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Rivers State University, Port Harcourt.
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| Title: | Exchange Rate and Manufacturing Sector Output in Nigeria |
| Author(s): | Nyeche E, Amadi S. N. & Oyedokun D. E. |
| Abstract: | This study examined the effect of exchange rate on manufacturing sector output in Nigeria from 1990 to 2020. Specifically, the study investigated the impact of exchange rate, trade openness, and external reserves on manufacturing sector gross domestic product. The annual data used in the study were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin. The independent variables used include exchange rate, trade openness, and external reserves, while the dependent variable is the manufacturing sector output. The techniques of data analysis adopted include descriptive statistical analysis, the Augmented Dickey-Fuller (ADF) test, and the Autoregressive Distributed Lag (ARDL) technique. The long run results show that trade openness and external reserve are positive and statistically significant with manufacturing sector output in Nigeria, indicating that a unit increase the trade openness and external reserve increases manufacturing sector by 0.4852 and 0.2213 units respectively, while on the other hand, exchange rate shows a negative and statistically significant, implying that a unit increase in the exchange rate decreases the manufacturing sector by -0.3305 units. Based on the findings the study recommends that the government should focus on policies that enhance trade openness. This could include reducing trade barriers, simplifying customs procedures, and promoting export-oriented industrial policies; the government should adopt a strategic approach to managing the country's external reserves to support long-term economic stability and provide a buffer against external shocks; and that the government should consider implementing measures to stabilize the Naira, possibly through more consistent foreign exchange interventions, maintaining adequate foreign exchange reserves, and fostering economic policies that reduce rapid fluctuations in the exchange rate. |
| Keywords: | Exchange Rate, trade openness, external reserves, manufacturing Sector GDP |
| Journal: | Journal of Contemporary Research in Economics and Development Studies Vol 2 No 1 |
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