EXPORT DIVERSIFICATION AND MANUFACTURING SECTOR PERFORMANCE IN NIGERIA

Abstract

The study examined the effect of export diversification on manufacturing sector performance in Nigeria for the period of 1981 to 2021. The specific objective was to investigate the relationship between Extensive Margin Export Diversification with Share of Manufacture
product on total exports in Nigeria; secondly to determine the relationship between Intensive Margin Export Diversification with Share of Manufacture product on total exports in Nigeria. the variables used are; Share of Manufacture product on total exports in Nigeria as the dependent variable, while Extensive Margin Export Diversification index, Intensive Margin Export Diversification index, with control variables like Gross Fixed Capital Formation and Labor participation rate, serves as the independent variable. The data was sourced from International Monetary Fund (IMF) export diversification and quality databases. However, due to the nature of the unit root test which comprises of ADF and PP test, of mixed order of integration, ARDL statistical techniques was applied in analysing the data. From the result, it was deduced that, Extensive Margin Export Diversification possessed a positive and insignificant relationship with Share of Manufacture product on total exports in Nigeria; Intensive Margin Export Diversification possessed a negative and significant relationship with Share of Manufacture product on total exports in Nigeria and the control variables also showed that, Gross Fixed Capital Formation possessed a negative and significant relationship with Share of Manufacture product on total exports in Nigeria; Labor participation rate possessed a positive and insignificant relationship with Share of Manufacture product on total exports in
Nigeria. It was recommended that, Policies that will encourage different sectors in the manufacturing component to also diversify in order to boost productivity in the country and expanding of exports to new products or new markets (extensive margin) in Nigeria; There is need to balanced mix of existing products (intensive margin) in Nigeria before exporting them because by so doing it will improve variety of product being exported and in the long run it will improve manufacturing export product performance.