INFRASTRUCTURE DEVELOPMENT AND INDUSTRIAL OUTPUT IN NIGERIA: A Dynamic Model Approach
- Taofik Mohammed Ibrahim
- ( paper pages. 1 - 34 )
Abstract
This paper empirically examines the influence of infrastructure(proxied by telephone density, energy consumption and capitalexpenditure in transport and communication) on industrialization(measured by industrial output) in Nigeria from 1981 to 2015. Itsynthesizes the production function and growth approaches toestimate the industrial output elasticity of infrastructure developmentusing the dynamic ordinary least squares (DOLS) estimationtechnique that accounts for present and past effects of infrastructuraldevelopment on industrialization. The Toda-Yamamoto modified Wald(MWALD)-based causality test that arbitrage between the results withand without structural breaks was used to define the direction ofcausality between infrastructure and industrial output. The unit roottests that account for break and without break were employed toascertain the stationarity of the data, while the residual-basedcointegration test with a structural break was employed to determinethe cointegrating relationship among the variables. Findings suggestthat all proxy of infrastructure except telephone density impactedpositively on industrial output when structural breaks were notaccounted for. Telephone density and energy consumption impactedon industrial output in the presence of structural breaks, while capitalexpenditure in transport and communication did not impact onindustrial output. This suggests that fluctuations in infrastructuraldevelopment, to a large extent, affected the magnitude of the impactof infrastructure on industrialization in Nigeria. The studyrecommends that government needs to look for other stable sourcesof financing infrastructure because reliance on oil revenue has brought about fluctuations in infrastructural development, which hasaffected the industrial drive of the nation.
Citation
Taofik Mohammed Ibrahim.
2019.
"INFRASTRUCTURE DEVELOPMENT AND INDUSTRIAL OUTPUT IN NIGERIA: A Dynamic Model Approach"
The Nigerian Journal of Economic and Social Studies,
61 (1): 1 - 34.
JEL Classification
O1, H4, H54, L9
