Productivity And Economic Growth In Nigeria: A Case Study Of Manufacturing Sector

Productivity And Economic Growth In Nigeria: A Case Study Of Manufacturing Sector

Productivity And Economic Growth In Nigeria: A Case Study Of Manufacturing Sector

The economic world we are living in is competitive and therefore nations must have to work hard and produce goods and services so that they can compete favorably with other nations.

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The ability to compete with other nations is very vital for their survival as a nation. Since their survival depends on their ability to provide basic goods and services to the people, there is need to increase productivity in all sectors of economy. That notwithstanding, productivity according to Robert et al (1988), productivity is the amount of output produced per unit of output. Because labour is the most important input, the most popular measure of productivity is labour productivity or output per hour of labour. According to the author, when economic talk about productivity, they usually mean labour productivity. Furthermore, Udabah S.I et al (1998) highlights that every developed country is very conscious of the relationship between her level of productivity and her ability to compete with other developed countries in the world market for industrial products. Again, it is obvious that in Nigeria, as in many other developing nations, low productivity contributed significantly to our economic problems. In fact, one of the major characteristics of developing nation is low productivity which could lead to other problems like those of low income, low savings, low investment and unemployment (ibib:). Consequently it was observed by Robert. E that productivity is that unit of output low productivity in a particular country further shows itself not only in the high prices of industrial products in the domestic market but also in the lack of competitiveness in the international market.

As a result of that, nations should be more productive in order to earn enough foreign exchange to pay its imports, hence there is almost continues comparison in levels of productivity among the worlds great industrial nations. This is for the simple reason that productivity determines the living standards of the people and the degree of economic growth and development. Economic growth depends on both the growth of resources and technological progress. Advance in technology allow resources to be more productive. On the other hand if the quantity of resources is growing and each resources is more productive, then output grows even faster than the quantity of resources. Economic growth, then is the sum of the growth rate of total factor productivity and the growth rate of resources economic growth = growth rate of total factor productivity (TFP) + growth rate of resources. The amount that output grows because the labour force is growing depends on how much labour contributes to the production of output.

Additionally, Jhingan (2005), maintain that in most developing nation, like Nigeria, the rate of production is low. To some extent low production is an aspect of the vicious cycle pf poverty in which many developing nation are trapped. Based on the writer, poor standard of living, bad health, lack of education, poor housing, poor transportation to and from work, bad and unfavourable working condition etc, reduce the workers productivity, and low productivity on turn reduces the capacity of the society to improve living standards. As a result, the psychological effect of poor living standard on the mind of workers may be even more serious. In his view, motivation to work is low, particularly if the workers feel cheated and exploited, and the will to work is correspondingly reduced. Furthermore, when motivation and job satisfaction is low, productivity will also be low.

In the same manner, the concept of production function systematically relating outputs for a given technology is often used to describe the way in which societies go about providing for their material needs. However, Udebah (1998) pointed out that technical, engineering concept of a production functions needs to be supplemented by a broader conceptualization that includes among its, “other” inputs- managerial flexibilities. Throughout the developing nations, levels of labour productivity (output per worker) are extremely low compared with those in developing countries.


An argument has been put forward that productivity is a (disgracing) challenge to economic growth and development. Based on fact, Eboh (1998) maintain that “Nigeria is among the 20 poorest countries in the world despite its widely acknowledged huge economic potentials”. It has been evident that the widespread of poverty in Nigeria today remains the major challenge to Nigeria’s development efforts. Prior to this, there is low worker productivity in Nigeria. By worker of productivity I mean the amount of work of acceptable quality provided by an individual or group of individuals in a given time period. Having said that, the low level of human capital in Nigeria is quite developing. That is the productive skills and degree of knowledge possessed by individual worker, obviously, labour is a productive resources.

However, not all kinds of labour yield are the same volume of output. Generally speaking the lack of their skills also is often tied to lower level of education. Additionally, it is important to know that human capacity does not only includes study skills and knowledge but also includes good health. Again, lack of human resources development is an essential ingredient militating against development in less developed countries. Such underdeveloped countries lack people possessing critical skill and knowledge required for all round growth and development of the economy, they’re by lowering the productivity of the country’s output.

