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Determinants of backward linkages of oil and gas industry in the Nigerian economy

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  • Adewuyi, Adeolu O.
  • Ademola Oyejide, T.

Abstract

This paper examines the determinants of backward linkages from the oil and gas industry in Nigeria. Secondary and primary data collected cover firms engaging in fabrication and construction; well-construction and completion, and control systems and ICT. Both descriptive and inferential statistical approaches were employed in the paper. Despite the widespread view that local content in the Nigerian oil industry is very low, there is a clear evidence for the existence of linkages – at least insofar as the three sub-sectors considered in this analysis are concerned. The paper shows that many of the linkages in the Nigerian oil value chain involve local firms, and that this has been a consequence of local content policies and investments in telecommunications and transport. Linkages have been held back by weaknesses in power and water infrastructure. The large investment in higher education in Nigeria suggests that skill-constraints have not been a major obstacle to linkage development in the three sub-sectors. The flow of labour to and from other sectors is indicative of learning spillovers, both within Nigeria and in the West African regional economy. Regression analysis shows that skills, policies, the quality of the national innovation system and their interactions are the major drivers of backward linkages. A number of policy implications to enhance linkage development in Nigeria's oil and gas value chain are identified.

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  • Adewuyi, Adeolu O. & Ademola Oyejide, T., 2012. "Determinants of backward linkages of oil and gas industry in the Nigerian economy," Resources Policy, Elsevier, vol. 37(4), pages 452-460.
    • Handle: RePEc:eee:jrpoli:v:37:y:2012:i:4:p:452-460
    DOI: 10.1016/j.resourpol.2012.06.007
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    References listed on IDEAS

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    Cited by:

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    2. Adedeji, Abdulkabir Niran & Sidique, Shaufique Fahmi & Rahman, Azmawani Abd & Law, Siong Hook, 2016. "The role of local content policy in local value creation in Nigeria's oil industry: A structural equation modeling (SEM) approach," Resources Policy, Elsevier, vol. 49(C), pages 61-73.
    3. Ludovic-Alexandre Vidal & Franck Marle & Mathieu Dernis, 2021. "Modeling and Estimating Host Country Values in International Projects to Facilitate In-Country Value Creation," Sustainability, MDPI, vol. 13(10), pages 1-21, May.
    4. Wegenast, Tim & Beck, Jule, 2020. "Mining, rural livelihoods and food security: A disaggregated analysis of sub-Saharan Africa," World Development, Elsevier, vol. 130(C).
    5. Filippo Bontadini & Maria Savona, 2019. "Revisiting the Natural Resource ‘Curse’ in the Context of Trade in Value Added: Enclave or High-development Backward Linkages?," SPRU Working Paper Series 2019-15, SPRU - Science Policy Research Unit, University of Sussex Business School.
    6. Vincent Géronimi & Claire Mainguy, 2020. "Exploitation minière et développement : des effets toujours controversés. Introduction," Mondes en développement, De Boeck Université, vol. 0(1), pages 7-29.
    7. Elkhan Richard Sadik-Zada & Wilhelm Loewenstein & Yadulla Hasanli, 2021. "Production linkages and dynamic fiscal employment effects of the extractive industries: input-output and nonlinear ARDL analyses of Azerbaijani economy," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 34(1), pages 3-18, April.
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    9. Mia Ellis & Margaret McMillan, 2018. "Optimal local content for extractive industries: How can policies best create benefits for Tanzania?," WIDER Working Paper Series 133, World Institute for Development Economic Research (UNU-WIDER).
    10. Narula, Rajneesh, 2018. "Multinational firms and the extractive sectors in the 21st century: Can they drive development?," Journal of World Business, Elsevier, vol. 53(1), pages 85-91.
    11. Heim, Irina & Kalyuzhnova, Yelena & Ghobadian, Abby, 2023. "Win-win strategies for firms operating in resource-abundant countries: Technological spillovers and a collaborative diversification policy," Resources Policy, Elsevier, vol. 83(C).
    12. Adewuyi, Adeolu O., 2016. "Determinants of import demand for non-renewable energy (petroleum) products: Empirical evidence from Nigeria," Energy Policy, Elsevier, vol. 95(C), pages 73-93.
    13. Maria Savona & Filippo Bontadini, 2023. "Revisiting the Natural Resource Curse: Backward Linkages for Export Diversification and Structural Economic Transformation," Development and Change, International Institute of Social Studies, vol. 54(2), pages 378-421, March.
    14. Nguyen, Chi-Hai & Ngo, Quang-Thanh & Pham, My-Duyen & Nguyen, Anh-Tuan & Huynh, Ngoc-Chuong, 2021. "Economic linkages, technology transfers, and firm heterogeneity: The case of manufacturing firms in the Southern Key Economic Zone of Vietnam," MPRA Paper 109670, University Library of Munich, Germany.
    15. Kaplinsky, Raphael, 2015. "Technological upgrading in global value chains and clusters and their contribution to sustaining economic growth in low and middle income economies," MERIT Working Papers 2015-027, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    16. Jack Pegram & Gioia Falcone & Athanasios Kolios, 2018. "A Review of Job Role Localization in the Oil and Gas Industry," Energies, MDPI, vol. 11(10), pages 1-18, October.
    17. Arena, Marika & Azzone, Giovanni & Dell’Agostino, Laura & Scotti, Francesco, 2022. "Precision policies and local content targets in resource-rich developing countries: The case of the oil and gas sector in Mozambique," Resources Policy, Elsevier, vol. 76(C).
    18. Mia Ellis & Margaret McMillan, 2018. "Optimal local content for extractive industries: How can policies best create benefits for Tanzania?," WIDER Working Paper Series wp-2018-133, World Institute for Development Economic Research (UNU-WIDER).
    19. Macatangay, Rafael Emmanuel “Manny”, 2016. "Optimal local content requirement policies for extractive industries," Resources Policy, Elsevier, vol. 50(C), pages 244-252.
    20. Kalyuzhnova, Yelena & Azhgaliyeva, Dina & Belitski, Maksim, 2022. "Public Policy Instruments for Procurement: An Empirical Analysis," Technological Forecasting and Social Change, Elsevier, vol. 176(C).
    21. Gbadago, Frank Yao & Enu-Kwesi, Francis & Agyei, Samuel Kwaku & Gatsi, John Gartchie, 2023. "Key local factors, supplier and linkage effectiveness: Evidence from the upstream petroleum sector of Ghana," Resources Policy, Elsevier, vol. 85(PA).
    22. Guevara, Zeus & Sebastian, Antonio & Carranza Dumon, Fabian, 2022. "Economy-wide impact of conventional development policies in oil-exporting developing countries: The case of Mexico," Energy Policy, Elsevier, vol. 161(C).
    23. Mancini, Lorenzo & Paz, María José, 2018. "Oil sector and technological development: Effects of the mandatory research and development (R&D) investment clause on oil companies in Brazil," Resources Policy, Elsevier, vol. 58(C), pages 131-143.

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