IMPACT OF PRIVATE CAPITAL INFLOWS, FINANCIAL SECTOR DEVELOPMENT AND MANUFACTURING SECTOR GROWTH (1990-2020)

This study focused on the impact of private capital inflow and financial sector development on manufacturing sector growth, between the periods 1990 to 2020. The research used manufacturing value added as proxies of manufacturing sector and domestic credit to private sector as proxies of financial sector development. The data were obtained from World Development Indicator. The Autoregressive Distributive Lag (ARDL) Model is employed as the estimation technique. The
results of the study revealed that in the short-run and in the long-run private capital inflows and financial sector development has positive and significant influence on the growth of manufacturing sector while exchange rate and trade openness has negative and insignificant influence on manufacturing sector growth. In the same vein, the interaction of private capital inflow and financial sector development has positive and significant on manufacturing sector growth. In addition, the granger causality result confirms a bidirectional existence between private capital inflow, financial sector development and manufacturing sector growth. based on the empirical findings, the study suggests that Government through its trade policy measures should properly screen the nature of private capital inflows as well as the amount of domestic credit given to private sector for the growth of the manufacturing sector. This is done in a bid to ensure that only viable investment that will propel growth of the manufacturing sector will be allowed into the country.