Evaluation of factors influencing industrial production in Nigeria

Abstract

Despite the relevance of the industrial sector in shaping the progress of an economy, there still existed factors that impede its growth. In order to evaluate this factors the study used inflation (FLATION), exchange rate (CHANGE) and (VATAX) as the explanatory variable while manufacturing production was used as proxy to the explained variable (industrial production).
Longitudinal research design was employed to evaluate the influence of inflation, exchange rate and value added tax on manufacturing production in Nigeria. Time series data that spanned 1989 through 2022 from online database. Probability sampling techniques was employed. Quantitative data analysis (descriptive statistic & inferential statistics) was used
since it involves numerical data and often includes statistical techniques to identify patterns, relationships, and trends. Results from analysis showed that FLATION and VATAX had insignificant influence on manufacturing production but CHANGE had a positive significant influence on MAPROD. Conclusively, the R-square statistics showed that the study variables has 55% influence on industrial production in Nigeria. Hence, it is recommended that economic regulators should embark on policies aimed at controlling inflation, as lower and stable inflation is generally favorable for economic stability and growth. Also, maintaining exchange rate stability is recommended, as volatility might impact manufacturing sectors indirectly through investor confidence and import/export costs. Although VAT shows an insignificant effect, it might still impose burdens on manufacturing firms. So government should re-evaluate and potentially reform VAT policies to alleviate any burdens on the
industrial (manufacturing) sector, possibly through targeted tax incentives or rebates for industrial firms.