Impact of Fiscal Policy Indicators on the Manufacturing Sector in Nigeria

Abstract

Abstract he government encourages the manufacturing industrial sector by Tcoordinating 􀄗scal measures and all the 􀄗scal policies are blueprints and methods used to generate income, make expenditures, and repay debts in the process of governing the economy and improving industrial output. 􀄉erefore, the study examined the impact of 􀄗scal policy on manufacturing industrial sector in Nigeria from 1987 to 2022. 􀄉e study adopted the ex post facto research design and secondary data which are time series data and were sourced from the Central Bank of Nigeria Statistical Bulletin December 2022. 􀄉e study further adopted the Auto-regressive Distributed Lag (ARDL) approach to estimate the effect of 􀄗scal policy indicators on manufacturing industrial output in Nigeria and the paper revealed that based on the coefficient of the government capital expenditures in Nigeria, oil taxation in Nigeria and public external debt in Nigeria have a negative effect on manufacturing industrial output in Nigeria while, government recurrent expenditures in Nigeria, non-oil taxation in Nigeria and public domestic debt in Nigeria were found to have a positive effect on manufacturing industrial output in Nigeria. However, the probability values of the model revealed that government recurrent expenditures in Nigeria, oil taxation in Nigeria, and public domestic debt in Nigeria have a signi􀄗cant effect on manufacturing industrial output in Nigeria while, government capital expenditures in Nigeria, non-oil taxation in Nigeria, and public external debt in Nigeria have an insigni􀄗cant effect on manufacturing industrial output in Nigeria. 􀄉erefore, the government through the Federal Ministry of Finance and other related Agencies should design a mechanism to track the 􀄗scal policy indicators in Nigeria to ensure that projects are industrially driven, especially the infrastructural projects for a massive increase in industrial output in Nigeria but manufacturing industrial output in Nigeria.