THE RELATIVE IMPACT OF OIL AND NON-OIL EXPORTS ON ECONOMIC GROWTH IN NIGERIA: 1983-2007
- Project Research
- 1-5 Chapters
- Quantitative
- Regression
- Abstract : Available
- Table of Content: Available
- Reference Style: APA
- Recommended for : Student Researchers
- NGN 3000
Background to the study
Oil, a very versatile and flexible, non-reproductive, depleting, natural (hydrocarbon) is a fundamental input into modern economic activity, providing about 50% of the total energy demand in the world. (Anyanwu J.C. et al, 1997)
Petroleum or crude oil is an oily, bituminous liquid consisting of a mixture of many substances, mainly the element of carbon and hydrogen known as hydrocarbons. It also contains very small amounts of non-hydrocarbon elements, chief amongst which are sulphur (about 0.2 to 0.6% in weight), then nitrogen and oxygen. (Anyanwu J.C. et al, 1997)
Non-oil exports comprises of agricultural products, solid mineral, textile, tyre, manpower, etc. it is made up of every other thing we export, except petroleum products. In the decades of the 1960s and 1970s, the Nigeria economy was dominated by agricultural commodity exports. Such commodities include cocoa, groundnut, cotton and palm produce. From the mid 1970s, crude oil became the main export produce of the Nigerian economy. (Anyanwu J.C. et al 1997)
The development of the petroleum (oil) industry in the country began in 1909. It started with exploration activities by the German Bitumen Corporation, but their search for oil seized after the First World War because the Germans started the war and lost in the war. With Nigeria being under British sectorial control, it was only natural that the Germans had to stop their exploration activities.
In 1937, an oil prospecting license was granted to shell D’Arcy Exploration parties. The first commercial discovery of crude oil in Nigeria was made in 1956 by shell at Oloibiri. The company started production and in 1961 the Federal government of Nigeria issued ten oil prospecting licenses on the continental shelf to five companies. Each license covered was subject to the payment of N1 million. With this generous concession full-scale on-shore and off –shore oil exploration began.
Oil was found in commercial quantities at Oloibiri in the Niger delta, further discoveries at Afam and Boma established the country as an oil-producing nation. The Nigerian crude oil is described as a sweet type because of its lightness and its low sulphur content. It was largely sought-after in the international oil market.
The global perception of Nigeria is that of a really blessed oil producing nation, but with a growing poverty index. (Maaji Umar YAKUB, 2008). The problems of low economic performance of Nigeria cannot be attributed solely to instability of earnings from the oil sector, but as a result of failure by government to utilize productively the earnings from the export of crude oil from the mid 1970s to develop other sectors of the economy. Nigeria is among the poorest countries in the world, with the poverty incidence estimated at 54% in 2006. The economy has been substantially unstable, a consequence of the heavy dependence on oil revenue and the volatility in its prices. The oil boom of the 1970s led to the neglect of non-oil tax revenue, expansion of the public sector, and deterioration in financial discipline and accountability. In turn, oil-dependency exposed Nigeria to oil price volatility which threw the country’s public finance into disarray.
This study will examine the relative impact of oil and non-oil export on economic growth in Nigeria.
Statement of the Problem
Oil is a major source of energy in Nigeria and the world (in general). Oil being the mainstay of the Nigerian economy plays a role, vital role in shaping the economy and political destiny of the country. It was towards the end of the Nigerian civil war (1967-1970) that the oil industry began to play a prominent role on the economic life of the country.
Non-oil product on the other hand plays an important role in the economic growth and development of the country. Non-oil exports, especially agricultural product like groundnut, palm oil, cotton, natural rubber, coffee, gum Arabic, sesame seed, etc. was our main stay before the period of the oil boom. It was during that period (that is, period of oil boom) that Nigerians neglected non-oil exports to an extent.
Nigeria can be categorized as a country that is primarily rural, that is, it depends on primary product export (especially, oil product). Since the attainment of independence in 1960 it has experienced ethnic, regional and religious tensions, magnified by significant disparities in economic, educational and environmental development in the south and in the north. This could be partly attributed to the major discovery of oil in the country which affects and is affected by economic and social components.
Crude oil discovery has had certain impact on the Nigerian economy both positively and adversely. On the negative side, this can be considered with respect to the surrounding communities within which the oil wells are exploited. Some of these communities still suffer environmental degradation, which leads to deprivation of means of livelihood and other economic and social factors. Although, large proceeds are obtained from the domestic sales and exports of petroleum products, its effects on the growth of the Nigerian economy with regard to returns and productivity is still questionable.
Hence, there is need to evaluate the relative impact of oil and non-oil exports on economic growth in Nigeria. In the light of the study, the main objective is to assess the relative impact of oil and non-oil export on the Nigerian economy.
Below are the research questions of the study.
1. What is the relative impact of oil and non-oil exports on investment in Nigeria?
2. What is the relative impact of oil and non-oil exports on economic growth in Nigeria?
Objective of the Study
The broad objective of this study is to investigate the impact of oil and non-oil exports on economic growth in Nigeria. However, the specific objectives are;
1. To determine the relative impact of oil and non-oil exports on investment in Nigeria.
2. To determine the relative impact of oil and non-oil exports on economic growth in Nigeria.
Research Hypothesis
The following hypothesis will be tested in this study:
1. Both oil and non-oil exports have no significant impact on investment in Nigeria.
2. Both oil and non-oil exports have no significant impact on economic growth in Nigeria.
Scope of the Study
This research work covers the impact created on economic growth by oil and non-oil exports. The geographical area involved is Nigeria. The study is as such a comparative one. The variables of interest are oil export, non-oil export, real interest rate, inflation rate, investment and GDP. The time period is from 1983-2007.
