SAVINGS AND FOREIGN EXCHANGE GAPS AND INDUSTRIALISATION IN NIGERIA
- Naomi O. Doki
- John Abu
- ( paper pages. 1 - 18 )
Abstract
The progress of industrialisation should be influenced by the level of savings andinvestment and should reflect on trade and influence the level of balance of payments.This paper examines the twin deficits, i.e., savings and foreign exchange gaps andtheir relationship with manufacturing output between 1981 and 2015. Hinged on thetwo gap model, the study models the relationship within the vector autoregressive(VAR) model in evaluating the effect of these gaps on industrialisation in Nigeria.Also, exploratory data analysis is used to assess the extent of disparities betweensavings-investment and exports-imports in Nigeria. The results reveal that both gapsare binding on the Nigerian economy. The effect of the foreign exchange gap is seento be a stronger constraint on the manufacturing sector than the savings gap. Also itis clear that foreign capital inflows have been high enough in the period to cover forthe deficits, but the effect is still not satisfactory on industrial development. The studyrecommends an improvement on industrial policy for Nigeria in ways that seek todeliberately improve on domestic savings, strengthen the linkages of savings andinvestments, as well as organise foreign capital flows to deliberately support non-oilindustrialisation in Nigeria as a matter of urgency.
Citation
Naomi O. Doki, John Abu.
2018.
"SAVINGS AND FOREIGN EXCHANGE GAPS AND INDUSTRIALISATION IN NIGERIA"
The Nigerian Journal of Economic and Social Studies,
60 (2): 1 - 18.
JEL Classification
E21, E22, F35, O14, F31
