1.1 BACKGROUND OF THE STUDY
Industrialization is regarded as a central object of economic policy in most developing economies. They see industrialization and agriculture as an integral part of development and structural change. Some economic analyst are of the view that industries play a vital role in the economic growth and development of any country. In this research work, effort is made to analyze the impact of the industrial sector to the economic development of Nigeria.
Generally, the industrial revolution which took place in Britain between the late 18th and 19th centuries has gotten much to do with the present set back on industrial development led to the factory process that metamorphosised into industrial production. Thus, history recorded that the industrial sector performance in Nigeria’s economic growth is as old as the nation itself. It dates back to the amalgamation of the southern parts of the country in 1914 to for the geographical land mass called Nigeria. By a representative of the colonial administration of Britain Lord, Fr. Fredrick Lugard.
As soon as independence was over, the government of Nigeria embarked on import substitution as an industrial strategy in order to reverse the problem of deficit balance of trade and fasten industrialization among other reasons.
Right from the first national development plan (1962-1968) to the fourth national development plan (1981-1985) rapid industrialization received priority in Nigeria’s development objectives. The government sector for instance, the allocation of 16.2 percent of the budget plan to the manufacturing sector during the third national development plan (1975-1980) was the highest. The industrial policies and strategies of development were adoption of import substitution strategy, expansion of indigenous equity participation in foreign owned enterprises, provision of integration, linkages and diversification of industrial increased domestic resources content of industrial product and provision of financial and manpower resources to promote research and adoption of technology to encourage the small and medium scale industries and public sector participation and control of some large industrial products such as iron.
To withstand the rising problems of the sector and economy in general, Nigeria embarked on structural adjustment programme (SAP) in 1986 on the assumption that structural adjustment programme (SAP) would corrects these problems. It has important implication on both the government and industry. It has brought government re-appraised of the regulatory environment, the structure of protection for local industries and the package of incentives available. For the private sector and industrialist in particular, SAP presented a new challenge which reported a more serious effort to control costs, increase production efficiency and remain competitive.
In the spirit of SAP, the second tier foreign exchange market (SFEM) was introduced in 1987 to allow market forces determine the foreign exchange rate, remove price distortions and thereby effect a more efficient allocation of resources.