The Moderating Effects of Government Effectiveness on the Relationship between Globalization and Manufacturing Sector Output in Nigeria
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Abstract
This study examines the moderating effect of government effectiveness on the relationship between globalization and manufacturing sector output in Nigeria. Annual time series data covering the period 1981 to 2023 were analyzed using the Autoregressive Distributed Lag (ARDL) bounds testing approach to investigate both the direct and interactive effects of globalization and institutional quality on manufacturing performance. The findings reveal that government effectiveness exerts a strong positive and statistically significant effect on manufacturing sector output. Specifically, a one-unit improvement in government effectiveness increases manufacturing value added by approximately 9.47 units, highlighting the critical role of effective public institutions in promoting industrial development. Furthermore, the interaction between overall globalization and government effectiveness is positive and statistically significant (coefficient = 3.5938, p = 0.0443), confirming that the gains from globalization are substantially enhanced when supported by effective governance. This suggests that globalization alone is insufficient to stimulate sustained manufacturing growth unless accompanied by strong institutional capacity. Exchange rate movements positively influence manufacturing output (coefficient = 0.342, p = 0.0002), while interest rates (coefficient = -0.797, p = 0.0113) and technological innovation (coefficient = -4.876, p = 0.0006) exert significant negative effects during the study period. The ARDL bounds test confirms the existence of a long-run equilibrium relationship among the variables, with an F-statistic of 5.0208, while diagnostic and stability tests indicate that the estimated model is statistically reliable and robust. The study therefore recommends comprehensive institutional reforms aimed at strengthening government effectiveness to enable Nigeria to maximize the developmental benefits of globalization and achieve sustainable manufacturing sector growth, competitiveness, resilience, and long-term industrial transformation.
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Copyright (c) 2026 Basirat Bolanle Ajala, Professor Shehu Usman Adam, Dr. Fatai Akosile, Oluwafemi Emmanuel Adewumi, Jimoh Olayinka Ajayi (Author)
This work is licensed under a Creative Commons Attribution 4.0 International License.
Basirat Bolanle Ajala, Department of Economics and Development Studies, Kwara State University, Malete, Nigeria.
STUDENT
Professor Shehu Usman Adam, Department of Economics and Development Studies, Kwara State University, Malete, Nigeria.
PROFESSOR
Dr. Fatai Akosile, Department of Economics and Development Studies, Kwara State University, Malete, Nigeria.
LECTURER
Oluwafemi Emmanuel Adewumi, Department of Economics and Development Studies, Kwara State University, Malete, Nigeria.
STUDENT
Jimoh Olayinka Ajayi, Federal Polytechnic Ayede, Ogbomoso, Oyo State, Nigeria.
Lecturer
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