Effect of Oil Revenue and Macroeconomic Performance in Nigeria Economy
– Effect of Oil Revenue and Macroeconomic Performance in Nigeria Economy –
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ABSTRACT
This research work was conducted to investigate the impact of the oil industry on the economic growth performance of Nigeria. In the process of the research, the ordinary least square was (OLS) regression technique was employed.
Considering the impact of time on the changes in economic variables, the analysis was carried out using the simple regression method in which the Gross Domestic Product (GDP), proxy to economic growth, was used as the dependent variable.
While the oil revenue (OREV) and Exchange Rate (EXCH) are the independent variables. However, the unit root test was conducted using Augmented Dickey Fuller to test for the stationality of the variables. The result shows that GDP is stationary and the independent variables are non-stationary.
The researcher also used Engel and Granger to show if the variables are cointegrated or not. From the result, since Tca l< Ttab at 5% critical value, we accept the null hypothesis that it is non-stationary and integrated of order one. Thus, we conclude that the variable is not cointegrated.
INTRODUCTION
Oil was first discovered in Nigeria in 1956 at Oloibiri, Bayelsa state in the Niger Delta by shell-BP after half a century of exploration, and in 1958 Nigeria joined the rank of oil producers when its first oil field came on stream.(Azaiki &Shagary 2007). Since then, Oil revenue began to play a prominent role in the Nigerian economy.
In resent time oil has been the major source of energy for the households and industries in Nigeria and in the whole world. Oil being the mainstay of the Nigerian economy plays a vital role in shaping the economic and political destiny of the country. The oil industry began to play a prominent role in the economic life of the country Nigeria (Fashola 1999).
Nigeria is Africa’s highest oil exporter and the world’s tenth largest oil producing country It has realized over US$ 600 billion in oil revenues since 1960, and is currently the 5th highest net oil exporter in the World (CIA The world fact book, 2015).
Nigeria’s economy is heavily dependent on natural resources; oil and gas constitutes 98%of total exports, 80% of government revenues and about 20% of GDP (CBN, 2010). In spite of the enormous economic potentials in Nigeria, it has largely failed to live up to the ambitious growth projections that followed the first oil boom in the 1970s (Bawa& Mohammed 2007).
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