An emerging literature on demand-led structural transformation and structuralist macroeconomics finds that demand-growth can positively complement industrial policy and drive structural transformation but there is no firm consensus which policies can achieve a sustained virtuous circle of demand-, output- and productivity growth. Looking at evidence from manufacturing companies listed on the Nigerian Stock Exchange (NSE), this paper supports the view that demand-growth can be a catalyst of structural transformation but only if demand problems of different nature are addressed simultaneously. Increases in government spending need to be combined with distributional policies favouring the disposable income of workers and subsistence communities and with policies that can address country-specific and historically formed supply-side problems in vertically linked sectors to counteract external demand problems manifesting through the balance of payments.
Keywords: Demand-led Structural Transformation, Industrial Policy, Nigeria, NSE-listed manufacturing companies
JEL classification: L16 O11 O14 O25 O55
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