Nigeria is the largest oil exporting country in Africa and has a rapidly growing economy. The country follows a resource based growth strategy driven by the production and exporting of oil. With the volatility of global oil prices and of-ten volatile growth of Nigeria’s economy, this research is designed to examine the effect of Nigeria’s oil dependency on economic growth. This research at-tempts to answer the question of if the volatility of global oil prices is directly linked with the volatility of economic growth in Nigeria and uses GDP as the key variable for economic growth. An exploratory data analysis is employed using secondary data to examine the relationship between oil and GDP and the effect it has had on Nigeria’s growth since 1961.
The research found that there is a significant and positive relationship between oil dependency and economic growth in Nigeria. In the short-run, Nigeria was able to have increasing, yet volatile growth because of the high global oil pric-es, but in the long-run, the inconsistency of oil prices and lack of diversifica-tion of the productive base has had a negative effect on Nigeria’s economic growth. Thus, the research suggests that global oil prices are the cause of Nige-ria’s volatile growth rate. A combination of strict fiscal policy focused on the actual implementation of development and diversification and industrialization might be effective to protect the country’s economic from further global shocks and lead to increased and consistent economic growth.
Contents
Acknowledgements : iii
Chapter 1: Introduction
1.0 : Background : 1
1.1 : Problem Statement and Justification
1.2 : Research Question and Objective
1.3 : Hypothesis : 3
1.4 : Methodology and Limitations in carrying out the research
1.5 : Organization : 4
Chapter 2: Literature Review
2.0 : Overview : 6
2.1 : Literature Review
2.1.1 Mainstream economists view on resource-based growth
2.1.2 New Institutional Economics
2.1.3 Structural Economists view
Chapter 3: Overview of Nigeria’s Economy
3.0 : Introduction : 15
3.1 : Structure of Nigerian Economy
3.2.1 National Development Plans
3.2.2 Agriculture policies
3.2.3 Policies towards Industrialization
Chapter 4: Analysis and Findings
4.0 : Introduction : 25
4.1 : Nigeria’s dependence on oil
4.2 : Corruption & Growth
4.3 : Diversification and Growth
4.4 : Resource dependence in Indonesia & United Arab Emirates
4.4.1 United Arab Emirates
4.4.2 Indonesia
Chapter 5: Conclusion and Policy Implications
List of Tables
Table 1:Exports of fuel, manufactured and agriculture as percentage of merchandise exports (1996-2011)
List of Figures
Figure 1: Nigeria GDP Growth and Oil Price Shocks (1961-2011)
Figure 2: Oil Rents
Figure 3: Fiscal Trends: Nigeria 2003-2011
Figure 4: Federal-Collect Revenue from 2003 to 2011
Figure 5:Allocation of Federal Government Expenditures (2006-2011)
Figure 6: GDP and Oil price
Figure 7: Rate of change in oil production and GDP 1998-2012
Figure 8: Relationship between oil price and value of oil exports
Figure 9:1990-2012 value of oil exports and gdp
Figure 10:Corruption Perception Index (CPI) and Annual percentage growth rate of GDP of Nigeria from 1996 to 2012
Figure 11: Exports of fuel, manufactured and agriculture as percentage of merchandise exports (1996-2011)
Figure 12: Average Annual GDP Growth: Indonesia, Nigeria and United Arab Emirates 1976-2011
Figure 13: UAE GDP vs. Global Oil Price (1976-2011)
Figure 14: United Arab Emirates Economic Structure (1976-2011)
Figure 15: Indonesian GDP and Global Oil Prices (1976-2011)
Figure 16: Structural Change in Indonesia’s Economy (1976-2011)
List of Acronyms
FAO : Food and Agriculture Organization
ISS : Institute of Social Studies
UNDP : United Nations Development Program
WB : World Bank
GDP : Gross Domestic Product
IMF : International Monetary Fund
NNPC : Nigerian National Petroleum Corporation
OPEC : Organization of Petroleum Exporting Countries
NEEDS : National Economic Empowerment and DevelopmentStrategy
EDA : Exploratory Data Analysis
FSDH : First Securities Discount House
NPC : National Planning Commission
CBN : Central Bank of Nigeria
IFPRI : International Food Policy Research Institute
OFN : Operation Feed the Nation
NAFPP : National Accelerated Food Production Program
UNIDO : United Nations International Development Organization
EPZ : Export Processing Zones
TI : Transparency International
UAE : United Arab Emirates
FTZ : Free Trade Zone
HO : Heckscher Ohlin