Despite several industrial strategies and programs adopted and implemented by the Nigerian government to improve the sector, it is obvious that its contribution toward national development has continued to decline. The official record of the World Bank showed that the interval growth of industrial sector shares to GDP between the periods of 1996 and 1999, 1999 and 2007, 2007 and 2014, and 2014 and 2019 stood at −7.78%, −2.32%, 0.17%, and −1.69%, respectively. One of the factors that has further made the problem more severe has been the country’s inherent weak institutional settings. This study uses different stand-ins to find out how economic, financial, and political systems affect the growth of the industrial sector in Nigeria between 1996: Q1 and 2019: Q4. These include economic institutions consisting of government effectiveness, regulatory quality, control of corruption, and rule of law; financial institutions comprising of contract-intensive money, lending rate, and financial deepening; and political institutions consisting of voice and accountability and political stability and absence of violence. Using the vector error correction model estimator, the results of the economic institutions showed that government effectiveness, regulatory quality, and rule of law negatively impacted industrial output growth, while control of corruption influenced the industrial sector positively. For financial institutions, contract-intensive money, lending rates, and financial deepening influenced industrial output growth positively. As regards political institutions, industrial output growth is negatively influenced by voice and accountability but positively influenced by political stability and absence of violence. We further discovered that financial institutions have the greatest impact on industrial sector growth, followed by economic institutions and political institutions. The study suggests the need for effective institutional settings that continuously ensure public service quality, contract enforcement, a stable political atmosphere, low interest on credit, and monitoring the activities of public officers to guarantee industrial output growth in Nigeria.
Cite this article as: Adelowokan, O. A., Oyebamiji, F. F., & Alimi, O. Y. (2024). Industrial sector growth and institutional quality in Nigeria: Comparative analyses of economic, financial, and political institutions. Journal of Business Administration and Social Studies, 8(1), 24-43.