THE PRODUCTION FUNCTIONS OF THE TEXTILES MANUFACTURING INDUSTRY IN NIGERIA: A CASE STUDY OF THE UNITED NIGERIAN TEXTILES LTD (U.N.T.L.)KADUNA
THE PRODUCTION FUNCTIONS OF THE TEXTILES MANUFACTURING INDUSTRY IN NIGERIA: A CASE STUDY OF THE UNITED NIGERIAN TEXTILES LTD (U.N.T.L.)KADUNA
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Date
1988-01
Authors
RABIU, MUSA MURAM
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Abstract
This thesis has attempted an empirical analysis of
the production functions in the textiles subsector of
the manufacturing sector. In tackling the problem we
have examined the production functions of the united
Nigerian Textiles Limited (U.N.T.L.), Kaduna, with
respect to scale parameter, factor-intensity, technical
efficiency and factor substitution. We have sought, in
this study, to expose the production functions of the
U.N.T.L. and its manifold characteristics such as the
productivity of the inputs and its relation to substitution
technological process and the efficiency of
production.
We advanced three hypothetical propositions with
respect to the character of the firm's production functions.
Firstly, we hypothesized that the U.N.T.L, operates a
capital-intensive production functions, secondly, that
the firm experiences increasing returns to its factors.
And thirdly, that it enjoys technical efficiency
(Hicks-neutral) in the process of production, in testing
the validity of these hypotheses we examined four
types of model specifications using an econometric
approach. These are broadly categorized into "aggregated"
and "disaggregated" models for Models I and II and Models
III and IV respectively. All the models were estimated
(vii)
for the Cobb-Douglas (CD) production function, while
only Model I was estimated for the constant Elasticity
of substitution (CES) production function for convenience
in the technique of estimation.
Our findings indicate that the first hypothesis
was generally rejected in Model II. This rejection in
favour of the raw material input shows that the manufacturing
production in Nigeria is highly sensitive to the
use of raw materials. This sensitivity became acute in
the 1980s when the supply (cotton) crisis adversely
affected the capacity utilization in the textiles
industry. We observed a divergence between the results
obtained in Model III and Model IV with respect to the
coefficients of capital taken individually and collectively.
This, we explained, could be due to the use of machines
of different vintages in production processes which we
have, for convenience, singly harmonized in this study.
The study has also shown that the U.N.T.L. generally
experiences increasing returns to scale. This finding
theoretically implies that the firm's profit has not
reached a global maximum. This is probably due to the
imperfection in both the product and factor markets.
The results obtained with respect to technical efficiency
are generally positive. Technical changes (efficiency)
contribute about 47 per cent to the growth of the firm's
output per annum. We observed that these technical
changes are both capital-deepening and raw material—
(viii)
deepening implying that the productivity of each of
the factors in question is enhanced overtime.
We also discovered that the U.N.T.L. exhibits
elasticity of substitution less than unity. This finding
confirms Maitha's (1973) conclusion that manufacturing
industries in developing economies are characterized
by capital-intensive production processes, we are,
therefore, based on these results, making the conclusion
that the expected benefits of the import-substitution
industrialization strategy with respect to the unemployment
problem, sectoral linkages, and transfer of
technology have not been generally realized in Nigeria.
The raw material crisis in the industry has exposed the
dependency of the textiles industry on imported inputs
as well as the increasing capital-intensity in the
production processes vis-a-vis the worsening unemployment
problem. This is an indication that the transnational
corporations do not perform properly their expected roles
in the industrialization process in Nigeria as in other
dependent developing economies of the world
Description
A Thesis submitted to the Postgraduate School, Ahmadu
Bello University, in partial fulfilment of the requirements
for the degree of Master of science in Economics,
Department of Economics, Faculty of Arts and Social
Sciences, Ahmadu Bello University, Zaria.
JANUARY. 1988
Keywords
PRODUCTION,, TEXTILES,, INDUSTRY,, NIGERIA:,, UNITED NIGERIAN,, )KADUNA