The study empirically examined the impact of capital market on industrial development of Nigeria using a time series data covering a period of 16years (2000-2015). The industrial sector was proxied by Real gross domestic product of the industrial sector, industrial loan and average capacity utilization rate of the manufacturing sector. Capital market variables considered include annual market capitalization of the industrial sector and value of traded securities of the industrial sector while inflation rate was included as a control variable. The ordinary least square (OLS) regression model was used to analyze the data collected. In addition, the simple and multiple regression models were used with the aid of statistical package for social science (SPSS) software package. The study revealed that annual market capitalization has a positive and significant impact on the gross domestic product of the industrial sector. Value of traded securities has a positive and significant effect on the gross domestic product of the industrial sector. Value of traded securities and annual market capitalization jointly predicts industrial loan issued, but none impacted significantly. Finally, the value of traded securities, annual market capitalization and inflation rate are all joint predictors of average manufacturing capacity utilization rate of the industrial sector, but none impacted significantly. Based on the findings of this study, it was recommended among others that government should put in place necessary infrastructures and policy reforms that will enable the Nigerian capital market to effectively and efficiently mobilize long-term funds for the development of the industrial sector.

1.1      Background to the Study
Industrialization can be seen as the backbone for economic advancement in any nation, be it capitalist, socialist or a mixed economy. The possession of industrial capabilities by an economy is considered an important potential for improved economic growth and development. It can be viewed as a veritable channel of attaining the lofty and desirable conception and goals of improved quality of life for the populace. This is because industrial development involves extensive technology-based development of the productive (manufacturing) system of the economy. In other words, it could be seen as a deliberate and sustained application and combination of suitable technology, management techniques and other resources to move the economy from the traditional low level of production to a more automated and efficient system of mass production of goods and services ( Ayodele & Falokun, 2003).

According to Kayode (2015), While Nigeria and most other developing countries are still struggling to catch up with the developed countries, in terms of industrialization, the world has since moved from the age of industrial revolution to globalization! Nigeria has performed poorly and far below expectation, in the area of industrialization, when compared to some regional and global counterparts. For instance, in the United States, Brazil, China, India and South Africa, the manufacturing sector contributes 13 per cent, 15 per cent, 30 per cent, 14 per cent and 15 per cent to their Gross Domestic Product, while employing 13 million, 15 million, 100 million, 30 million and 1.5 million people respectively. In Nigeria, the manufacturing sector contributes a meager four per cent to their GDP, while employing only two million people.

In modern world, manufacturing sector is regarded as a basis for determining a nation's economic efficiency. Industrial sector in advanced economies, serves as the vehicle for the production of goods and services, the generation of employment and the enhancement of incomes. Hence, Kayode (1989) described industry and in particular the manufacturing sub-sector, as the heart of the economy.

Nigeria has employed several strategies which were aimed at enhancing the productivity of the sector in order to bring about economic growth and development. For instance, the country adopted the import substitution industrialization strategy during the First National Development Plan (1962-1968) which aimed at reducing the volume of imports of finished goods and encouraging foreign exchange savings by producing locally some of the imported consumer goods (CBN, 2003). The country consolidated her import substitution industrialization strategy during the second National Development Plan Period (1970-1974) which actually fell within oil boom era. After the discovery of crude oil in Nigeria, the nation has shifted from its preeminent developing industrial production base and placed heavy weight on crude oil production, not only has this jeopardized its economic activities, it also aggravated the nation's level of unemployment. Various policy measures were adopted to ameliorate the above situation, such as the stabilization measures of 1982, the restrictive monetary policy and stringent exchange control measures of 1984, all proved abortive. This led to the introduction of the Structural Adjustment Programme (SAP) in 1986 (CBN,2003). However, despite the introduction of SAP and series of deregulation policies introduced since 1986 by successive governments to facilitates industrialization process in an economically conducive manufacturing environment, the performance of the industrial sector remains undesirable, and the contribution of the manufacturing sub-sector to Gross Domestic Product (GDP) has declined steadily without yielding the desired result. Nigeria as a.....

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Item Type: Postgraduate Material  |  Attribute: 79 pages  |  Chapters: 1-5
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