IMPACT OF MONETARY AND FISCAL POLICIES ON THE PERFORMANCE OF MANUFACTUIJNG SECTOR IN AN EMERGING ECONOMY: THE NIGERIAN EXPERIENCE

Empirical evidence from both developed and developing economies has proved that fiscal and monetary policies have the capacity to influence the entire economy in an emerging economy. This work therefore, set out to assess the impact of fiscal and monetary policies on the performance of the manufacturing sector in an emerging economy, the Nigerian experience. It specifically sought to find out the total amount of government expenditure and commercial bank loans and advances to the manufacturing sector an emerging economy and their impact on tlie performance of the manufacturing sector in Nigeria. Data were collected from secondary source. The ordinary least square was used to analyse the data. The a priori expectation is that government expenditures and commercial bank loans and advances to manufacturing sector should have a significant positive impact on the perfonnance of the manufacturing sector in Nigeria. Our findings revealed that the marginal productivity coefficient of commercial bank loans and advances to manufacturing sector is positive and significant. However, the marginal productivity coefficient of government expenditures to manufacturing sector is negative but in significant. Impliedly, capacity utilisation tends to improve when the volume of loan increases but declines insignificantly even though the government expenditure to manufacturing sector increases. In view of this, the researchers recommended that the financial institutions should inject more loans to manufacturing sector and ensure conducive lending environment for manufacturing sector to have easy access to loan. Government of an emerging economy should discourage its expenditures to manufacturing sector or it most ensure that its expenditures to manufacturing sector have not been distorted by any politically motivated programmes and the manufacturers should endeavour to judiciously utilise the fund and honour loan obligations promptly.