The real sector for which the manufacturing sector is part play key role in the quest for achieving economic growth of any country. Naturally, high output in the manufacturing sector will contribute significantly to increase in economic growth. However, the productivity of the manufacturing sector is directly dependent on the capital-labour ratio performance. Thus, this study seeks to examine the impact of capital (FDI inflow) and labour (domestic labour) on the manufacturing sector output in Nigeria. The choice of ARDL approach by this study is informed by the mixed order of integration from the unit root test. The finding indicates that capital significantly and positively promotes the manufacturing sector output in Nigeria, while labour influences the manufacturing sector performance in a positive and insignificant way. Further result proves that the impact of labour is elastic, indicating that a little change in labour will cause a drastic change in the level of output in the manufacturing sector. In general, the manufacturing sector is capital-driven rather than labour-driven. A recommendation is made of the need for a systematic human capital development through improvement in education and training system to increase the efficiency of labour. Secondly, since FDI inflow demonstrates significant positive impact, the authority concern should formulate policy that will attract more FDI inflow into the sector for higher productivity. Such policy include, tax holidays, stable exchange rate, reasonable interest rate to enable investors gain access to fund in the domestic economy as well as general stability of the macroeconomic environment to enable smooth flow of investment.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.