Significance of the Study
Countries of the world today are engaging themselves more in international trade to earn foreign currency, maintain a surplus Balance of Payment (BOP), establish good relationship with foreigners and most of all achieve economic growth. Nigeria as a country is not left out in the international trade. Our export commodities can de divided into oil and non-oil.
It is important to study the relative impact of oil and non-oil exports on economic growth in Nigeria to ascertain whether the exportation is contributing to our economic growth and per capita income or whether we have just been wasting our resources.
Definition of Operational terms
Economic growth: This is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.
Oil sector: This is also known as the oil industry or the oil patch, includes the global processes of exploration, extraction, refining, transporting, and marketing of petroleum products. The largest volume products of the industry are fuel oil and gasoline.
Oil Price Volatility: This is the measure of the tendency of oil price to rise or fall sharply within a period of time, such as a day, a month or a year. Lee (1998) as cited in Mgbame, Donwa and Onyeokweni (2015) defines volatility as the standard deviation in a given period and noted that volatility has a negative and significant impact on economic growth instantly, while the impact of oil price changes delays until a year.
Non-oil revenue: This is the income or proceeds generated from the commodities that are sold in the international market excluding crude oil (petroleum product). Non-oil exports on the other hand are those commodities (excluding crude oil) that are sold abroad in order to generate revenue. These non-oil exports include agricultural products or crops, manufactured goods, tourist services/receipts, solid minerals, telecommunication services and other exports.
Gross Domestic Product: This implies the market value of all officially recognized final goods and services produced within a country in a given period. GDP per capita is often considered as an indicator of a country‘s standard of living. GDP is related to national account, a subject in macro -economics. It is customarily reported on an annual basis. It is defined to include all final goods and services, that is, those that are produced by economics resources located in that nation regardless of their ownership and are not resold in form.
Inflation is defined as a generalized increase in the level of price sustained over a long period in an economy. It is a rise in the general level of prices of goods and services in an economy over a period of time.
Exchange rate: An exchange rate (also known as foreign exchange rate) between two currencies is the rate at which one currency will be exchanged for another. It is regarded as the value of one country‘s currency in terms of another currency. Exchange rates are determined in the foreign exchange market, which is open to a wide range of different types of buyers and sellers where currency trading is continuous.
Non-oil export: These include the exportation of the non-oil produces among which are agricultural, industrial and manufacturing outputs.
Non-oil export index: This is the fraction of the total export of goods and services that are produced within the economy that are not directly related to the oil sector of the economy. The non-oil products exports are unlimited as they include cash crops, food crops, manufacturing, entertainment, tourism etc. the value of the non-oil export index shall be used for measuring the non-oil export.
Related Project Materials
THE ROLE OF COST ACCOUNTING IN PERFORMANCE MEASUREMENT IN THE TEXTILE INDUSTRY
Abstract: THE ROLE OF COST ACCOUNTING IN PERFORMANCE MEASUREMENT IN THE TEXTILE INDUSTRY
This study examines the role of cost accounting...
THE IMPACT OF VIRTUAL REALITY ON VOCATIONAL TRAINING FOR MECHANICAL ENGINEERING
ABSTRACT: The impact of virtual reality (VR) on vocational training for mechanical engineering holds significant potential for transforming tr...
THE IMPACT OF COST-BENEFIT ANALYSIS ON BUSINESS STRATEGIES
ABSTRACT
THE IMPACT OF COST-BENEFIT ANALYSIS ON BUSINESS STRATEGIES
This study investigates the impact of cost-benefit analysis...
ASSESSMENT OF YOUTH ORGANIZATION’S PARTICIPATION IN THE PLANNING AND IMPLEMENTATION OF COMMUNITY DEVELOPMENT PROJECTS IN ABIA STATE, NIGERIA
ABSTRACT
The main purpose of this study was to assess youth org...
INFLUENCE OF HYGIENIC ENVIRONMENT ON THE TEACHING AND LEARNING OF PUPILS
ABSTRACT
The purpose of this study is to ascertain the knowledge and practice of basic personal hygiene among school chi...
IMPACT OF NEW MEDIA ON POLITICAL ADVERTISING IN 2015 GOVERNORSHIP ELECTION
ABSTRACT
This study investigated the impact of social media on political advertising during the 2015 governorship electi...
EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON ORGANIZATION SURVIVAL
BACKGROUND OF THE STUDY
Corporate Social Responsibility is the responsibility of an organization for th...
A STUDY ON THE STRATEGIES FOR PROMOTING LIFELONG LEARNING HABITS AMONG VOCATIONAL STUDENTS
ABSTRACT: Strategies for Promoting Lifelong Learning Habits Among Vocational Students examines approaches to instill a culture of continuous learni...
A TERM PAPER ON MANAGING HUMAN RESOURSES FOR IMPROVED ORGANIZATION EFFECTIVENESS
Abstract
Human Resource is a very important input in the production matrix. Other seven inputs include materials, money, time, energy, kn...
THE INFLUENCE OF CORPORATE GOVERNANCE ON FINANCIAL REPORTING INTEGRITY
ABSTRACT:
This study examines the influence of corporate governance on financial reporting integrity in...
