Manufacturing Output Growth and Employment in Nigeria

Abstract

The Manufacturing sector of the Nigerian economy can perform better in job creation, particularly during the period of economic expansion, which did not happen in the last period of economic growth between 1981 and 2014. Consequently, it is important to understand the real relationship between growth and job creation in the sector during the period.  Therefore, this study investigated the employment intensity of gross value added growth in the sector during the period of growth, using Vector Error Correction Model (VECM) with a view to providing useful statistics to facilitate policies for the development of sectoral employment strategy during the next cycle of economic growth. Previous studies have either used descriptive statistics or less robust econometric models applied to aggregate data of shorter series and did not explore the inter-sectoral relationship effect. The estimated employment elasticity of gross value added in the sector was not significant at 95 per cent confidence level, and can, therefore, not be relied upon for pin-point policy. However, the inter-sectoral and inter-temporal relationships provided significant estimates, indicating that such relationships should be taken into account in designing and developing sectoral employment strategy for the manufacturing sector. There is future scope for the extension of research to cover periods of recession, as well, for example, post COVID-19.