Abstract
Economic diversification has been the glamour of successive administrations in Nigeria, especially amidst the dwindling oil-revenue in recent years, which has resulted from the fluctuations in world crude oil prices. This study aims at investigating the impact of diversifying the economy on the economic growth in Nigeria. Secondary data on GDP growth rate as a proxy for economic growth, non-oil GDP as a proxy for GDP diversification, non-oil export as a proxy for export diversification, investment and exchange rate, between 1981 and 2016, were adopted in the study. An econometric approach of Ordinary Least Squares (OLS) was adopted to empirically analyze the collected data and the result revealed that non-oil gross domestic product impacted positively and significantly on economic growth while exchange rate had an inverse but significant nexus on economic growth in Nigeria, within the period covered in the study. However, non-oil export and investment impacted positively but insignificantly on economic growth in Nigeria. The study recommends the encouragement of increased productivity in the real sector as well as the adoption of stable and favourable exchange rate policies by the government in order to accelerate economic growth in Nigeria.
Highlights
The Nigerian economy was dominated by commercial activities and exports prior to independence in 1960 as there was no viable industrial sector
This implies that a unit change in the non-oil gross domestic product (NOGDP), non-oil export (NOEXP), and investment (INV), will lead to an increase of 18.54%,3.15% and 3.02% on economic growth in Nigeria respectively
The adjusted R-squared of 0.499296 shows that about 50% of the total variation in economic growth is accounted for by the factors adopted in the study, leaving the remaining 50% for other factors not considered in the study
Summary
The Nigerian economy was dominated by commercial activities and exports prior to independence in 1960 as there was no viable industrial sector. Agricultural activities served as the pivot around the sustenance of the Nigerian economy. Agriculture showed its efficacy by contributing to the GDP by 65% despite the swings in world prices (Jide, 2017). It was through Agriculture that revenues were raised that facilitated the importation of capital goods and raw materials from foreign nations through international trade. Jide (2017) added that there were infrastructural developments by the governments through the surplus realized from the marketing boards for prospective economic advancement. The policy was formulated to improve export activities as a means of guaranteeing development (Ekpo and Umoh, 2014)
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