Abstract

Author: Usman Nuhu, Onum Friday Okoh

Doi: 10.26480/bosoc.02.2025.50.56

This is an open access article distributed under the Creative Commons Attribution License CC BY 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

The study investigated the effect of fiscal policy on manufacturing output in Nigeria between 1985 and 2020. Specifically, it pursued three objectives: to examine how government capital expenditure influences manufacturing output, to assess the impact of government recurrent expenditure on the sector, and to evaluate the effect of taxation on manufacturing performance. Annual time series data were employed, with real manufacturing output serving as the dependent variable, while recurrent expenditure, capital expenditure, value-added tax, and domestic debt were the independent variables. The analysis was carried out using the Ordinary Least Squares (OLS) method, with data obtained from the CBN Statistical Bulletin. Findings showed that recurrent expenditure exerted a negative effect on manufacturing output, capital expenditure also had a negative influence, and value-added tax similarly reduced manufacturing performance. Conversely, domestic debt demonstrated a positive effect on output in the sector. Based on these results, the study recommended that fiscal policy should place greater emphasis on the manufacturing sector by ensuring improved budget implementation. Strengthened and consistent government commitment is expected to boost aggregate spending and enhance the overall performance of the manufacturing industry.