Project Materials




Need help with a related project topic or New topic? Send Us Your Topic 



Chapter one


1.1 Background of the Study

Underdeveloped and developing countries continue to prioritise economic growth and development. It is the transformation of national attitudes, the structure and method of production, and the distribution of output that results in an increase in standard of living.

According to Wilson (2002), industrialization began in the 18th and 19th centuries, with the industrial revolution. This period was distinguished by the invention of machines, the establishment of factories, and other industrial innovations of the time.

Industrialization is the foundation of economic growth, as the process of economic development is typically initiated with industrialization and is impossible without it.

The pursuit of industrialization by developing economies is based on theoretical and empirical evidence that developing countries are highly industrialised.

Industrialization and economic growth are inextricably linked since it allows for significant technological advancement, on-the-job training, and productivity gains, all of which lead to pay increases.

Furthermore, it results in greater backward and forward linkages, a more stable and easily controllable production process than agriculture, and the best conditions for growth are produced when industry and agriculture are in balance.

Industrialization is the process of changing raw materials into consumer goods, production goods, and services using both capital and human resources (Amechi and Azubuike 2004).

Today, nations are divided into two categories: industrialised and unindustrialized. Developed nations are typically industrialised nations with extremely high output levels. Industrialization has a knock-on effect on all other economic activity sectors as well as the overall economy.

Industrialization, like any other development effort, stems from national planning, and efforts are typically deliberate in nature, with the purpose of achieving certain macroeconomic goals, beginning with economic growth.Industry is typically divided into main and tertiary production.

Primary production involves the mining and extraction of mineral reserves, whereas tertiary production focuses on the conversion and transformation of raw materials or primary products into completed consumable or tertiary products.

CBN (2012) divides industrial output in the Nigerian economy into three categories: crude petroleum and natural gas, solid mineral mining, and manufacturing.Industrialization is identical with manufacturing

which is the process of increasing a nation’s capacity to turn raw materials and other inputs into completed items for further production or eventual consumption.

1.2 Statement of the Problem

There is an underlying belief that not all sectors are equally crucial for economic progress. The idea that economic growth is dependent on the expansion of a core sector was formalised in an eighteenth-century physiocratic analysis of agricultural output production and distribution, and it has survived in various forms ever since. Many analytical research have focused on the role given to industrialization.

The above thought may have been what motivated or fueled successive Nigerian governments’ efforts to promote industrial activities, which contribute significantly to economic growth through job creation, increases in foreign exchange earnings, the acquisition of both semi- and highly specialised skills, the minimization of the risk of complete foreign dependence, and resource utilisation.

The drive to industrialise began in the pre-colonial period. During the post-independence period of the 1960s, the government’s policy of import substitution gained popularity, and following the civil war of the 1970s, vast amounts of foreign cash streamed in from crude oil exports, allowing the government to invest directly in manufacturing.

The import substitution policy was followed by the indigenization policy, which attempted to give Nigerians complete control over many of the country’s businesses.

The government has also implemented other methods and incentives, such as export promotion, tax breaks, tariff reductions, loan assistance, and so on.

During these efforts, industries such as crude petroleum and natural gas accounted for a significant portion of foreign exchange earnings and nationally collected revenue.

However, the recent slump in the global oil market calls into question the industrial sector’s contribution to Nigerian economic growth. In 1981, industry contributed 51.89% of GDP (source: CBN testified bulletin 2014).

A decade later (1991), it increased to 54.89%. It decreased steadily throughout the decades, from 44.15% in 2001 to 42.86% in 2011. It fell further, to 39.03% in 2012 and 34.54% in 2013.

These could be ascribed to a drop in the output of crude petroleum and natural gas, both of which are components of industrial operations. This implies that other industrial sub-sectors have remained relatively inert.

The CBN categorises manufacturing activity into three categories: oil refining, cement, and other manufacturing; nonetheless, non-oil industrial activities continue to contribute insignificantly to the economy.

In 1981, it was 33.34%, but it fell by 17.88% in 1991. It fell further to 7.52% in 2011, reaching an all-time low of 1.61% in 2012.These findings are not in line with the different government endeavours and drives towards industrialization.

Could it be that government efforts were not properly implemented or were insufficient to provide the desired results? Has the industrial sector contributed considerably to Nigeria’s economic growth? This is the problem that prompted this investigation.


To attempt to answer the puzzle of determining how industrialization has impacted economic growth in Nigeria, this study develops the following research questions:

1. Does the industrial sector have a substantial impact on Nigeria’s economic growth?

2. Is there a causal relationship between industrial sector expansion and Nigeria’s economic performance?

1.4 Objects of the Study

The study’s overarching goal is to understand how industrialization affects economic growth in Nigeria. As a result, following the research questions developed above, the precise aims of this study are:

1. Determine how the industrial sector affects Nigeria’s economic growth.

2. Determine whether or not there is a causal relationship between the growth of the industrial sector and economic growth in Nigeria.

1.5 Research Hypothesis

According to the research questions and objectives defined in this study, the hypotheses to be tested are:

1. HO: The industrial sector has had no meaningful impact on Nigeria’s economic progress.

H1: The industrial sector has had a substantial impact on Nigeria’s economic progress.

2. HO: There is no causal association between industrial sector expansion and Nigeria’s economic growth.

H1: There is a causal association between industrial sector expansion and Nigeria’s economic growth.

1.6 Significance of the Study

A study of the impact of industrialization on Nigerian economic growth has far-reaching and important economic ramifications. This research is noteworthy in the following ways:

1. It will assist the Ministry of Trade and Investment in reassessing the destination of investment flows with the goal of directing them towards manufacturing industry activity.

2. It will allow the government to choose its policy direction in capital budgeting.

3. The findings of this study will encourage investment in the industrial sector, particularly manufacturing.

1.7 Scope and Limitations of the Study

This study covers both space and time, and it investigates the impact of industrialization proxy by industrial sector output of the economy on aggregate output proxy by gross domestic product (GDP) from 1986 to 2014.

The variables are GDP, interest rate, and agricultural sector output. Another disadvantage of this study is data inconsistency across different sources. However, data trustworthiness was verified by receiving it from a reputable source (CBN).

Need help with a related project topic or New topic? Send Us Your Topic 


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.