Benue State University, Makurdi

Crude Oil Revenue and Output Growth in Nigeria: An Error Correction Model Approach

Gushibet Solomon Titus

Abstract

The paper investigated the impact of crude oil revenue on output growth in Nigeria from 2000 to 2019 for which data were available. The disruption posed on output growth and ensuing economic recessions in Nigeria as a result of oil price shocks has provoked the study. The paper employed the Error Correction Model as the technique to estimate and analyse the impact of crude oil revenue on output growth in Nigeria. Descriptive analysis was used to present the data analysis. It was found that all the variables except net foreign assets have positive but largely insignificant impacts on GDP in Nigeria. Net foreign assets showed a negative and statistically insignificant effect on GDP growth in the country. Urgent diversification has become a policy option to fast-track growth, and the paper recommended that the Federal and State Governments should prioritise their investment expenditures more to the provision of enduring infrastructures such as efficient road networks, stable power and other public goods that will contribute to the ease of doing business for the private sector to thrive and expand Nigeria’s net foreign assets as well as agricultural and manufacturing output in the country. This will reduce dependence on oil revenue which is susceptible to oil price shocks, amongst other recommendations and implementation strategies.

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