Monetary Policy and Nigeria’S Quest for Import-Substitution Industrialization

Chigbu E. Ezeji, Osmond N. Okonkwo


This study examines the impact of monetary policy variables on industrialization via import substitution strategy in Nigeria from 1981 – 2012. The deregulation of the foreign exchange market in Nigeria was with the aim of stimulating export and industrialization through import substitution. However, it turned out that Nigeria had become more import dependent than ever. We specified four explanatory variables for this study based on theoretical underpinnings. We sought to establish a relationship between the explanatory variables and industrial output. The Johansen trace test revealed that there was one cointegrating equation. The estimated error correction mechanism (ECM) revealed that 53 per cent of disequilibrium in industrial-GDP is corrected for in the long run.

Keywords: Monetary policy, exchange rate, industrialization, imports substitution industrialization.

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ISSN (Paper)2222-1700 ISSN (Online)2222-2855

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