Impact of Fiscal Policy Indicators on Non-Manufacturing Industrial Sector in Nigeria

Abstract

A b s t r a c t In Nigeria, government expenditure has continued to rise due to the huge receipts from the production and sales of crude oil, and the increased demand for public goods. Unfortunately, rising government expenditure has not translated to meaningful industrial growth and development. Therefore, the study examined the impact of fiscal policy on the non-manufacturing industrial sector in Nigeria from 1987 to 2022. The study adopted the ex post facto research design and secondary data were sourced from the Central Bank of Nigeria Statistical Bulletin December 2022. The study further adopted the Autoregressive Distributed Lag (ARDL) approach to estimate the effect of fiscal policy indicators on non-manufacturing industrial output in Nigeria and the paper the study revealed that the government recurrent expenditures in Nigeria and oil taxation in Nigeria have a positive and significant effect on nonmanufacturing output in Nigeria and though the non-oil taxation in Nigeria has a positive impact on manufacturing industrial output in Nigeria its effect was insignificant in improving the level of manufacturing industrial output in Nigeria while, government capital expenditures in Nigeria, public external debt in Nigeria and public domestic debt in Nigeria have a negative effect on manufacturing industrial output in Nigeria. Therefore, the government through the Federal Ministry of Finance and other related Agencies should design a mechanism to track the fiscal policy indicators in Nigeria to ensure that projects are industrially driven, especially the infrastructural projects for a massive increase in industrial output in Nigeria especially, the non-manufacturing industrial output in Nigeria