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The effect of state-level trade incentives on boosting domestic production in Nigeria: Evidence from Ogun State (2000–2020)

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Background of the Study :

State-level trade incentives, such as tax breaks and export rebates, are designed to stimulate domestic production by making local products more competitive against imports. In Ogun State, these incentives have been implemented between 2000 and 2020 to encourage industrial expansion, increase job creation, and promote economic self-sufficiency. Such measures aim to reduce production costs and enhance export performance, thus boosting domestic manufacturing (Okonkwo, 2023). Empirical evidence shows that well-designed trade incentives can foster domestic production and contribute to broader economic development (Adeniyi, 2024). However, challenges including bureaucratic delays, mismanagement, and inadequate monitoring have sometimes limited their effectiveness (Chukwu, 2025). This study examines the impact of state-level trade incentives on domestic production in Ogun State by analyzing industrial output, investment trends, and employment data. The research seeks to determine whether these incentives have significantly boosted production and to identify potential areas for policy improvement.

Statement of the Problem

Despite the introduction of trade incentives, domestic production in Ogun State has not reached its potential. Issues such as inefficient policy implementation, corruption, and a lack of supportive infrastructure have diminished the positive impact of these measures. The gap between intended incentive benefits and actual industrial performance raises concerns about the effectiveness of current policies. This study seeks to identify the key barriers that hinder trade incentive effectiveness and to evaluate their overall impact on domestic production. Addressing these challenges is critical for optimizing incentive schemes to stimulate robust industrial growth (Okonkwo, 2023; Adeniyi, 2024).

Objectives of the Study:

1. To assess the impact of trade incentives on domestic production in Ogun State.

2. To identify implementation challenges affecting incentive effectiveness.

3. To propose recommendations for policy optimization.

Research Questions:

1. How do state-level trade incentives affect domestic production?

2. What are the main challenges in policy implementation?

3. What measures can enhance the effectiveness of these incentives?

Research Hypotheses:

1. H1: Trade incentives positively influence domestic production.

2. H2: Inefficiencies in implementation reduce incentive impact.

3. H3: Policy optimization can significantly boost production.

Significance of the Study (100 words):

This study evaluates the role of trade incentives in boosting domestic production in Ogun State. Its findings will guide policymakers in refining incentive programs to achieve greater industrial growth and economic self-sufficiency, thereby supporting sustainable development (Chukwu, 2025).

Scope and Limitations of the Study:

The study is limited to Ogun State from 2000–2020, focusing on trade incentive policies and production metrics. Limitations include data availability and regional specificity.

Definitions of Terms:

1. Trade Incentives: Fiscal measures intended to stimulate domestic production.

2. Domestic Production: The manufacturing output of local industries.

3. Ogun State: A Nigerian state serving as the case study.

 





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