OIL PRODUCTION - GDP NEXUS: EMPIRICAL INSIGHTS FROM THE NIGERIAN ECONOMY

Abstract

Several studies abound that concentrated on oil production and the environment, oil exploration and socio-economic conditions, contributions of crude oil consumption to the growth of the Nigerian state, etc. But there are no recent studies investigating the oil production- GDP nexus. Hence, the main goal of this study is to explore the contribution of oil production to the national GDP from an oil-dependent economy nexus. Annual time series data on oil production and its growth rate represented the oil production side of the nexus while GDP and its growth rate represented the GDP side of the nexus. We applied the three different econometric techniques: unit root test, cointegration test, vector error correction and the Granger causality estimation techniques. Our results largely suggest that there exists a long-run joint and simultaneous
 (bilateral performance) between GDPg and OILPRODg , and between GDP and OILPRODg; growth rate of GDP (GDPg) has negative coefficients in relation to its contribution to the growth of oil production (OILPRODg); and negative but statistically insignificant impact of the dependence of the growth rate of current OILPRODg on GDP. Furthermore, OILPRODg Granger caused GDPg as well as GDP, and GDP does not Granger cause OILPROD. We recommend that oil production should be controlled and directed towards effective management of GDP and economic growth outcomes in Nigeria
 JEL Classification Code: O47, O55,Q32,Q43