Benue State University, Makurdi

Oil Revenue, Portfolio Investment and Economic Growth in Nigeria and United Arab Emirates

Joseph Fefa, Abba Adaudu, and Victor Ushahemba Ijirshar

Abstract

The general perception of resource-rich countries is that they are wealthy. Natural resources, however, do not automatically translate into economic growth and national transformation. The relationship between oil revenue, portfolio investment, and economic growth in Nigeria and UAE from 1970 to 2019 is therefore examined in this study. The study employed a structural vector autoregressive model (SVAR) for data analysis. Result shows a strong bidirectional relationship between oil revenue and economic growth in UAE at 5% level of significance. The study also found that portfolio investment in UAE yields a stronger positive influence on economic growth than in Nigeria in terms of magnitude and level of significance. Results also indicate that oil revenue has a favourable impact on economic growth in Nigeria and the United Arab Emirates, and the estimates are statistically significant at the 5% level of significance. The study infers that portfolio investment has a weak influence on economic growth in both countries while oil revenue strongly determines economic growth in Nigeria and UAE. Thus, there exists a positive but weak transmission running from oil revenue to economic growth in Nigeria and UAE through portfolio investment but with a relatively higher influence in UAE than that of Nigeria. It recommended among others that there is a need for various governments to double their efforts at improving the investment climate in the portfolio using proceeds from oil sales.

DOWNLOAD COMPLETE ARTICLE HERE (CLICK)