How Important is Oil in Nigeria’s Economic Growth? | Zendy

Anthony Enisan Akinlo | Zendy

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How Important is Oil in Nigeria’s Economic Growth?

Author(s) -

Anthony Enisan Akinlo

Publication year - 2012

Publication title -

journal of sustainable development

Language(s) - English

Resource type - Journals

eISSN - 1913-9071

pISSN - 1913-9063

DOI - 10.5539/jsd.v5n4p165

Subject(s) - causality (physics) , agriculture , granger causality , manufacturing sector , economics , business , agricultural economics , natural resource economics , international economics , econometrics , geography , physics , archaeology , quantum mechanics

This study assesses the importance of oil in the development of the Nigerian economy in a multivariate VAR model over the period 1960-2009. Empirical evidence shows that the five subsectors are cointegrated and that the oil can cause other non oil sectors to grow. However, oil had adverse effect on the manufacturing sector. Granger causality test finds bidirectional causality between oil and manufacturing, oil and building & construction, manufacturing and building & construction, manufacturing and trade & services, and agriculture and building & construction. It also confirms unidirectional causality from manufacturing to agriculture and trade & services to oil. No causality was found between agriculture and oil, likewise between trade & services and building & construction. The paper recommends appropriate regulatory and pricing reforms in the oil sector to integrate it into the economy and reverse the negative impact of oil on the manufacturing sub sector.

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