IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 3 NO. 3 2018

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Public, Private Sector Investments and Growth of the Industrial Sector: A Panacea for Sustainable Economic Development in Nigeria.

Duruechi, Anthony H. PhD

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Abstract

The study examined public, private sector investments and growth of the industrial sector as panacea for sustainable economic development in Nigeria. This is in consideration of the fact that the industrial sector in Nigeria accounts for a tiny proportion of economic growth which has not translated to meaningful development as Nigeria ranks among the poorest countries in the world in spite of rising public and private sector investments profiles. This paper therefore is an investigation into the impact of public, private sector investments on industrial growth in Nigeria using time series data on public, private sector investments and industrial growth sourced from the Central Bank of Nigeria Statistical Bulletin and World Development Indicators from the period 1986 to 2016. Public sector investments were disaggregated into capital expenditures in the areas of economic services, social community services, administration and transfers, while private sector investments were decomposed into private domestic investments and foreign direct investments. In the same vein, industrial growth was proxied by industrial production index. The Johansen Cointegration Test and Vector Error Correction Mechanism were used for analysis. The cointegration results revealed the existence of long run relationship between public, private sector investments and industrial growth in Nigeria. The VECM showed that short run deviations can be corrected in the long run at the speed of -0.021876 approximately 2.19% with insignificant t-statistic of -0.90653. That is to say, though there is a long relationship, but the impact has not been statistically significant to infer causality. Further evidence of the analysis revealed that in the short run, only public sector investments in the area of economic services and private domestic investments contributed positively and significantly to the growth of the industrial sector in Nigeria. Therefore, the study recommended that government policies geared

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