Analysis of Government Revenue on Industrial Output in Nigeria

Abstract

G overnment revenue can be used to support small and medium-sized enterprises (SMEs) in the industrial sector by providing them with funding and resources to grow and expand industrial output in developing countries like Nigeria. The paper's objective is to analyze the relationship between government revenue indicators and industrial output in Nigeria using historical data. This is done through the use of a regression model, with data sourced from the Central Bank of Nigeria Statistical Bulletin spanning the years 1987-2021. While Autoregressive Distributed Lagged (ARDL) was used for the estimation. Thus, the ARDL results revealed that the government's non-oil revenue in Nigeria has a positive and signicant impact on the industrial output in Nigeria at a 5 percent signicant level. Similarly, the government oil revenue in Nigeria has a positive and signicant impact on industrial output in Nigeria at a 5 percent signicant level. Also, the speed of adjustment mechanism from the short run to the long run should there be any disequilibrium is 227% and this implies that it will take more than 24 months for any disequilibrium to be corrected in the model of government revenue and industrial output in Nigeria. The paper suggests that the Nigerian government should increase non-oil revenue through investment in the real sector and improving sector productivity, while also improving oil revenue through domestic production and distribution. Additionally, a long term policy strategy is recommended to improve the impact of government revenue on industrial output in Nigeria.