ABSTRACT

This research evaluated the fiscal policy tool on the manufacturing sector performance in Nigeria (1981-2019). The data used were annual data which were sourced from Central Bank of Nigeria (CBN) Statistical Bulletins 2019 and World Development Indicators from World Bank collection of development indicators. This research work employed Autoregressive Distributive Lag (ARDL). The variables employed for this research were Manufacturing Sector Output (MOPT), Total government expenditure (TGXP), Tax Revenue (TXRV), Gross Fixed Capital Formation (GFCF), and Inflation (INFR). The result from the analysis shows that total government expenditure had a positive relationship with manufacturing sector performance (LMOPT) increasing it significantly by 0.744886 units at 5% level of significance, there also exist a negative relationship with manufacturing sector output (LMOPT) in the long run, decreasing it significantly by -0.503165 units at 5% level of significance , the gross fixed capital formation had a positive relationship with manufacturing sector output (LMOPT) in the long run increasing and was significant by 0.823863 units at 5% level of significance, the study further shows that inflation rate (INFR) had a positive relationship with manufacturing sector output (LMOPT) increasing it significantly by 0.007812 units at 5% level of significance. This study recommends fiscal policy initiatives must be redirected to make Nigeria a producer nation through the manufacturing sector, which will contribute to economic growth and development, Government should spend more on the factors that will encourage manufacturing sector and make a policy that will implement the expenditures rather than siphoning the funds. And the expenditure should be mainly on capital factor that has a significant effect on manufacturing sector performance.