Economic Impact of Sectoral Transactions in Nigeria

Abstract

Most applications of input-output (I-O) analysis to date have been to highlight inter-industry flows and to estimate the main aggregate national accounts, such as GDP, gross output and final demand categories. However, multiplier coefficients relating to output and income multipliers have hardly been explored especially in the Nigerian context. Sectors like agriculture, fishing, food & beverages as well as mining/quarrying have particularly significant roles and their economic impacts can be quantified using Nigeria's I-O table. The study adopted a longitudinal design and utilized the 2015 I-O table comprising of twenty-six (26) sectors obtained from Eurostat database. This table was used to compile an inter-industry transaction table and Leontief matrix, which was then used to derive industry-wise Type I and Type II multipliers for the aforementioned sectors. Type I multiplier takes into account the direct and indirect effects while the Type II multiplier captured the induced effects in addition to the direct and indirect effects. Mining/quarrying as a single sector had a Type I multiplier of 1.80 and 2.17 for both output and income respectively and a Type II multiplier of 2.41 and 3.12 for both output and income respectively. Similarly, the fishing sectors were identified to have the highest contributions (2.11 and 2.89 as well as 2.22 and 3.19) in both Types I and II multipliers for both output and income respectively when compared with other sectors.

Assessment of Nigeria’s Economic Sectors Through the Input-Output Model

“…The importance of studying the interdependency and inter-sectoral connectedness of industries within an economy cannot be overemphasized (Ayantoyinbo and Ekundayo, 2015). The Leontief input-output (IO) model is the widely accepted and accurate measure of such transactions (Effiong, Okoye, and Itam, 2019). The input-output model is by nature one of the most suitable instruments or models for estimating interdependency between sectors and the impact of each sector on the national and global economy (Wu et al, 2014;Xing, 2017).…”

“…The most recent available Nigerian IO table was the symmetric for 2015, which was obtained from the Eurostat database. (Effiong, Okoye, and Itam, 2019). The published IO's were intended to provide the public with comprehensive statistical data on the interrelationship of the various sectors of the economy and the purpose for which it will be useful for economic planners, academicians, etc.…”

“…The IO model has been recognised as a useful approach to analyse and predict the overall economic impact (Jeong et al, 2021). This economic analysis has hardly been explored, especially in the Nigerian context (Effiong, Okoye, and Nweze, 2019). The research seeks to explore the potential sectoral multiplicative impacts that one sector is able to disperse or to concentrate due to its input-output interdependencies with the other sectors of the economy.…”