More so, the most widespread obstacle to development manifest in the developing countries is capital formation. This is as a result of the vicious circle of poverty. In less developed countries (LDC’s), the masses are poverty ridden. Hence, they use outdated capital equipment and methods of production. They practice subsistence farming, lack mobility and have little connection with the market sector of the economy. These ugly development, however decrease Nigeria’s productivity. Therefore, the productivity of the LDCs is marginally low. Low productivity leads to low rate of capital/savings as well as low demand for goods and services.


(1) What are the factors militating against productivity in Nigerian economy?

(2) What are the effects of low productivity in the economic growth and development of the Nigerian economy?

(3) How does poverty contribute to low productivity in Nigeria’s economic development?


The primary objectives of this research work are:

(1) To examine the causes of low level of productivity and economic growth in Nigeria economy.

(2) To know whether there is a relationship between productivity and economic development in Nigeria economy.

(3) To make appropriate recommendations that would help in solving the problem.


The justification of research is its value and contributions to already existing knowledge and the solution the research renders for ameliorating the practical problems of concern Obasi (1999). From the above quotation, this research is however, structured:

To afford the opportunity for the government at all levels and nongovernmental organization to further re-examine other factors that brings about poor productivity (GDP) in Nigerians economic activities.

To enable the government formulate its policies and procedures and thus come up with the best strategies that can pave way for better productivity and economic development in Nigeria.

Finally, is to create further inquiring into the nation of Nigeria productivity transition and again, series as a source of information for social science research.


By hypothesis, we mean a statement, which guides an investigator by providing a tentative solution to the research problem (Iyiogwe and Awoke 2005).

HO: productivity does not have any effect on the economic growth and development of Nigerian economy.

Hi: Productivity has effect on the economic growth and development of Nigeria economy.


This research was conducted on productivity and economic growth in Nigeria. To narrow down the research study, manufacturing industry in Nigeria serves as a case study from (1993 – 2003).


The limitation of a study refers to constraints, factors or problems, that in one way or the other, affect adversely the quality of the research in terms of say validity of data collection instrument. Hence the limitation include:

Inadequate information/Data Resources:

Lack of co-operations from the private and public organizations was a serious constraint to this study. The scarcity of library resource and the likes however, posed a serious limitation to this work.



In every country whether developing or developed economy or certainly planned economy, the major source of capital output growth is in an increase in productivity Abamovitz (1981). Per capital output growth is in turn an important component of economic welfare. Historical experience of the advanced countries has shown that people and the technology are the main sources of productivity as an engine of industrial growth. The success of any productivity programme, depend on both labour and capital. The key to the growth in industry and growth of economy in general is an increase in productivity.

Productivity is defined as the relationship between the volume of goods and services of acceptable quality and price that are produced and on the other hand, productivity factors which could be the volume and quality of products and services bought by the market and the total resources used to produce and distribute them Abramovitz (1981). Relative contribution of capital, labour and factor productivity to growth process has attracted considerable attention in an under developed and developed countries. In many developing countries low productivity is to some extent an aspect of the vicious cycle of poverty in which they are trapped. Poor standard of living is related to lack of education, poor transportation to and from work, and bad workers productivity Onitini (1987) low rates and the capacity of the economy to improve the standard or living. Furthermore, the Asian experience has also maintained that human capital is one of the main agents of productivity growth and economic growth. The rapid growth in these economic was facilitated by the availability of highly skilled domestic engineers and workers who could make productive use of foreign knowledge and imported capital.

Also in analysis of productivity growth in the past was Japan, Homade and Honda (1995) suggested that rapid growth proceeded as follows: technical growth was brought about by importing technology but to assimilate it for increased productivity, there was need to invest first in human capital as well as in machines and equipment. New investment created from specific skills that could be acquired by on the joy training. The combination of borrowed technology and firm specific skill formation to adopt the rapid growth are Hama and Honda (1995). Olalya (1985) in his study he aimed on analyzation of total factor of productivity in Nigeria manufacturing industries. On his work, (1962-1980), he defined factors of productivity as p = 0, xc

Where P = Total factor of productivity

O = index output

Xc = index of total factor input

Also, a production function of the Cobb Douglas form, with constant returns to scale was specified. Thus:

X = A [t] KB n1 – B

Where a = Technical progress a function of time

K = capital input

N = labour input

B = production elasticity. With respect to capital he used data from secondary source the study used net capital expenditure as a measure of capital services. The study also used per worker earnings as measure of labour services.

