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Abstract

In consideration of the relevance of industrialisation to sustainable growth and development, this study investigates the determinants of industrialisation in Nigeria. In doing this, the dynamic OLS estimator is employed for analysis of annual time series data spanning the period from 1981-2022. The study finds that FDI, trade openness, exchange rate and government capital expenditure are significant determinants of industrialisation. Specifically, it is found that industrialisation is positively affected by increased FDI inflows and government capital expenditure, and negatively affected by trade openness and currency depreciation. Domestic investment and financial deepening are found to have non-significant effects on industrialisation. Based on the empirical evidence, the study recommends as measures to (further) industrialise the economy: (i) increased government capital expenditure especially expenditure in energy generation (and transmission), transportation, telecommunication, research development and other viable pro-industrialisation capital projects, as industrialisation could be state-assisted; (ii) efforts by the government to enhance the attractiveness of the economy and position same for FDI inflows. (iii) selective trade liberalization with due consideration of infant industry-protection and import-substitution strategies and (iv) strengthening of the local currency using appropriate policies.