Spatial patterns of production subcontracting in Nigeria

Abstract

Studies on production subcontracting have usually been conducted within the transaction cost perspective. This has tended to hinder an understanding of the networks to interfirm relationships, which could be better understood through a spatial perspective. This paper, which analyses the spatial relationships amongst places through subcontracting, introduces the spatial perspective. In a broad sense, this study analyses the spatial relationships amongst places through production subcontracting. The case study is based on the relationship within the Lagos region and those between the regions and other towns within Nigeria. This paper shows that production subcontracting is concentrated in a few locations. The analyses of the spatial distribution of production subcontracting in the step-wise multiple regression model is highly statistically significant. While the number of subcontractors and volume of subcontracting calculated in naira were the dependent variables, the size and structural characteristics of the locations where subcontracting is found are the independent variables. The results of these analyses show that the number of industrial establishments is the only significant explanatory variable. The implication of this study is that, if encouraged, production subcontracting could be used to enhance the industrial development of Nigeria.