Public Infrastructure Capacity Utilization On Manufacturing Growth In Nigeria

Project and Seminar Material for Economics

Chapter One

Introduction

The purpose of this study is to analyze how public infrastructure and capacity utilization could aid manufacturing growth in a developing economy like Nigeria. The concern is understandable where productivity growth is major determinant of the future of standard of living.

Economist have written extensively on the decline of productivity growth and how it affects output growth and has gone to great length to try identify the reason for the show down.

Background of the Study

Prior to the early 1970 many Nigerians did not realize the importance of public infrastructure and capacity utilization as a major key to economic growth and development towards a better standard of living hence, it was perceived that public policies to promote economic growth and development international competitiveness were traditionally focused on savings and private investment in plant and equipment to the detriment of public infrastructure has not actually led us to the promise land and this led to a high rate of rural urban drift or migration.

Over the years, this has led to the increase in government policy to invest more in public infrastructure as a way of fostering economic growth and development while not equally ignoring the importance capacity utilization in the quest for economic growth.

Statement of the Problem

Economists and other close observers have tried to identify the factors responsible for the falling productivity. Notably among the factors are poor and inconsistent public policy, high unemployment and under employment, high and persistent inflation, political instability and increasing military expenditure and the deteriorating state of public infrastructure. Certainly all these factors to varying degrees influence the rate of manufacturing growth. Prior to the 1970s, government has been making efforts to sustain improvement in the lives of its citizens, which undoubtedly depends on the growth of the economy. Improvements of the citizenry depend on sustainable increase in the per capita out put. By this measure Nigeria has not done fairly well due to the drop in oil price of the early 1980’s

Attention should be given to the serious deterioration of the nation public infrastructure, which raises the question as to whether public capital significant affects economic development? Policy makers and researchers concerned with economic issues have claimed for years that public infrastructure; investment is one of the primary means to implement a strategy of economic growth and development, infact one of the ways local government encourages local industries is through investing in various types of infrastructure.

The quest for industrialization cannot be over emphasized, as can be understood from the study of development economics, that industrialization promotes growth and in the long run development for this reason developing economy is conscious of her industrial growth.

Capacity utilization is an essential thing in any developing economy because it helps in ensuring that resources are allocated effectively and efficiently in the establishment of public infrastructure that would be helpful in promoting the manufacturing growth in the economy.

Thus, the question which thesis or study, seek to address or the statement of problem is that; due to investment in public infrastructure and capacity utilization improved output growth in the manufacturing sector?

Has public infrastructure investment using investment in capacity utilization as it relates to output had positive impact on the citizenry; Does investment in public infrastructure and capacity utilization.

In the short run enhance output stabilization or achieve the run the desired macro economic goals in the long run.

These are indeed statement or problem that needs to be addressed in this study.

Objectives and Rationale of the Study

This research is aimed at stability the relationship that exists between public infrastructure, capacity utilization and manufacturing growth in Nigeria.

The objectives are as follows:

Examining government role in the provision of public infrastructure.
Identifying limiting factors to capacity utilization.
Appraise the importance of both public and private sector investment and output growth.
To measure the effectiveness and impact on output.

Significant of the Study

the importance of achieving significant results in providing public infrastructure using the required capacity utilization could often hinge on the fact of what is done, how it is done, when it is done and whom it is targeted at.

The study is expected to be a concerted effort to identity articulate and highlight the existence, causes and effects of public infrastructure, capacity utilization and output growth in Nigeria. It is also the quest for streamlining its effect and making them more potent.

It is believed that the research would be beneficial to policy makers and arouse the interest of students to conduct more research in the field of study.

Hypothesis

The study is based on the hypothesis that:

Ho: public infrastructure and capacity utilization have succeeded in improving the manufacturing sectors output.
HI: public infrastructure and capacity utilization have not succeeded in improving the manufacturing sectors output.

Methodology

These issues to be raised in this are both theoretical and empirical. A sample regression model will be specified and tested, using a simple regression analysis model.

On the theoretical side, effort would be directed towards a review of the development on public infrastructure and capacity utilization and productivity growth which will provide the necessary foundation for simple empirical model.

Scope of the Study

The period of focus of this study will the period 1973 that the post civil war in Nigeria till the year 200, it is pertinent to note the period also include Pre-sab, Sap and Post sap era in Nigeria? More so, the study shall focus primarily on the impact of public infrastructure, capacity utilization for productivity growth in Nigeria.

