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Petroleum Revenue and Gross Domestic Product in Nigeria

Author

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  • Joseph Ojo EKIRAN (PhD)

    (Department of Economics, Bamidele Olumilua University of Education, Science and Technology, Ikere-Ekiti)

Abstract

Nigeria is the most populous country in Africa, it maintains the second largest oil reserve in the continent. The question on whether the oil natural resource endowment is a blessing or a curse is still not adequately answered in the literature. This study therefore examines the interrelationships between petroleum revenue and gross domestic product in Nigeria from 1985-2020. The data used for the analysis of the study was obtained from World Bank and Central Bank of Nigeria data base. Augmented Dickey Fuller (ADF) unit root test was used to test for the presence of stationarity in the variables, autoregressive distributed Lag (ARDL) co-integration test was employed to test for long run relationship and error correction model (ECM) was employed to test the short-run relationship among variables. The variables used for the research work are Gross Domestic Product (GDP), Oil Revenue (OIR), Inflation (INF), Effective Exchange Rate (EEXR), Labour (LAB) and Gross Capital Formation (GCFC). The study showed that oil revenue and labour force exhibit significant positive impacts on gross domestic product (economic growth). This study recommends that government should establish annual spending limits in order to reduce inflation, the government should engage in the rehabilitation of the old refineries and construction of new ones in order to stop the age long practice of exporting crude oil at a low price and purchasing the refined oil at a high price. Measures to reduce the high exchange rate of naira with other countries’ currencies should be put in place. Various government policies should be put in place and diligently enforced to ensure that the diversion of revenue gotten from the oil sector are duly handled to further meet the economic growth objective in the country.

Suggested Citation

  • Joseph Ojo EKIRAN (PhD), 2024. "Petroleum Revenue and Gross Domestic Product in Nigeria," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 11(1), pages 141-153, January.
    • Handle: RePEc:bjc:journl:v:11:y:2024:i:1:p:141-153
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    References listed on IDEAS

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    1. Musa Dauda & Philip O. Alege & Olabanji O. Ewetan & Franklin F. Asemota, 2023. "Oil Revenue and Sustainable Economic Growth in Nigeria: Empirical Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 13(4), pages 150-155, July.
    2. Kuan-Chieh Chen, 2021. "The Impact of Oil Price Shocks on Economic Growth: The Case of Taiwan," International Journal of Economics and Financial Issues, Econjournals, vol. 11(5), pages 96-103.
    3. Charles O. Manasseh & Nnenna G. Nwonye & Felicia C. Abada & Ogochukwu Okanya & Anuli R. Ogbuagu & Felicia U. Eze-Dike & Osmond N. Okonkwo & Otene Samson & Okechukwu J. Akamike & John O. Okoh & Peter O, 2022. "Evaluating Oil Price Movement and Revenue Generation in Nigeria during Covid-19 Pandemic: Experience from Pre and Post Era," International Journal of Energy Economics and Policy, Econjournals, vol. 12(3), pages 57-65, May.
    4. Mohammad Reza Farzanegan & Pooya Alaedini & Khayyam Azizimehr & Mohammad M. Habibpour, 2021. "Effect of oil revenues on size and income of Iranian middle class," Middle East Development Journal, Taylor & Francis Journals, vol. 13(1), pages 27-58, January.
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