FOREIGN EXCHANGE, INTERMEDIATE INPUTS IMPORT AND INDUSTRIALIZATION NEXUS IN NIGERIA
- Olawale E. Ogunkola
- Solomon Abayomi Olakojo
- ( paper pages. 1 - 31 )
Abstract
This study investigates the link among exchange rate, importation of keyintermediate inputs and industrialization in Nigeria using data covering 1981-2016. It utilizes structural vector autoregressive (SVAR) model based oncontractionary devaluation hypothesis. Decomposing the variance ofindustrialization (measured by share of manufacturing sector in GDP), the resultsshow that oil prices, external reserves and exchange rates are important factors.The impulse of industrialization shows that positive shocks to industrializationcome directly from shocks to importation of chemical products, as well asmachinery and transport equipment, while shocks to these imported inputs comefrom shocks to foreign exchange. The study thus recommends the need for foreignexchange easing by providing special exchange rate windows for the importation ofchemical and machinery and transport equipment. This will go a long way toenhance the much desired industrialization in Nigeria.
Citation
Olawale E. Ogunkola, Solomon Abayomi Olakojo.
2018.
"FOREIGN EXCHANGE, INTERMEDIATE INPUTS IMPORT AND INDUSTRIALIZATION NEXUS IN NIGERIA"
The Nigerian Journal of Economic and Social Studies,
60 (3): 1 - 31.
JEL Classification
F31, O14, O24