Organization on the Study

To achieve the stated objectives, the chapters are divided into five as follows: chapter one deal with introduction, chapter two devoted to literature review, chapter three is the researches examining the theoretical framework and model specification, while chapter four is presented and interpretation of regression result; and chapter five deals with summary, recommendation and conclusion.

Chapter Five

Summary, Recommendation and Conclusion

5.1 Summary

The study investigated the relationship between public infrastructure capacity utilization and the manufacturing growth in Nigeria and verified the effect of openness on the relationship. In particular keen interest was focused on assessing the efficacy of capacity utilization, interest rate and school enrolment on the manufacturing growth in Nigeria. Also the impact of inflation, capital formation and GDP where also assessed.

Therefore, based on the foregoing, the highlights of our finding are as follows:

That school enrolment was found to impact positively on the manufacturing growth and that it is very significant.
Interest rate has a strong impact and is also significant to the manufacturing sector output.
That capital formation thought impacted positively on manufacturing sector, was a weak predictor of manufacturing growth.
Capacity utilization is a key determinant in the manufacturing sector as it showed. A relatively strong prediction of output growth.
Inflation which is supposed to have a negative relationship however refuted theoretical expectation sowing that every economy needs inflation to grow but it showed that inflation in Nigeria is a weak predictor and determinant of the manufacturing sector.
That the one period lagged manufacturing sector out put impacted positively on the current output, which shows that output, of previous past periods influenced the output of the current period.

5.2 Recommendation

Having dealt extensively on the tenet of this paper, the following are the recommendation:

In view of the important of educational human capital investment, government should expand the educational facilities to accommodate more students which will in turn result to rise in school enrolment rate in Nigeria.
High school enrolment should be as a matter of fact be complimented with qualitative delivery of educational instruction in sort, this is necessary so that the students who are enrolled in a school acquire the knowledge at the end instead if acquiring just paper results.
That interest rate on loans should be minimal so to encourage investment to the manufacturing sector for expansion.
There should be prevention of further deterioration in the public infrastructure. Ensuring that maintenance culture is inculcate into every body so that quick and immediate repairs are carried out on broken down and ageing infrastructure In the country.
Since capital formation and capacity utilization impacted positively and significantly on infrastructure sector output emphasis should be placed in ensuring the measures that promote higher investment in this area are pursued vigorously.
Also the government should effect policies which would protect infant industries. This can be done by placing high duty tariffs on importation of products that are highly competitive in the market to encourage purchase of locally produce product which in turn would increase output growth.
That with expansion of domestic market with increase in gross domestic product it would be able to improve and impact positively on the manufacturing sector growth.

5.3 Conclusion

The study of the impact of public infrastructure capacity utilization and the manufacturing growth in Nigeria has clearly shown that investment in public infrastructure and capacity utilization is a veritable means of fostering and promoting output growth in the country. As we known that a significant relationship do exist between public infrastructure, capacity utilization and manufacturing growth in Nigeria.

Increased investment in capital formation capacity utilization, school enrolment and a minimal interest rate would help in playing a vital role in determining the growth of the sector. The availability of these factors would encourage higher productive output and being about a better welfare package for the citizenry in the country.

However, due to low emphasis on investment, maintenance culture low level of resources being utilized in the country among other factors are responsible for the insignificant impact on public infrastructure on the material Koutsoyiannis (1989: 115-117) vividly showed this when the point that businessmen would want some reserve capacity. He also painted out how some types of technologies makes it necessary to have excess capacity.

This factor as pointed out earlier informs the entrepreneur’s decision in installing more than required capacity.
The view was corroborated by Sutcliffe (1971:201), when he said that the main reason for capacity under utilization is the small size of the plant which has been adopted. Teriba etal (1981:81-83) has also identified demand efficiency as major factor affecting capacity utilization.

In other to reduce or eliminate totally, bad layout, method or cork study has been suggested by Burbrigde (1978:123) availability of infrastructural as been identified as factors affecting capacity utilization, Fabayo (1981:40). Also strikes pickets and lockouts as also some of the factors hinder full capacity utilization. In some vein the influence of informal work has been identified as a factor.

Meanwhile, the (2004) Embassy of federal Republic of Nigeria declared that import duty rebate was introduced in 1995 to ameliorate the adverse effect of inflection and to ensure increase in capacity utilization.

However, the UNF, USA (2006) strongly supports system democracy and economic growth in Nigeria also points that investment in the public infrastructure leads to increase in manufacturing growth. The (1999) Central Bank of Nigeria (CBN) zonal conference death length with the issue of public infrastructure and productivity growth.

Project Material Download