THE KALDOR -VERDOORN'S LAW ON MANUFACTURING: TEST OF THE NIGERIAN EXPERIENCE
Authors:
ONAKOYA Adegbemi
Publication Type: Journal article
Journal: Redeemer’s University Journal Of Management And Social Sciences
ISSN Number:
0
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Abstract
This study is to determine the applicability or otherwise of the relationship between the labour productivity and the output of the manufacturing sector of Nigeria using annual data from 1970 to 2012. The dynamic model of the Verdoorn’s Law was tested given that Augmented Dickey-Fuller (ADF) and Philips-Perron tests showed non stationarity when expressed in their level form. The outcomes of the Engle-Granger and Johansen tests provide evidence of cointegration between the two variables at order (1, 1). The results of the Error Correction Model (ECM) show that in the long run, a positive relationship exists between both variables. This confirms that Kaldor- Verdoorn's Law is applicable to Nigeria during the forty years research period. The computed impulse response function further corroborates the co-integrated nature of the variables. Indeed, a shock in one variable largely influences the other positively. This study recommends enhanced growth generating policies for manufacturing sector in order to engender sustainable economic development in Nigeria.