CHAPTER ONE

1.0 BACKGROUND OF STUDY

Prolonged economic recession caused by the collapse of world oil market from the early 1980s and the concomitant fall in foreign exchange earnings have affected the growth and economic development in Nigeria. Other problems of the economy include excessive dependence on imports for consumer and capital goods, dysfunctional social and economic infrastructure, unprecedented drop in capacity utilization rates in the industry and neglect of agriculture, among others (Ku et al, 2010; Adesina, 1992). They have led to fallen standards and devalued income to live among Nigerians.

Although the structural adjustment program (SAP) was introduced in 1986 to address these problems, no significant improvement has taken place. In a middle-income country in the 1970s and early 1980s, Nigeria is now among the 30 poorest countries in the world. Put the country on the road to recovery and growth will require the urgent reconstruction of damaged infrastructure and making more goods and services available to citizens at affordable prices. This would involve a quantum leap in the production of goods and services.

The road to economic recovery and growth may require the increase of production factors - land, labor, capital and technology - and or increase productivity (and Kayode Teriba, 1977). Increased productivity should be the focus because many other countries that found themselves in the same difficult situations resolved them through improving productivity programs. For example, Japan from the end of the Second World War and the United States of America in the 1970s were high productivity, the point of their central economic planning and the results were overwhelming. In addition, middle income countries such as Hong Kong, South Korea, Singapore and India have adopted plans to boost productivity as an integral part of their national planning and today they have made significant in roads in industrial markets worldwide.

Given the importance of high productivity in stimulating economic growth and living standards of the people, it is necessary to evaluate the productivity of the manufacturing sector of Nigeria. This will be useful in determining the relative effectiveness of companies, sectors and sub-sectors. Knowledge of the relative efficiency of industries in relation to economic growth and development could help the government in planning its programs and policies, deciding on particular industries that should have priority. In light of the foregoing, there can be a more appropriate time to assess the role of Nigeria in the manufacturing sector in the economic growth and development of the country than now.

1.2 PROBLEM STATEMENT