ASSESSMENT OF LONG RUN RELATIONSHIP BETWEEN EXCHANGE RATE AND MANUFACTURING SECTOR’S OUTPUT: EVIDENCE FROM NIGERIA

The main aim of this research is to examine the relationship between exchange rates and manufacturing output in Nigeria. The research paper made use of secondary data in reaching the objectives of this research work. Data were sourced mainly from Central Bank of Nigeria (CBN) Statistical Bulletin, CBN Statement of Accounts and Annual Reports, and the Nigerian Bureau of Statistics publications. The variables for which data are sourced include: manufacturing output, manufacturing capacity utilization, exchange rate, government expenditure, inflation rates and interest rate for the period 1980 to 2020. The result of the regression estimate showed that Exchange rate and government expenditure on manufacturing sector variables has a positive and significant impact on manufacturing productivity, while consumer price index and manufacturing capacity utility rate variables has a negative and significant impact on manufacturing productivity but interest rate, has negative and insignificant impact on manufacturing productivity during the study period. The study concluded that Exchange rate, government expenditure on manufacturing sector, consumer price index, manufacturing capacity utility, and interest rate influences manufacturing output. In order to boast the level of Manufacturing output in Nigeria, there is the need for the government to manage or control the exchange rate in order stimulate export and support export - led growth, particularly in the provision of incentives and soft loans for export of locally produced manufacturing output.