SOURCE:

Faculty: Social Sciences
Department: Economics

CONTRIBUTORS:

Obisike, N. E.
Nwogwugwu, U. C. C.

ABSTRACT:

Nigeria is one of the country’s in the world with huge crude oil deposit, and large refinery paradoxically Nigeria exports crude oil and imports refined petroleum products. As a result, this study examined the impact of oil sector trade (export and import) on Nigerian economic growth from 1983 to 2017. With precise interest on the impact of oil supply and demand growth rates, and oil terms of trade on Nigeria’s oil sector growth rate as well as the impact of oil sector growth rate on Nigeria’s economic growth rate. In order to capture the objectives of the study, relevant methods of analysis were adopted which include; Engle-Granger test statistic and Granger causality test. The E-G test reveals that oil supply variables (CEPGR and CERGR), oil demand variables (PPIPGR and PPIEGR), and oil terms of trade variables (OCTOT and ODFTOT) have positive impact on Nigeria’s oil sector growth rate within the study period, in turn oil sector growth rate had positive impact on Nigeria’s economic growth rate. The causality test shows that Nigeria is vulnerable to external shocks while the elasticity test indicates that oil import is income and price elastic positively while oil export is price elastic negatively. Given the empirical results on average, the study conclude that the pattern of oil trade going on in Nigeria has the capacity to lead to perpetual underdevelopment in Nigeria and thereafter recommend that Nigerian Government should channel oil trade towards exportation of both crude oil and refined petroleum products.