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Oil Price Volatility And Infrastructural Growth: Evidence From An Oil- Dependent Economy

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  • Sunday Osahon Igbinedion

    (Department of Economics, Faculty of Social Sciences, University of Benin, Edo State Nigeria)

Abstract

Since the discovery of crude oil in Nigeria in 1957, the Nigerian economy has remained a mono-product economy largely impacted by the effects of oil price volatility with its attendant adverse consequences on the nation’s revenue profile and infrastructural growth. Accordingly, this paper attempts to investigate the nexus between oil price volatility and infrastructural growth in Nigeria, utilizing cointegration and error correction modeling approach for the period 1981-2015. The data for this study were sourced from the Central Bank of Nigeria Statistical Bulletin, 2014 and 2016 editions. The results suggest that both oil price volatility and inflation rate tend to exert negative impact on infrastructural growth, while the appreciation of real exchange rate tend to trigger investment in infrastructure. Accordingly, we recommend, among others, the need to design and implement effective diversification policies with a view to raising the nation’s revenue trajectory, while strengthening local crude oil refining capacity so as to minimize the adverse consequences of such external shocks on the domestic economy.

Suggested Citation

  • Sunday Osahon Igbinedion, 2019. "Oil Price Volatility And Infrastructural Growth: Evidence From An Oil- Dependent Economy," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 4(1), pages 17-28, March.
    • Handle: RePEc:ora:jrojbe:v:4:y:2019:i:1:p:17-28
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    References listed on IDEAS

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    More about this item

    Keywords

    oil price; infrastructure; ECM; economic growth; Nigeria.;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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