Evaluating the Sectoral-Shift, Diversification and Growth Dynamics Nexus in Nigeria and Selected Asian Economies

Abstract

This study examines and compares the channel through which sectoral shifts
affect economic growth dynamics in Nigeria, Malaysia and China. The study
employs dynamic generalized method of moments (GMM) and time series data
spanning 1981 to 2014. While the study finds that the channel from the
agricultural sector to economic growth through industrial and manufacturing
sectors is negative and insignificant in the case of Nigeria, those of Malaysia and
China are positive and significant. The study also reveals that manufacturing and
services as well as agricultural and services channels on economic growth are
negative and insignificant for Nigeria but otherwise in the case of Malaysia and
China. The results imply that a shift away from agriculture through industry and
manufacturing creates the basis for growth accelerations in Malaysia and China.
However, a reallocation from agriculture to services without passing through
industry and manufacturing is inconsistent with the linear pattern view. This study
concludes that Nigeria is a tale of sectoral shift without diversification as a result
of lack of interdependence among the agricultural, manufacturing and industrial
sectors. This study therefore recommends that government should vigorously
pursue a local-content initiative that would ensure proper diversification of the
sectors so as to achieve sustained economic growth.