From Demography to Development: Investigating the Manufacturing Pathway to Growth in Nigeria

Nigeria’s rapid population growth and persistent industrial underperformance have raised concerns about the country’s growth trajectory. Previous research often analyses these variables independently, thereby missing their potential synergy. This research explores whether population growth can spur economic growth when channeled through the manufacturing sector’s absorptive capacity. Using annual data between 1981 and 2024, the study utilizes the Autoregressive Distributed Lag (ARDL) approach with an interaction term (Population Growth × Manufacturing Output) controlled by inflation, exchange rate, and gross capital formation. The findings show that population growth and manufacturing output have independent negative long-run effects on GDP. Their interaction revealed a positive and significant effect, implying that population pressure can sustain growth when supported by strong manufacturing sector output. Inflation and exchange rate volatility were found to destabilize output significantly. The study concludes that Nigeria’s population is a development asset only if supported by a strong manufacturing base. It recommends that integrated demographic-industrial policy, improved infrastructure and credit access, and macroeconomic stabilization to translate the demographic dividend into a long-run growth.