In his result, using the statistic information for the year 1962 through 1980, the total productivity trend equation is estimated as Log p = 2.334 + 0.0206 x in the equation, the average percent rate of total productivity growth is 2.06. He concluded that a lot of factors have co-joined for the growth of total factor productivity. One of them in increased quality of the work force through education and training.

Finally, he recommended that government and management of industries should establish a necessary institutional machinery to increase productivity. Okorie (1992), in her study reviewed human capital activity in Nigeria, given the importance of human capital investment for higher productivity. She went further to examine the concept and measurement of productivity.

According to her, by productivity we are measuring some relationship between the quality of goods and services produced (output) usually factor input such as labour and capital that is

Productivity = output


She went further to say that productivity analysis is important for improvement, this indicates areas where improvements are required or how well improvements efforts are doing. The most common approach to the measurement is to assume a new-capital production function at the sectional or industrial level such that y = f (v, t) where

v = vector inputs

t = Time index

Also the index of total factors productivity was given as the elasticity of output with the respect to time.


y = df/dy


Total factor productivity can also be measured by the formula

Pt = QT

L + C + R + Q

Where pt = Total productivity

Qt = Labour input

C = Capital inputs

R = Raw materials and purchased parts inputs

Q = other miscellaneous goods and services inputs factor.

In addition total factor productivity is index of partial productivity, which is defined as: partial productivity

= Total output

Partial Input

The partial input can be capital or labour in many ways the most important of productivity is that of labour. At the national level labour productivity is computed by taking the entire economically active population as inputs and the total value of goods as the output.

National Productivity = GNP

Working population

Moreover, her study also found that an overwhelming majority of the civil servants, especially the junior staff had never attended any training programme.

Finally, she concluded that the experienced of the advanced countries and rapidly industrializing countries in Asia have shown that human capital investment is a major factor in productivity growth and consequently economic growth.

Further, an Anas et al (1996) in their study with the aim to determine the contribution of infrastructure of productivity, according to them the central question in economic development is the extent to which infrastructure investment positively influences the economic growth and productivity of nation.

Moreover, they went further to study how the productivity of an urban economy responds to infrastructure services and then how increased productivity in urban areas shapes macro –economic growth. However, practical consideration restricted the scope of their study in a number of ways:

 They focused on the infrastructure related problems and investments of manufactures only.

 Secondly, relatively little data on infrastructure needs and conditions were available for individual manufactures in economy.

 Thirdly because project resources were limited, they could not devote equal attention to each of the important infrastructure sectors on which they collected data. They studied three countries (Nigeria, Indonesia and Thailand) using a united framework of analysis, models and concepts. The use of the there countries allows them to make comparisons pf how manufacture needs affective productivity in the three countries therefore, their theoretical model and its associated econometric procedure be applied to the other infrastructure sectors. Their empirical findings are grouped into two parts:

 Those, which are supported by the descriptive analysis of the data in the three surveys as well as their field observation.

 Those, which are revealed by the econometric testing of our micro-economic model.

The findings from descriptive analysis show that business remains captive to the inadequate public service incoming the higher cost associated with the unreliability of such services. This results in lower productivity, less output and low or quality output.

Also, a robust econometric founding show that lack of adequate infrastructure facilities heads to how productivity.

Finally, they recommended that the government should allow private sector participate in the infrastructures provision. “Our policy recommendation apply with full force in Nigeria when the government countries to be protective of public infrastructure monopolies and not friendly to private sector participation. Our recommendation are supported by the relative success of Indonesia of the deficiencies have been rendered less serve, in parts because the public sector has encouraged the private sector involvement in infrastructure provision.

Also Denison (1983) in his study on the interruption of productivity growth in the United States between 1948-81. Between 1948 and 1973, there was an average annual increase of 2.5% in labour productivity of this increase, Denison attributed 0.3% to changes in the labour force as measured by education accounted for 0.5% which he found that the increase in physical capital contributed 0.4% increase in output per water. An improved allocation of resources added 0.3%; economics of scale added 0.4%.

Finally, advances in knowledge accounted for 1.1% almost half of the total increase.

But I 1973-1981, there was an average annual increase of –0.2% of labour productivity of 0.3% was attributed to changes in labour force when he found that an improvement in the quality of labour force, as measures by education accounted for 0.6% also he found that there is decrease in physical capital to 0.2% and the improvement in allocation or resource fail to 0.

