Sunday B.Akpan, Ini-mfon V.Patrick and Daniel E. John
The study analyzed technology based capacity utilization in the sugar industry in Nigeria in the period 1970 to 2010. Data used in the analysis were obtained from the sugar firms in Nigeria, Central Bank of Nigeria (CBN) and National Bureau of Statistics (NBS) as well as Food and Agriculture Organization (FAO) database. Unit root test was conducted on the specified data to ascertain their stationarity and order of integration. The short-run and long-run coefficients of technology based capacity utilization with respect to the macro-economic variables were determined using the techniques of co-integration and error correction estimation. Trend in the technology based capacity utilization rate exhibited undulating pattern throughout the study period with an average value of 24.24% and excess value of about 75.76% per annum. The empirical results obtained substantiate the presence of a long-run equilibrium relationship between the technology based capacity utilization in the sugar industry and some key macro economic variables in Nigeria. Real sugar import, real exchange rate, import price of sugar, parallel market exchange rate premium and tariff rate on sugar import were significant variables that influenced technology based capacity utilization rate in the sugar industry in Nigeria. Our results suggest that policy measure that should focus on periodic upward review of sugar tariff is strongly advocated as a means of enhancing domestic capacity utilization in the industry. Also policy measure that would promote full commercialization of the sugar industry manufactures in the country was strongly recommended.
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