Manufacturing Sector Output Growth and Macroeconomic Policies Performance: Empirical Insight from the N-Eleven Countries

This study examined the impact of macroeconomic policies on manufacturing sector growth using panel data from the N-11 countries — Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, Turkey, South Korea, and Vietnam — from 2000 to 2024. The N-11, identified as the next set of emerging economies with potential to rival BRICS, face structural challenges in industrialization despite implementing diverse monetary, fiscal, and trade policies. Anchored on the structural change model, the study employed panel fixed effect and random effect models to assess how monetary policy, fiscal policy and trade policy influence manufacturing sector output growth rate in the N-11 countries. The random effect model was more appropriate based on the Hausman test result. The empirical results reveal that monetary policy had positive and insignificant impact on the manufacturing sector growth rate in the N-11 countries. Fiscal policy had negative and significant impact on the manufacturing sector output growth rate and trade policy had a positive and significant impact of 10% on manufacturing sector output growth rate. The implications of the findings are that Governments of the N-11 countries should prioritize policies that crowd-in private capital tax incentives for machinery import, infrastructure bonds, and stable power supply to raise returns on capital. The study recommends that macroeconomic policies should be strengthened to boost the manufacturing sector output growth rate in the N-11 countries.

Macroeconomic Policies, Manufacturing Output, Random Effect, N-11 Countries

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