Dynamics of Manufacturing Sector Development and Youth Unemployment in Africa

International Journal of Research and Innovation in Social Science (IJRISS) | Volume V, Issue VII, July 2021 | ISSN 2454–6186

Dynamics of Manufacturing Sector Development and Youth Unemployment in Africa

Ajeigbe Omowumi Monisola¹, Olomola Phillip Akanni², Adeleke Oluwayemisi Khadijat^3
1,³Department of Economics, Faculty of Social Sciences, Redeemers University, Ede
²Department of Economics, Faculty of Social Sciences, Obafemi Awolowo University, Ile-Ife

Abstract
The study examined the effect of manufacturing sector development on youth unemployment in Africa. The study made use of 33 African countries within the time frame of 2000-2018. Data was sourced from the world development indicators by the World Bank. The estimation technique used was the Panel Autoregressive Distributed lag which deals with the stationary series problem of different orders and allows us to study potential long term effects of structural economic policies. The variables used were in natural logarithms and they are Youth Unemployment, Manufacturing Value Added, Foreign Direct Investment, Gross Capital Formation and Domestic Credit to Private Sector. The result revealed a positive long run relationship among MVA, DCP FDI, GCF and YUEMP. In the short run, MVA and DCP showed a positive relationship to youth unemployment while FDI and GCF showed a negative relationship. The study recommended that to curb the menace of youth unemployment ravaging major African Countries, policy focal point should be directed towards the development of manufacturing sector, conducive economic environment to attract foreign direct investment, policies should be put in place to enhance capital formation with domestic credit being made available for new and existing entrepreneurs and industrialist.

Keywords: Manufacturing Value Added, Youth Unemployment, Decent work, Panel Autoregressive Distributed Lag,

Africa

1.Introduction

Scholars and policymakers have advocated that a robust manufacturing sector is a fundamental path to economic growth and development (Diao, Ellis, McMillian & Rodrik, 2021, Adegboye et al, 2019, Signe, 2018, Oguntoye & Evans, 2017). In recent time, the sector have attracted attention of policy makers in Africa based on the launch of the African Free Trade Area (AFCFTA) in March 2018 having the motive of a single market for goods and services, unlocking manufacturing potential and facilitating industrialization so as to drive sustainable growth, decent jobs and enhance inclusive growth (Maryla & Michele, 2020, Abdychev, et al, 2018). Also, the African Union in their briefings proclaim industrialization as the major strategy to promote and achieve inclusive economic transformation based on the African Union flagship Agenda 2063 which states that a prosperous Africa based on inclusive and sustainable development has industrialization through the manufacturing sector as one of the pillars of achieving this agenda (Okurebia, 2014, Haraguchi et al,

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