemini and Uranta, 2008); and lack of profitable eventuality for rapid-fire profitable growth and development( Ogbole, 2010). Despite the emphasis placed on financial policy in the operation of the frugality, the manufacturing sector inclusive, Nigerian frugality is yet to come on the path of sound growth and development because of low affair in the manufacturing sector to the frugality( GDP).

This study is specifically interested in examining the position of significant financial policy has on manufacturing sector affair in Nigeria due to its low donation to the growth of the frugality. utmost studies on financial policy dwelt on the determinants, its impact on profitable growth, its impact on capital conformation, its impact on capital stock, deficiency and macroeconomics variables, while studies on manufacturing sector focuses on its productivity, bank lending, profitable growth, global profitable downturn, financial policy, banking sector reform, and its performance. still, in Nigeria, both variables have precious significant effect on profitable growth and stabilization, but study about their relationship has exploration gap, as there seems to be little or no attention on the impact of financial policy on manufacturing sector in Nigeria. This study seeks to fill this exploration gap.

Objects Of The Study

The broad ideal of the study is to ascertain the part of profitable policy in the diversity of Nigeria economics. The study has the following specific objects

To determine the impact of government expenditure on manufacturing sector affair in Nigeria. To ascertain the effect of duty profit on manufacturing sector affair in Nigeria.

Significance Of The Study

The study will contribute immensely in abetting the government, policy makers, profitable itineraries, experimenters and the academia generally. This will give an sapience and understanding to the government on how to be prudent in spending public finances that would bring about profitable growth and development. It’s also of immense help in furnishing an sapience and knowledge to the general public, policy makers, profitable itineraries, and manufacturing sector nonsupervisory authorities on the impact of financial policy on the manufacturing sector in Nigeria.

To the academia, the findings of the study will contribute to the available literature on the current script of manufacturing sector in Nigeria and its position of donation to the GDP.

Grounded on our empirical findings and analysis, the result of the study will be of immense benefit to experimenters who’ll calculate on their benefactions to being knowledge for farther exploration.

The findings of this exploration will help financial authorities in assessing the performance of the financial policy in Nigeria particularly in terms of their impact on the affair of manufacturing sector. This work is also of immense benefit to the policy makers and profitable itineraries in terms of using its findings in formulating and enforcing applicable policy measures towards accelerating profitable growth through the manufacturing sector.

Limitations Of The Study

The main constraints encountered in carrying out this exploration work, this includes;

Time Factor

This exploration work was conducted contemporaneously with normal academic work within a short period of time in which some precious information could be attained.

Financial Difficulty

In an trouble to have a sufficient exploration material to be suitable to write considerably on the subject matter, the experimenter was faced with some fiscal dilemma considering high cost of not only education accoutrements coupled with the high transport chow.