The Impact of Oil Revenue on Economic Growth in Nigeria (1981-2018)

  • Gideon Tayo Akinleye Ekiti State University
  • Johnson Kolawole Olowookere Osun State University
  • Samson Bamikole Fajuyagbe Ekiti State University
Keywords: Oil Revenue; Petroleum Profit Tax; Economic Growth; ARDL; Co-integration (Bound test)

Abstract

The study examined the impact of oil revenue on economic growth in Nigeria (1981-2018). The secondary data collected on the economic variable used in the study were sourced from the Central Bank of Nigeria Statistical Bulletin and National Bureau of Statistic. An Augmented Dickey Fuller unit root test, autoregressive distributive lag (ARDL) method and ARDL bound test for co-integration with various other diagnostic techniques were employed for the study. The result revealed that exchange rate (EXCR), real gross domestic product (RGDP), petroleum profit tax (PPT) and oil revenue (OREV) were stationary at first difference (I(1)) and it was discovered that the inflation rate (INF) was stationary at level (I(0)); on ARDL, the result showed that the previous values of the economic growth (RGDP (-1)) and oil revenue were directly related with the economic growth (RGDP) in Nigeria; it was also revealed that the petroleum profit tax (PPT), inflation rate (INF) and exchange rate (EXCR) were inversely related with the economic growth (RGDP) in both the short and long run. The fitted ARDL model was statistical significance and as such reliable and appropriate for examining the impact of oil revenue and other identified economic variables on economic growth in Nigeria during the period under study. Hence, there was a need for government to formulate appropriate policy that could engender better and judicious used oil revenue to enhance the growth of the Nigerian economy. The entire loopholes to oil revenue generation should be blocked to ensure that fund is properly channel for the growth of the economy. Also, government should take a bold step towards the diversification the economy from oil in order to encourage the growth of the economy from other sectors of the economy.

Author Biographies

Gideon Tayo Akinleye, Ekiti State University

Preofessor

Department of Accounting, Faculty of Management Sciences

Johnson Kolawole Olowookere, Osun State University

Senior Lecturer

Department of Accounting, Faculty of Management Sciences

Samson Bamikole Fajuyagbe, Ekiti State University

PhD Student 

Department of Accounting, Faculty of Management Sciences

References

Adekanola, O. (2007) Taxation as a Means of Economic Revitalization: Limitations and Prospects in a Developing Economy, Lagos. The Nigerian Institute of Chartered Accountants of Nigeria- The Nigerian Accountant, 4(4), pp. 12-27.
Akinlo, A. E (2012). How important is oil in Nigeria’s economic growth? Journal of Sustainable Development, 5(4).
Ibeh, D. S. (2013). Diversification and development of the UAE’s economy. Messina, Italy: University of Messina.
Ibeh, F.U. (2013). The Impact of Oil Revenue on the Economic Growth in Nigeria: 1980-2010.
Igbeasere, T. (2013). The Effect of Oil Dependency on Nigeria’s Economic Growth. Journal of International Institute of Social Science, 3(1), pp. 23-32.
Johansen, S. & Juselius, K. (1990). Maximum likelihood estimation and inferences on cointrgation-with applications to the demand for money. Oxford Bulletin of Economics and Statistics, 52, pp. 169-210. http://dx.doi.org/10.1111/j.1468-0084.1990.mp52002003.x.
Johansen, S. & Juselius, K. (1992). Testing structural hypotheses in a multivariate cointegration analysis of the PP and UIP for UK. Journal of Econometrics, 5(3), pp. 211-244. http://dx.doi.org/10.1016/0304-4076(92)90086-7.
Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control, 12, pp. 231-54. http://dx.doi.org/10.1016/0165-1889(88)90041-3.
Kiabel B. D & Nwikpase, N.N. (2009) Selected Aspects of Nigerian taxes, Port Harcourt, Mgbaa Commercial Enterprises, 454
Mincer, J. (1958). Investment in human capital and personal income distribution. Journal of Political Economy, 66(4); pp. 281-289.
Musa, Y. A.; Sunusi, S. A.; Sabiu, B.S. & Abdullahi, Y. J. (2016). Analysis of the Impact of Oil Revenue in the Nigerian Economy. IOSR Journal of Economics and Finance. 1(7), pp. 10-12.
Odularu, G. O. (2008). Crude oil and the Nigerian economic performance. World Trade Organization (WTO), Centre William Rappard, Rue de Lausanne, 3(4), pp. 12-20.
Oladipo & Fabayo, (2012). Global Recession, Oil Sector and Economic Growth in Nigeria. Asian Transactions on Basic and Applied Sciences, 1(6), pp. 9-17.
Solow, R. M. (1956). A contribution to the theory of economics growth. Quarterly Journal of Economics (Oxford Journals), 70 (1), pp. 65–94.
Usman, A.; Madu, I. & Abdullahi,F. (2015). Evidence of Petroleum Resources on Nigerian Economic Development (2000-2009). Business and Economics Journal, 6(2), pp. 12-29.
World Bank (2013). Nigeria economic report (No. 1). Washington, DC: World Bank. World Bank (1994) Indonesia: Sustaining Development. Washington, DC: World Bank.
Published
2021-07-06
Section
Economic Development, Technological Change, and Growth