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**CHAPTER THREE ****Methodology of Study**

This study will make use of the simple linear regression equation. The ordinary least square (OLS) method is used which would be employed to establish the power supply and the performance of small and medium scales industries in Nigeria and economic growth and development from the year 1986- 2010. it will also enable us ascertain the veracity of our model and will enable us determine the explanatory power of our variables.

**Method of Data Analysis**

The method of data analysis that will be used for this study is both descriptive and analytical tool. Regression analysis will also be used to show the relationship that exists between power supply and manufacturing to the economic growth in Nigeria. It enables us to predict unknown variables from know variables. The variable that is estimate is the dependent variables while the variable from which the estimation was done is the independent variables.

**Model of specification**

This is the first and most important step in economic research. It involves the determination of the dependent and independent variables. The prior expectation of the signs of the parameters of the functions and the mathematical form of the model.

The model specified for study is thus as follows:

The functional form of the model;

RSMP F(RPSP, REIR, REER)

RSMP =b_{o}+b_{1}RPSP+b_{2}REIR+b_{3}REER+u_{1} Where

RSMP = real small scale and medium scale product.

RPSP = Real power supply product

REIR = Real electricity interest rate REER = Real electricity exchange rate

U = an error which can not capture in the regressive of the mode

**Technique of Estimation**

The estimation techniques to be used in this research work are the ordinary least square (OLS). The computational procedure of OLS is fairly simple as compared with the other economic techniques. It is also considered as one of the most commonly employed techniques in estimating linear relationship in econometric methods.

**Evaluation of Model**

**Evaluation based on economic apriori criteria**

This test is carried out to check if the signs and magnitudes of the estimated parameters conform to what economic theory postulates.

**Evaluation based on statistical criteria**

The coefficient of determination (R^{2}) thus R^{2} explains the total variation in the dependent variable (GDP) caused by variation in the explanatory variables included in the model.

**The F-Test**

This test is used to test whether the variables included in the work are significant or not in determining the level of domestic saving in Nigeria. Each element of b_{2} follows the distribution with n-k degree of freedom.

**The T-Test**

This tests the overall significant of the regression model.

**Evaluation based on econometric criteria**

Test for auto correlation this is to test whether the errors corresponding to different observations are uncorrelated. The test will adopt the Durbin Watson statistic because of the presence of the lagged dependent variables as are of the regressors, which indicates that the model is an autoregressive model.

**Test for normality**

The test will be carried out to test what the error term follows the normal distribution. The normality test would adopt the Jarque –Baera (JB) test of normality. The JB test of normality is an asymptotic, or large –sample, test. It will also base on the OLS residuals.

**Test for Heteroscedasticity**

This test would be conducted to ascertain whether the error, U, in the regression model have a common or constant variance. The white heteroscedasticity test (with no cross term) will be adopted.

**Sources of data and collection**

The secondary data was gotten from various sources like central bank of Nigeria, Annual report and statement of accounts (various years) statistical bulletin, federal office of statistic (FOS) the Nigeria Power Holding Company, news papers internet, text books, journals, magazines, seminar reports etc. these data are gathered for a period of 25years (1986-2010). Hence the reliability of the estimates depends on how account the data gather through those sources.

Title page

Approval page

Dedication

Acknowledgment

Table of contents

Abstract

CHAPTER ONE: INTRODUCTION

1.1 Background of the study

1.2 State of research problem

1.3 Objective of the study

1.4 Hypothesis

1.5 Justification of study

1.6 Scope of study

1.7 Plan of the project

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

2.2 Theoretical issues

2.3 Empirical studies

2.4 Theoretical framework

CHAPTER THREE: METHODOLOGY OF STUDY

3.1 Method of data analysis

3.2 Model of specification

3.3 Techniques of model

3.4 Evaluation of model

3.5 Sources of data and collection

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS OF RESULT

4.1 Presentation of result

4.2 Evaluation based on economic apriori criteria

4.3 Evaluations based on statistical criteria

4.4 Evaluation based on econometric criteria

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATION

5.1 Summary

5.2 Conclusion

5.3 Recommendations

Bibliography

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POWER SUPPLY AND THE PERFORMANCE OF SMALL AND MEDIUM SCALE INDUSTRIES IN NIGERIA FROM (1986 – 2010)