REVITALIZING THE INDUSTRIAL SECTOR THROUGH FISCAL POLICY: NIGERIA IN FOCUS
Ubong E. Effiong & Ettah B. Essien
Department of Economics
University of Uyo, Uyo
Email: ubongeffiong3@gmail.com
ABSTRACT
This paper aimed at investigating the influence of government expenditure (a proxy for fiscal policy) on the industrial sector output of Nigeria for the period 1980 – 2018. Government expenditure was disaggregated into capital and recurrent expenditures. Data were sourced from the Central Bank of Nigeria Statistical Bulletin. The data were subjected to Augmented Dickey-Fuller and Philip-Peron unit root test which reported that all the variables were stationary at first difference. The Johansen cointegration test revealed the existence of a long-run relationship among the variables in the model. This therefore posed the need for the use of the Vector Error Correction (VEC) model to estimate both the short-run and long-run estimates. Findings from the VEC revealed that both government capital and recurrent expenditures significantly influences industrial output in the short-run. Also, capital expenditure does not have a significant relationship with industrial sector output in the long-run but recurrent expenditure does. Following the findings, the study recommended that concerted efforts should be made on the part of the government to boost the industrial sector output through development of the nation’s infrastructural facilities, in other to encourage domestic investors and win more foreign investors which are highly competitive globally.
Keywords: Fiscal Policy, Industrialization, Industrial Policies, Vector Error Correction