Also economics of scale reduced to 0.3% finally, advances in knowledge fell to 0.1%, therefore before the period (1973-81) labour productivity become stagnant.

The most important conclusion of Denison study was hat a significant source of productivity growth is an improvement in technology, inventions, and better methods of production.

Although, productivity growth resulted from a combination of causes, no single determinant held the key to productivity growth nor could every simple strategy such as increasing the investment in plant and equipment-hold out hope for a major acceleration of productivity growth.


The effective tools for making decision at all economic levels are productivity measure and analysis. Therefore, productivity improvement process indeed is for sound decision-making. Productivity measurement is important for effectiveness of the organization because it indicates where to look for opportunities to improve and also shows how well improvement efforts are forming, productivity measurement, while there is nothing wrong with measuring labour productivity, this constitutes only one of the factors of a forms productivity manager need to have a broader view of the facts affecting overall form productivity. Hence, professionals have realised the need to mean total factor productivity rather than just labour productivity.

Total productivity is measured as a ratio of output to input to resources. Total productivity measures reflect the relationship between the total inputs of an enterprise.

T.P = Total Output.

Labour + Capital + Material + Energy + Others

There are many approaches to productivity measures because different groups of people have different goals. Some simple and practical approaches to productivity analysis are:

 Measurement system for planning and analysing unit labour requirement.

 Measurement systems of labour productivity aimed at the structure of the labour resources used.

 Measurement of capital productivity.

 Value added productivity at the enterprise level. Normally, the method of measurement is determined by the purpose of the productivity analysis. Three of the most common among them are:

 Comparing an enterprise with its competitors.

 Determining the relative performance of departments and worker.

 Comparing relative benefit of various types of inputs for collective bargaining and staring gains. Among the most important requirements for sound productivity measurement, the following should be given specific consideration.

 Measurement result should indicate accountability as much as possible.

 The source of profit i.e. whether the profit comes from real productivity growth or inflationary pricing.

 The measurement system should be understood and trusted by management and employees.

 All resources and business activities should be included in the measurement.

 The result should clear signals for managerial decisions and actions in improving profitability.


Economic growth at present is a major pre-occupation of governments and of the public option. Industrial development is an indispensable part at the same time a pre-condition and a consequence of economic development. Together with the diversification and technical development of the economy as a whole one of the very conditions of economy growth is industrialization and in particular the development and increase of the share of manufacturing industries. (The greater part of industrial development in the Soviet Union took place after the 1920’s and in other European Socialist Countries after the late 1940’s industry however, still receives particular attention on these countries both for the material good. It is expected to deliver and for its impact on the technical development of the economy as a whole).

Industry however, is still the most dynamic part of an economy. The level of productivity is a central determinant of the standard of living which invariably resource economic growth. Low productivity in particular countries of industrial products lack competition in the international market. To some extent, low productivity is an aspect of the vicious circle of poverty in which many developing nations are trapped. Poor standard of living – ill-health, lack of education, bad housing, poor transportation to and from work, bad conditions in the work place etc reduce the workers productivity and low productivity in turn reduces the capacity of the society to improve living standards. However, the role of education and training productivity improvement is much wider than it seems. Many observers believe that productivity objectives should be built into the educational system, such that at any level in the educational pyramid the students would have acquired a minimum level of discipline and motivation in his approach to tasks and problems. High levels of productivity can be achieved under various economic systems, provided that economic and social policies are consistent with the requirements of increased productivity, fairness and justice in the ordering of society proper working conditions, appropriate rewards for increased productivity, an educational system geared to improve productivity.


The stock market is an institution, which is highly influenced by the savings and investment pattern of the citizens of a nation (the Nigerian stock market is an institution that has been growing since its inception in 1961).

In Nigeria context, the growth of the stock exchange market is seen to have mainly been influenced by income. Osazee 1985 said that “activity in stock exchange is often and indication/indicator of economic performance and the flurrying activity is measured by the movements and behaviours of stock prices in any exchange, Nigeria inclusive”.

