Monetary Policy and Industrialization in an Emerging Open Economy: Lessons from Nigeria

Is monetary policy, as one of the toolkits of macroeconomic management, still important for economic growth of nations? Is Industrialization still a pivotal driver of the development process? With these underlying affirmative presumptions, this paper empirically assesses the impact of monetary policy on industrialization in Nigeria as an open economy, deploying macroeconomic time series variables of industrial output, exchange rate, interest rate, money supply, balance of trade, and total reserves. Using vector error correction mechanism of ordinary least squares econometric technique as the estimation method, the study revealed that these variables have statistically significant impact on industrialization. It submits that monetary policy should be consistent and transparently defined in response to the dynamics of the domestic and global economic developments.