An Empirical Analysis On The Impact Of Oil And Non-oil Exports On Nigeria’s Economy (1981-2012)

ABSTRACT

This research focuses on the impact of oil and non-oil exports on Nigeria’s economy from 1981 to 2012. Data on gross domestic product, oil export and non-oil export were used. The ordinary least square (OLS) was used to estimate the parameters. The research results from econometrics analysis revealed that oil and non-oil exports have significant impact on Nigeria’s economy. The unit root test was conducted using the Augmented Dickey- Fuller and Phillip Perron unit root test and all the variables were integrated at order one. The cointegration test was also conducted using the Johansen cointegration test technique and the results shows that the variables under study have no long run equilibrium relationship. Other test conducted includes the Granger causality test and the autocorrelation test. The Granger causality test was conducted to determine the direction of causality. The study recommends as part of Nigeria’s strategy for achieving rapid and sustainable economic growth the fashioning of right policies such as bringing expert personnel that will be in charge of the Administration of the export promotion council because the national export promotion council remains the major vehicle for conveying the export policies of government specifically on non-oil exports.

TABLE OF CONTENT

TITLE PAGE

APPROVAL PAGE

DEDICATION

ACKNOWLEDGEMENT

ABSTRACT

CHAPTER ONE

CHAPTER TWO

2.0 LITERATURE REVIEW…………………………………………………………………………………..13

2.1 THEORETICAL LITERATURE………………………………………………………………………….13

 

CHAPTER THREE

CHAPTER FOUR

CHAPTER FIVE

BIBLIOGRAPHY Apendixes 

 

INTRODUCTION

Nigeria Economy is practically an open economy with international transactions taking an important fraction of her overall economic activities over the years. Before Nigeria gained her independence in 1960, agriculture was the dominant sector in the economy, which provided both cash crops and food crops to the economy and accounted for the largest part of the foreign exchange of the country. However, the discovery of crude oil production in commercial quantities changed the structure of the Nigerian economy. This crude oil was first discovered by shell-BP in oloibiri in Bayelsa state in the year 1956. This discovery led to the neglect of agricultural product, making the Nigerian economy depend heavily on crude oil production and exportation to other nations. In 1959, the sole concession rights over the whole country granted to shell-BP had to be reviewed (Attamah, 2000). Consequently, exploration rights were extended to companies of other nationalities in line with the policy of increasing the pace of exploration, while at the same time ensuring that the country was not overtly dependent on one company or nation (Attamah, 2000)

In the year 2000, crude oil export accounted for more than 98% of total export and about 83% of federal government revenue (Odularu, 2008). Furthermore, the United States of America (U.S.A) remains

Nigeria’s largest customer for crude oil export accounting for about 40% of the country total oil exports, provided about 10% of overall United State oil imports and ranked as the fifty-largest source for United State imported oil. (Odularu 2008)

According to CBN bullion publication authored by Odularu (2008) on the contribution of agricultural and oil sector on gross domestic product in Nigeria, the structure and trend of the Nigerian export sector has remained the same since the end of colonialism till date. This is seen from the dominance of one export commodity which is crude oil. Before independence in 1960 and into the mid-1970’s, Nigeria was a major exporter of agricultural commodities. On the average, agriculture contributed more than 60% to our GDP in the early 1960’s. By the turn of the 1960’s, the percentage contribution of agriculture had fallen below 50%. It continue to decline in the year 1970’s reaching an all time low level of 23% in 1980 showing that the role of agriculture in terms of its contribution to the GDP of Nigeria has been declining.