Manufacturing Capacity Utilization and Economic Growth in Nigeria

Edidiong Justine John; Wisdom Etiemana Peter; Macauley Chrysantus Martin; Oto-Obong Udom Udo

doi:10.56201/ijebm.vol.11.no12.2025.pg352.370

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Manufacturing Capacity Utilization and Economic Growth in Nigeria

Edidiong Justine John, Wisdom Etiemana Peter, Macauley Chrysantus Martin, Oto-Obong Udom Udo

Abstract

Despite various policy initiatives and interventions, Nigeria’s manufacturing sector has remained subpar, with capacity utilization rate averaging around 50% over the years. In view of this, this study examined the effect of manufacturing capacity utilization on economic growth in Nigeria. However, the study specifically sought to examine the effect of average manufacturing capacity utilization (CU) on economic growth in Nigeria and to determine the causal relationship between average manufacturing capacity and economic growth in Nigeria. The study adopted an ex-post facto research design with data covering 30 years period (1995-2024) obtained from CBN Bulletin. The study captured the systematic annual time series of the considered variables in the model specification. This study employed various tests to ensure data validity and significance, including the Augmented Dickey-Fuller Unit Root Test for stationarity, Engel-Granger Co-integration Test for long-run relationships, Breusch-Godfrey Serial Correlation LM test for autocorrelation, and Ordinary Least Square model via E-views 10.0 statistical package with coefficient of determination (R2) and Durbin-Watson (DW) Statistics. Significance tests included F-test for variance comparison and T-test for parameter estimate significance, with a 5% level of significance used to determine hypothesis rejection. The findings revealed that there is no statistically significant relationship (Coeff. = -0.9214{0.0814}) between average manufacturing capacity utilization and economic growth in Nigeria while there is causal relationship (F- stat.=64.54{0.0000}) between average manufacturing capacity and economic growth in Nigeria. P-ISSN 2695-186X It was thus concluded that manufacturing capacity utilization has a significant effect on economic growth in Nigeria. The recommendations made included that the government should implement policies that promote capacity utilization in the manufacturing sector, such as providing access to a

Keywords

Manufacturing capacity utilizationManufacturing productivity indexInflation rateExchange rateLabor forceInterest rateEconomic growthReal gross domestic product

References

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Manufacturing Capacity Utilization and Economic Growth in Nigeria

Abstract

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