Crude Oil Export Earnings and Economic Growth in Nigeria

Abstract

The crude oil sector is one of the main sectors saddled with the potential to employ a large segment of the population and is an essential key to the sustenance of the economic growth of countries. This study presented an empirical analysis of the impact of crude oil export earnings on economic growth in Nigeria spanning the period of 1981 - 2020. The model built for the study was the proxied Real Gross Domestic Product (RGDP) as the endogenous variable measuring economic growth as a function of Crude Oil Export (OEX), while Exchange Rate (EXR), Trade Openness (TOP) and Transportation Cost (TPC) were the exogenous variables. The annual time series data were gathered from CBN Statistical Bulletin, and the World Development Indicator (WDI). The study used econometric techniques of Augmented DickeyFuller (ADF) unit root test, Johansson co-integration, error correction model and Granger causality for empirical analysis. The results of unit root suggested that RGDP, OEX, EXR TOP, and TPC were stationary at first difference. The Johansson co-integration showed a long-run relationship among the variables. The findings from the ECM showed that crude oil exports have a positive and significant impact on the Nigerian economy. The study recommended that the activities by the government in promoting economic growth and development in the country should be geared towards promoting and developing the Oil export base of the country as it has a significant relationship with economic growth.