External Sector Variables, Exchange Rate and Industrial Sector Output Performance in Nigeria

This study examines the relationship between external sector variables, exchange rate and industrial sector output performance in Nigeria from 1980-2023 using the Ordinary Least Square analysis, the co-integration test and error correction mechanism. The study revealed the existence of a positive relationship between foreign direct investment and foreign port investment while a negative links exists between exchange rate and industrial capacity utilization on the industrial sector output performance in Nigeria within the period under consideration, 1980-2023. The error correction coefficient ECM (-1) value is -0.804506 or 80 per cent and correctly signed (negative sign) and significant. This implies that external sector variables, exchange rate and industrial sector output performance in Nigeria adjust speedily to the changes in the explanatory variables. Therefore, the ECM is able to correct and tie any deviations from the long –run relationship between industrial sector output performance and the explanatory variables to its short-run period.