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CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

The purpose of this study is to analyze how public infrastructure and capacity utilization could aid manufacturing growth in a developing economy like Nigeria. The concern is understandable where productivity growth is major determinant of the future of standard of living. Economist have written extensively on the decline of productivity growth and how it affects output growth and has gone to great length to try identify the reason for the show down. Prior to the early 1970 many Nigerians did not realize the importance of public infrastructure and capacity utilization as a major key to economic growth and development towards a better standard of living hence, it was perceived that public policies to promote economic growth and development international competitiveness were traditionally focused on savings and private investment in plant and equipment to the detriment of public infrastructure has not actually led us to the promise land and this led to a high rate of rural urban drift or migration. Over the years, this has led to the increase in government policy to invest more in public infrastructure as a way of fostering economic growth and development while not equally ignoring the importance capacity utilization in the quest for economic growth.

STATEMENT OF THE PROBLEM

Economists and other close observers have tried to identify the factors responsible for the falling productivity. Notably among the factors are poor and inconsistent public policy, high unemployment and under employment, high and persistent inflation, political instability and increasing military expenditure and the deteriorating state of public infrastructure. Certainly, all these factors to varying degrees influence the rate of manufacturing growth. Prior to the 1970s, government has been making efforts to sustain improvement in the lives of its citizens, which undoubtedly depends on the growth of the economy. Improvements of the citizenry depend on sustainable increase in the per capita output. By this measure Nigeria has not done fairly well due to the drop in oil price of the early 1980’s.

Attention should be given to the serious deterioration of the nation public infrastructure, which raises the question as to whether public capital significant affects economic development? Policy makers and researchers concerned with economic issues have claimed for years that public infrastructure; investment is one of the primary means to implement a strategy of economic growth and development, infact one of the ways local government encourages local industries is through investing in various types of infrastructure.

The quest for industrialization cannot be over emphasized, as can be understood from the study of development economics, that industrialization promotes growth and in the long run development for this reason developing economy is conscious of her industrial growth. Capacity utilization is an essential thing in any developing economy because it helps in ensuring that resources are allocated effectively and efficiently in the establishment of public infrastructure that would be helpful in promoting the manufacturing growth in the economy. Thus, the question which thesis or study, seek to address or the statement of problem is that; due to investment in public infrastructure and capacity utilization improved output growth in the manufacturing sector? Has public infrastructure investment using investment in capacity utilization as it relates to output had positive impact on the citizenry; Does investment in public infrastructure and capacity utilization. In the short run enhance output stabilization or achieve the run the desired macro economic goals in the long run. These are indeed statement or problem that needs to be addressed in this study.

OBJECTIVES OF THE STUDY

This research is aimed at stability the relationship that exists between public infrastructure, capacity utilization and manufacturing growth in Nigeria. The objectives are as follows:

Examining government role in the provision of public infrastructure.

Identifying limiting factors to capacity utilization.

Appraise the importance of both public and private sector investment and output growth.

To measure the effectiveness and impact on output.

SIGNIFICANT OF THE STUDY

The importance of achieving significant results in providing public infrastructure using the required capacity utilization could often hinge on the fact of what is done, how it is done, when it is done and whom it is targeted at.

The study is expected to be a concerted effort to identity articulate and highlight the existence, causes and effects of public infrastructure, capacity utilization and output growth in Nigeria. It is also the quest for streamlining its effect and making them more potent.

It is believed that the research would be beneficial to policy makers and arouse the interest of students to conduct more research in the field of study.

HYPOTHESIS

The study is based on the hypothesis that:

Ho: public infrastructure and capacity utilization have succeeded in improving the manufacturing sectors output.

Hi: public infrastructure and capacity utilization have not succeeded in improving the manufacturing sectors output.

RESEARCH METHODOLOGY

These issues to be raised in this are both theoretical and empirical. A sample regression model will be specified and tested, using a simple regression analysis model. On the theoretical side, effort would be directed towards a review of the development on public infrastructure and capacity utilization and productivity growth which will provide the necessary foundation for simple empirical model.

SCOPE OF THE STUDY

The period of focus of this study will the period 1973 that the post civil war in Nigeria till the year 200, it is pertinent to note the period also include Pre-sab, Sap and Post sap era in Nigeria? More so, the study shall focus primarily on the impact of public infrastructure, capacity utilization for productivity growth in Nigeria.

ORGANIZATION ON THE STUDY

To achieve the stated objectives, the chapters are divided into five as follows: chapter one deal with introduction, chapter two devoted to literature review, chapter three is the researches examining the theoretical framework and model specification, while chapter four is presented and interpretation of regression result; and chapter five deals with summary, recommendation and conclusion.

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