The stock exchange does not provide capital, what it does is to provide market for the resale of transferable securities, which have already been sold. The Nigerian stock market has recorded steady growth since inception. In 1961, securities have grown from nineteen (19) in 1961 to two hundred record of N57.2 billion worth of transactions stocks and shares. Securities investments are a veritable medium of transforming savings into economic growth, Nicks 1965, argued that savings cannot be an end on itself but a means to facilitate economic growth and development. The existence of the stock exchange in a capital market helps to broaden the share ownership base of companies, and evenly distributes the nation’s wealth by making it possible for people in different location to own shares through the simple mechanism of the stock market.

One of the features of economic development in Nigeria since 1900 is the expansion of long-term securities market and the increase in proportion of investors that put their savings into these securities i.e. stock exchange, Edo, 1995.

The extent of price movement experience on the Nigerian stock market constitutes on important indicator or performance and growth/productivity. A company that posts a superior profit would be expected to command higher price than another, which achieves only moderation profit levels, still Edo, (1995). Similarly, a company that achieves a lower than average level of returns would in all probably experiences a negative price change, Anis et al, 1996. The aggregate price changes tend to reflect general on the state of the economy or shifts in investors collective expectations.


Growth of an economy derives from investment in such economic. A key role is assigned to investment as the propellant of economic agents in turn thrives on the existence of investment climate this largely explains why nation consciously put in place incentives to encourage prospective investors, both local and foreign. Measured at 1984 constant factor cost, the Nigerian economy had factor over on the nation output of goods and services between 1980 and 1995 successive increase were recorded on the national growth table except the slight decline recorded between 1982 and 1985, Olalya, (1985).

An examination of the sartorial contribution to GDP growth however, reveals that the nation’s economic growth was agriculture led. The contribution of the manufacturing sector was by no means dominant. Yet long-run growth and development of an economy demands that the economy will be industry led. The rear place occupied by manufactured products in Nigerian’s economy growth is largely explained by inadequate investment in the economy Anyawu (1993). Indeed, he maintain that manufacturing in Nigeria appears to be favoured sector, probably because it is generally believed that the main instrument of rapid growth structure change and self sufficiency lies in the manufacturing industry. Thus, resources have been channeled into this sector through heavy public sector investment; essentially import substitution basic industries through generous financial incentives, on addition to high level of production for private investment. High investment rates generates high rate of capital formation which helps to fuel growth but capital formation cannot fuel growth strictly, capital formation is the increase in the capital stock that results from investment spending (Chirinko and Morris, 1994). Complementary factors such as favourable economic environment, improved technology, adequate and efficient infrastructural facilities stable and predictable political environment etc also crucial factors that impinge directly or indirectly on the level of the investment such as other factor as stable fiscal and monetary policy incentives also help to elicit high investment rates in an economy. Aware of the importance of investment rate in the economy, successive Nigerian government have put in place a number of incentives to encouraged both local and foreign investors in the economy, these incentives are broadly into four forms, they are: tax incentives/concessions, tariff concession, non tax financial incentives and key infrastructural development project. Although Nigerian government are always unsuitable in policy decision-making.


First of all, the concept and definition of the word “factor” must be determined. For the purpose of this research it is prudent to state that a factor is any force or impact, which changes with the productivity level and its rate of growth (Chen 1997). Again he said that to improve productivity and quality we have to be aware of the entire critical factor (forces and impacts) in order to influence them by adopting different sets of actions.

The most common and practical definition of productivity is the relationship between, on the one hand, the volume of goods and services of acceptable quality and price that are produced and sold and on the other hand the necessary input costs, the most evident productivity factors could be the volume and quality of products and services bought by the market and the total resources used to produced and distribute them. By increasing output and improving quality in accordance with market demand, you can also do this by reducing the volume and cost of resources used.

Classification of factors: Every company has its organizational structure reflecting various functions, products or job specification, no single person or unit has ever been able to cope successfully with all the productivity and the quality factor at the same time. These specialisations indicate who and which parts of the organization can deal effectively with each other factor. For this reason, in order to make good management decision concerning productivity improvement, it is very important to classify all the productivity factors, into some general groups and sub-group which help to allocate to each its proper weight and priorities and put them in the care of the rights persons and organizational units.

