EFFECTS OF AUTOMOTIVE OIL GAS ON MANUFACTURING PERFORMANCE IN NIGERIA: ARDL APPROACH
Hussaini Abdullahi , Yahanazu Ahmad and Hamisu Muhammad
Volume 9 Issue 2
Abstract
The paper investigates the effects of automotive oil gas on manufacturing performance in Nigeria via annual time series dataset spanning as of 1980 - 2020. The study employed Autoregressive Distributive Lag Model (ARDL) for the estimation of the parameters. The long run result shows that there is positive and statistically significant association between automotive oil gas and manufacturing performance in Nigeria. This entails that raise in the price of automotive oil gas influence the performance of manufacturing performance positively via raise in the price of manufacturing output. The short run empirical results revealed that manufacturing performance respond negatively to change in the price of automotive oil gas. Increase in the price of automotive oil gas bring about increases in the cost of manufacturing output which in turn lead to decline in rate of production. This implies that manufacturing performance in Nigeria are prone to negative shock in the price of automotive oil gas because they rely heavily on automotive oil gas to power their manufacturing plant for operation due to inadequate energy substitute. The study recommends that there is need for the African countries to look for energy substitute beside automotive oil gas such as renewable energy for the effective operation of their manufacturing sector. Keywords: Automotive Oil Gas, ARDL, Cusum, Cusum-q, ECM, Manufacturing Performance
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