Usman, Abdullateef, Adeyemi Adeyinka Emmanuel
This study focused on the effects of supply price of capital on industrial production and the capacity of the economy to generate employment in Nigeria. The paper set out a Simultaneous Regression Model with Multivariate Autoregressive- moving average to test for the significance of cost of capital, investment and employment rate on industrial contribution to the Gross Domestic Product as well as the significance of industrial contribution to Gross Domestic Product on Employment rate. The trend analysis shows that the IGDPt has been on a decline and has not helped in achieving a meaningful employment generation. In the long run, the Two Stages Least Square Estimates (2SLSE) shows that real interest rate has a negative influence on growth of the industrial production in the country as well as employment generation. The estimated industrial contribution to Gross Domestic Product has a significant relationship with Employment rate but lagged employment rate has no significant effect. The Economics of this is that industrial capacity is not capable of generating increase employment in the presence of high lending rate. It is imperative therefore, that for the industrial sector to be able to generate employment, the supply price of capital must fall to one digit.
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