External and Internal Factor: This classification is the most general and it help to group facts into those enterprises that management cannot control or influence in the short run, external factors and those that are under enterprise management control and should be influenced by it (internal factor). A study conducted by Mckinsey revealed that 85% of the American companies are internal to the organization and controllable management while barely 15% are external and beyond management control. A Kepner-Tregor study further showed that 80% of the internal, award 70% of productivity factors in industrialized market. Economy countries are under managerial control. In developing countries and countries under going a transition to a market economy, the reverse could often be true in view of their economic crises and unnecessarily high level of government intervention as well as their dependence upon the developed economies markets. Indeed, too much government intervention and unreasonably high taxation could kill the business or derive it underground.

Process-Related Factors: Production process is a complex, adaptive and continuing socio-production system. The inter-relationship between labour, capital and socio-organizational environment are important in the way they are balanced and co-coordinated into an integrated whole. Productivity improvement depends upon how successfully we identify and use the main factors as the socio-production system. Since the main consequential elements of any production process are inputs, process output and feedback, it is often useful to classify the productivity and quality factors into four groups;

Input (resource-related)

Process (transformation of resource into products)

Output (products and services sold) and

Feedback (measurement or results)

These groups of factors must be well balanced and

coordinated. For example, if you spend too many resources on input and neglect the transformation process, the essential parts or input would be wasted.

A well-designed technological process could share a lot of input. However, even balanced input and process elements can be wasted if the delivery of output to the market is late, or its packaging is of poor quality. Feedback [in this case, productivity measurement and analysis] would provide the best criteria to judge the balanced combination and coordination of input process and output factors.

Resources Related Factors: Many specialists of productivity factors link them only with resource-related such as manpower and capital. The manpower factor includes work motivation etc when the capital factor is discussed land, plant, equipment and facilities are usually mentioned. This classification is particularly important since it corresponds well with partial productivity measure such as labour productivity and capital productivity. The analysis of capital/labour ratio productivity provides very important information for managerial decision-making by improving the quality and possible combinations of resources and the ways on which they are used.


External productivity factor may be considered as environmental forces, which are not under the enterprise’s control in the short term, internal productivity factors are those, which could and should be influenced by the enterprise management. Following the internal productivity factors through the production process, each of these elements has its specific objectives and logic. The first organizational element (input factors) is responsible for the provision of all necessary resources or the proper quantity, and quality and price and at the right time and place.

The second element is the actual production process – the process of transforming resources [input factors] into products i.e. output. Feedback could also consider as an important part of the production process, since it deals with the measurement and analysis of the important product stages and results, and with productivity (effectiveness).

The third and last element [output factors] deals with the product mix; packaging, pricing sales, delivery and after sales services etc.

The optimal combination of these three groups of factors is critical in achieving an overall productivity improvement for the whole enterprise.


1. Capital, Plant Equipment: These include the volume

and structure of capital investments, the level of innovation, costs, quantity and reliability and certainly the appropriate technology for the chosen production/technological process. It is the task of company management to look into the capital goods that are on the market and to make the appropriate analysis and justification to minimize cost and to maximize future returns on investment [ROI], which is an actually capital productivity.

A cheap and low-skilled work force is often a barrier to mechanization which developing countries could be much more expertise than labour. However, in short term the result of productivity analysis may point to substitution of capital by labour, which could improve both productivity and employment opportunities in some regions. The long-term trend is for the substitution of labour (particularly low-skilled labour) by capital.

1. Material and Energy: Improving productivity also

Depends to great degree upon the optimal choice of material even before their use in the production process. The material yield (output per unit of material or energy used) depends upon selection of the material that is right, its volume and mix, its quality and its price (market).

2. Technology and Know-how: These and other

Information, which is brought in the market place, should also be considered as an input factor, and thus every reasonable cost of reduction on this side would contribute to productivity improvement. In technology choice, many criteria should be taken into consideration, but the most common and important are; cost/benefit prospects; environmental friendliness; availability of equipment for the chosen technology, and mass/individual production expectation.

3. Product Design: Product design may actually be

Considered as a productivity factor at all stages of production (input process – output) if product design is undertaken by the producing company it should be considered as a process factor, but if it is brought in the market place, it should be viewed as an input factor like any other externally purchased resource. On the input side it is important that the design of a product ensures that it can be produced with the least possible use of labour and capital. The important of product design, therefore, product designer can contribute greatly to productivity improvement.

