Oil Price Changes and Manufacturing Sector Output in Nigeria: A New Empirical Insight
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Abstract
This study examines the relationship between global crude oil price fluctuations and the performance of Nigeria's manufacturing sector which is a key driver of industrialization and economic development. Given the volatility in international energy markets and their spillover effects on Nigeria’s domestic productivity, the research investigates how oil price changes impact manufacturing costs, output, and pricing policies. Using the Autoregressive Distributed Lag (ARDL) model on secondary time-series data, the analysis finds significant short- and long-term effects, with oil price increases negatively affecting manufacturing output. This indicates that rising oil prices raise operational costs and suppress productivity, undermining economic growth. The study recommends diversifying Nigeria’s energy sources to reduce reliance on volatile oil prices, enhancing local refining capacity to lower import dependence and cost inflation, and increasing investment in infrastructure and capital development to support manufacturing activities. Implementing these strategies would strengthen Nigeria’s manufacturing industry, making it more resilient to global energy market fluctuations and fostering sustainable economic growth amid international instability.
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