Impact of Manufacturing Capacity Utilization on the Nigerian Economy

Abstract

This paper examines the manufacturing capacity utilization on
Nigeria’s economy using Gross Domestic Product (GDP). The
study further looked at the relation between capacity utilization
(CU), manufacturing productivity index (MPI) and gross domestic
product in the period under review. Secondary data were sourced
from Central Bank of Nigeria (CBN) Statistical Bulletin and other
relevant government agencies for the period covered in the study,
1981-2021. The data were analyzed using econometric model with
the aid of E-views 8. The results showed that a strong positive and
significant relationship exist between economic growth and
manufacturing capacity variables used. However, it was
recommended that the government should hereby embark on core
industrial project to facilitate local supply of raw materials and
intermediate products that would bring about the much-needed
backward integration in the economy. Improved local sourcing of
raw materials will undoubtedly reduce cost of production and boost
employment generation, thereby making locally manufactured
products’ price competitive, both in the local and international
markets