4. People/Manpower: (Workers, engineers, managers

5. And entrepreneurs) is the principle resource and the

Central factor in productivity improvement derives. On the input side the most considerations, when dealing with the choice of workers, specialists and managers are their skills and education, the career and incentive expectation, their attitudes and values and their health. Skills and education are critical for all kinds of production. The invention of new product is essentially an elite activity and can be very successful when based upon elite education. In many cases, the education and skill of the 25% of company manpower are what counts.

6. Process-related factors: Effective process

Organization and management is the next important condition of productivity growth in many manufacturing or Service Company.

This decisive stage, when available resources (input) are transformed in final products or services to be sold (output). In this connection, the most important productivity factors in the process stage are linked with:

I. People (workers, specialists and managers)

II. Technology

III. Product design

IV. Plant and equipment

V. Material and energy

VI. Work methods and

VII. Organization and management styles

Output factors (Related factor): By output factor productivity, I mean the extent to which the product meets output requirements. Many companies around the world fight a constant battle to incorporate technical excellence into marketable product for example; leading Japanese companies continually redesign products, which are on the market.

Product place value, time values and price value refers to the availability or the product at the right place, at the right time and at a very reasonable price.

The following check list may be suggested for productivity factors analysis or the output sale.

1. Product/service volume

2. Product/service quality

3. Product/service customer (after sale service)

4. Timely and reliable delivery

5. Innovativeness of product/services design

6. Good packages product/services

7. Product/services mix

8. Availability at proper place and time

9. Long-term guarantee and good warranty systems

10. Product influence on market share and penetration

11. Product influence or corporate image; and

12. Product environmental characteristics.

These most important output productivity factors should be kept in view by management, particularly design, sales and marketing managers, in order to improve market penetration and product distribution to customers.


These planning have only recently come to awareness of many, together with the identification that the principal source for the development of every country lays not its “human resources”. Economic thinking previously considered investment as the principal moving force of development. This was reflected in the Harrod-Domar model or in the neoclassical Cobb-Douglas type of production functions where production appears as a function of capital and labour, increases in productivity being the result only of increase in capital per head. The residual term here can be considerate as reflecting the increases of skills, technical development, and overall productivity change.

Manpower planning has both a formal, static aspect when operating mainly with accounting identities and a dynamic aspect when dealing with qualitative changes, the substantial part of planning. What was the measure of the plan is only the skill composition of the labour force, change in the numbers of and the share within the total of persons having completed elementary, secondary and higher education, and the share of unskilled semi-skilled and skilled workers or of engineers and technicians in the industrial labour force, (Adeyemo, 1985).

However, the statistical analysis and planning experience lead one to believe that labour productivity and skill composition indication are acceptable approximations of what planners are interested in, namely the efficiency of labour and the quality of manpower. The approximation of “other conditions being equal” (ceteris pa-ribus) is usually permitted. An increase in labour productivity indicators therefore will usually correctly reflect an increase in effective labour productivity, considered in the most general sense, is the volume of national income per employed person. When employment cannot be increased substantially or can be increased only in the long run on the basis of population growth, it is evident that economic development will depend on productivity increases.

Educational planning is being introduced or the developing countries which do not apply economic planning on general. An increase of skill is one factor and in the long run, the most important for any increase of productivity. This will hold true whether literacy is promoted at the lower stage of development or the proportion of highly qualified engineers and scientists is increased. In addition, higher productivity will lead to a rise in national income and thus in turn to the education will be made possible by higher material wealth. Labour productivity can be considered as a set of technical co-efficient, which in effect establish connections between the output of different industrial branches and the most general and the most important resource, labour productivity is the most comprehensive indicator for planners of the rates of growth and the level of the economy.

Economic literature country abundant discussions on the factors of change in productivity. It is obvious that productivity is, in the first place determined by the quantity and the quality of the instruments of production used largely measured by fixed capital.

Among the instrument of production, it is the machinery and the tools directly used in production that exercises the greatest and the most direct influence productivity. This means that change in labour productivity are directly determined by the development of material transforming machinery, (Ahluwalia, 1991).

Changes in the utilization of productive capacity are sometimes mentioned as an important factor in productivity changes (Harrod-Domar).

Conclusively, the plan for qualified and highly qualified manpower has to be closely integrated into the overall plans for economic and social development in particular close co-ordination with the production plans for individual sectors is necessary. Education are one of the main basic of skill formation, it is also a powerful tool in productivity sector, for the individual as well as for society as a whole.



