Is Oil Revenue Propitious to Nigeria’s Economy?
Oil revenue is determined by a change in oil quantity and the fluctuation in oil prices. It affects economies differently contingent on whether the economy is an oil-importing or oil-exporting economy. It also depends on the structure and the patterns of demand for and supply of energy. It is based on this that the study examines the effect of oil revenue on the growth of the Nigerian economy over the period 1986 to 2019. Using the annual time series data which was collected from the online database of World Bank Development Indicators (WDI), CBN statistical Bulletin, etc. and analyzed with the VECM model. The study revealed an average economic growth rate of 4% was gotten within the period with about 13% of the GDP gotten from oil. Government expenditure and the Exchange rate were observed to have an insignificant effect on GDPRATE in the short run while all other variables exhibited a significant and positive relationship with GDPRATE in the short run. Consequently, the result further reveals that inflation is necessary for the increase in Economic growth while revenue from oil serves as a positive spinner of Nigeria’s GDP. Therefore, efforts should be geared towards rebuilding and renovating the nation’s refineries as this will help at increasing the domestic production capacity and ultimately drive down the price of petrol while contributing to the nation’s economic growth and guaranteeing energy security in the country.
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