APPLICATION OF LEONTIEF INPUT-OUTPUT MODEL IN MANUFACTURING SECTOR IN NIGERIA

Abstract

The study applied the Leontief input-output relationship of nineteen manufacturing companies in Nigeria. The objective of the study is to investigate the extent of the interdependence between companies in the Nigerian manufacturing sector, and to determine the input-output relationship of the manufacturing sector in Nigeria. The study also examined the extent of scale efficiency of the manufacturing sector in Nigeria and the extent of technical efficiency of the manufacturing sector in Nigerian. The study used longitudinal research design by selecting some quoted manufacturing companies in the Nigerian Stock Exchange for the period 2011 to 2015. Data Envelopment analysis (DEA) was used for the empirical analysis. The result showed that there is a relationship between inputs and outputs, Chemical and Allied Product (CAP), Cutix, Dangote Cement and Greif were efficient under constant return to scale (CRS) after taking five years average inputs and outputs to sustain its efficiency within the period. While Aluminium Extrusion Industries, Chemical and Allied Product, Cutix, Dangote Cement, Dn Meyer, Greif Nigeria, Ipwa, Nigeria Ropes, Nigerian Enamelware, Paints and Coatings Manufacturers, Portland Paints and Premier Paints were scale efficient and technically efficient among the nineteen manufacturing companies sampled. The study therefore recommends that management and concerned authorities of the manufacturing companies in Nigeria should ensure that the manufacturing sectors are technically efficient. The study also suggests that the government should provide a platform for the inefficient manufacturing companies by formulating policies favourable in terms of tax relief and holiday for productive efficiency of the sector.