This chapter analysis the detail of how the work will be undertaken. During the last decade, there has been a renewed interest in the economic of human as has been evidenced by the increased volume of publications, dealing with the problem of education, manpower, productivity and economic growth.


In specifying the model of this study, the relationship that exists between the phenomena must be borne in mind. In this study, it is believed that the index of the manufacturing production and the capacity utilization rate of the manufacturing sector will represent the productivity while the GDP will represent the economic growth in the country. This led to the formation of the equation in the form below.

GDP = F (MCU, MPI, NSO) ————————————-(1)


GDP = Gross Domestic Product

MCU = Manufacturing Sector Capacity Utilization Rate

MPI = Index of Manufacturing Sector Production.

MSO = Manufacturing Sector total Output.

The above equation could be transformed to a linear form as given below.

GDP = b0 + b1 MCU + b2 MPI + b3 MSO + U ——————(11)


B0 is the constant

b1 b2 and b3 are the coefficients of the dependent variable, and i.e. the error term.

However, it is necessary to transform the second equation to the logrithem from so as to reduce the discrepancies that should have occurred as a result of some numbers being in rates of percentage while others are in normal figures. This led to the model shown below.

LGDP = b0 + b1 LMCU + b2 LMPI + b3 LMSO + U


LGDP = Log of GDP

LMCU = Log of MCU

LMPI = Log of MPI

LMSO = Log of MSO


The hypothesis of the problem will be evaluated using a descriptive methods: This involves the use of ordinary least square (OLS) criteria and hence the use of multiple linear regression.

The study will test for the statistical significant of each variable used in the model using t- statistics. That is when t- cal is greater than the t- tab we will accept the parameter estimate and we reject when otherwise. However, the goodness or fit of the entire model will be tested using the R- square (R2)

The values of R2 ranges between 0 and 1 the closer the R2 becomes to one, the better the goodness or fit of the regression line that is we accept the independent variables as a good one if F –cal is greater than F-tab (i.e. F* > F0.05) and reject it when otherwise.

Meanwhile, the degree of freedom between the independent variables (i.e. the presence of autocorrelation) will also be tested using the Durbin Watson statistic. The DWT indicate if there are either positive, negative or no serial autocorrelations among the explanatory variables.


The data needed for this research work were collected from the Annual report on the survey of the manufacturing and from Central Bank of Nigeria statistical Bulletining Industry. The data covers the period of (1990 – 2004). However, other sources of data used for this study include: Textbooks, Programmes from internets, News papers, Magazines, Lecture notes and personal experiences etc.



The concept “productivity” has made several governments ever lad on Nigeria to receive one kind of blame or the other. Low levels of productivity has been described as socio-economic malaise ravaging the economy. Low productivity shows economic growth and by implications declines economic development. Based on that, the need for productivity on rapid economic growth and development in Nigeria economy cannot be over stated.

Moreover, several factors have been identified for low productivity in Nigeria manufacturing sector. These factors include: poor saving habits, low investment, low output, high level of illiteracy, neglect of agricultural sector, dominance of subsistence farming system, political instability, poverty etc.

In sum, this research work continues to examine the causes of low level of productivity and economic growth in Nigeria economy.


From the result of the study, the researcher came up with the followings:

That productivity is low in Nigeria; that there is low standard of living in Nigeria. Again, high level of poverty and illiteracy is also responsible for low level of productivity in Nigeria manufacturing sector. That there is a common and development of Nigeria economy.

Additionally, there are other factors militating against productivity and economic growth (GDP) i.e. gross domestic product.


Productivity is the most desirable form of economic growth. Hence, there is need to encourage and accelerate the factors that affect productivity in the country especially manpower and skills for as long as productivity is low, there cannot be a meaningful growth.

 Effort should be made to increase agricultural productivity through the supply of necessary inputs to farmers.

 There should be political stability.

 Government should invest in the people since high economic performance is a function of the people working in the country.

 Government should pursue a favourable policy frame work and provide necessary infrastructures.

 There should be rapid investment in research and development.

Productivity And Economic Growth In Nigeria: A Case Study Of Manufacturing Sector

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  1. otunba ridwan says:

    Pls i want this topic “human resources management and labour productivity in nigeria manufacturing company(a case study of fan milk plc)..

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