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Effect of Crude Oil Revenue on the Oil and Non-oil Sectors in Nigeria

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  • Salaudeen Mohammed Bashir

    (Department of Economics, Faculty of Management and Social Sciences, Lead City University, Ibadan, Nigeria)

Abstract

The debate for oil-rich economies to plough their oil windfalls into real economic activities to spur diversification has become intense due to the deficit fiscal crisis and poor socio-economic profile of resource-abundant nations. Therefore, we use secondary data from the period between 1981 and 2020 to assess the impact of crude oil revenue on the oil and non-oil sector output performance in Nigeria. The study adopts the ARDL (i.e. autoregressive distributed lag) and the augmented Granger causality techniques to analyse the data. The ARDL regressions show that crude oil positively impacts oil sector performance, but the impact is only substantial in the short run. Crude oil revenue exerts a positive and insignificant effect on the short-run non-oil sector output, whereas, over the long run, it has a negative but significant effect. To propel growth, the study recommends using the excess crude oil earnings to develop non-oil sectors such as agriculture, services, and manufacturing.

Suggested Citation

  • Salaudeen Mohammed Bashir, 2023. "Effect of Crude Oil Revenue on the Oil and Non-oil Sectors in Nigeria," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 11(1), pages 138-161, October.
    • Handle: RePEc:vrs:auseab:v:11:y:2023:i:1:p:138-161:n:12
    DOI: 10.2478/auseb-2023-0007
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    More about this item

    Keywords

    natural resources; diversification; economic growth; economic output; revenue shock;
    All these keywords.

    JEL classification:

    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania

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