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IMPACT OF NON-OIL EXPORT ON NIGERIA’S ECONOMIC GROWTH (1981-2015)

  • Type:Project
  • Chapters:5
  • Pages:110
  • Methodology:Regression Analysis
  • Reference:YES
  • Format:Microsoft Word
(Economics Project Topics & Materials)
IMPACT OF NON-OIL EXPORT ON NIGERIA’S ECONOMIC GROWTH (1981-2015)
ABSTRACT

The Nigerian economy has for decades precariously leaned on the fragile leg of crude oil. Consequently, it has had its growth slowly driven by the continual fluctuations of oil prices. But however, Exports have been described as catalysts for overall development and thus increases the earnings of a country thereby creating an avenue for growth by raising the national income of the country. This study investigates the specific impact of the non-oil exports to the growth of Nigerian economy using data between 1981 and 2015. In carrying out this study, secondary data were collected and empirical analysis was made, in achieving the objectives of this study the Ordinary Least Square Methods and the Error Correction Mechanism is used for analysis. Following this, several studies suggests that in the last seven years the economy was growing without job creation and poverty reduction and recent study says that the Nigerian economy is in a state of jeopardy as poverty rate and unemployment rate is on an increase. Thus there is need for attention to be shifted towards non-oil export as a remedial for this quagmire that the economy is faced with. Therefore, diversification then comes to play as the study made some recommendations for diversification to be achieved and for enhancing the productivity and output of non –oil commodities as well as providing markets for the commodities.
Thus it is recommended that the Nigerian government should focus on the need for diversification into other sources of revenue in order not to be affected by the fall in oil prices in the international market.
The government should develop other sectors of the economy such as agricultural sector and the industrial sectors by providing incentives such as tax concession, provision of facilities needed by these sectors in order to boost more production.
The government should take urgent steps to sufficiently boost the non-oil sector in Nigeria so that it will impact tremendously on economic growth in the country.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study    -    -    
1.2 Statement of Research Problem    -
  Objective of The Study    -    -    -
Statement of Hypothesis    -    -    -    
Research Question    -    -    -    
Significance of The Study    -    -    -    
Scope and Limitation    -    -    -    -    
Structure Of The Study    -    -
CHAPTER TWO: LITERATURE REVIEW
2.1     History of Oil in Nigeria    -    -    
2.2     Trend in Non-Oil Export    -    -    -    
2.3     Conceptual Literature    -    -    -
2.4      Economic Growth and Development    -    -
2.5    Determinants of Economic Growth    -    -    
2.6      Challenges of Non-Oil Export    -    -    
2.7    Theoretical Literature    -    -    -    
2.8      Empirical Literature    -    -    -    -
CHAPTER THREE
3.1    Theoretical Framework    -    -    -    -
3.2     Model Specification    -    -    -
3.3    Apriority Expectation    -    -    -    -    -    
3.4    Research Methodology    -    -    -    -
3.5     Method of Data Collection    -    -    -    
CHAPTER FOUR: PRESENTATION, ANALYSIS OF DATA AND DISCUSSION OF FINDINGS
4.1    Test for Stationary    -    -    -    -    -
4.2    Cointegration Test    -    -    -    
4.3    Error Correction Model    -    -    -    -
CHAPTER FIVE: SUMMARY, RECOMMENDATIONS AND CONCLUSION
5.1    Summary of Findings    -    -    -    
5.2    Recommendations    -    -    -    -    -    
5.3    Conclusion    -    -    
Appendix I    -    -    -    -    -    
CHAPTER ONE: INTRODUCTION
BACKGROUND OF THE STUDY
Nigeria is one of the most populous black nation in the world and has the second largest economy in Africa. As a great nation, Nigeria is endowed with vast varieties of natural resources ranging from limestone, coal, marble, phosphate, granite, zinc, dolomite just to mention a few. Aside all these natural resources, Nigeria is also blessed with abundant agricultural produce which are distributed across the states in the country. The structure of the Nigerian economy has been evolving since the nation was put together by the British and although like many other developing countries, Nigeria began as an agrarian economy engaging in the production of beans, palm oil, timber, groundnut etc. These agricultural products accounted for over 50percent of Gross domestic product and were the main source of export earnings and public revenue. Also, before the outbreak of the Second World War in 1939, the Nigerian economy was still largely dominated by peasant agriculture (Hellenier, 1966) in addition with a small and active export enclave. The Nigerian economy was also an open economy (Kilby, 1969) exporting agricultural products and importing manufactured ones.
Prior to the discovery of oil in 1960, Nigeria was still largely an agricultural country with agriculture accounting for approximately 64% of output and thus employing over 73% of the total labour force. In addition to this, crude oil was first discovered at Oloibiri in Niger Delta State in the year 1956 and this then lead to Petroleum exploration in Nigeria to be in three phases. The first phase, (1908) when the Nigeria Bitumen Company which was German started exploring the Western region for petroleum. The second phase (1937) this period was when the Anglo Dutch consortium under the name Shell D’Arcy started exploration activities. While the final phase which is the third phase was in 1947 when Shell D’Arcy then known as Shell BP was given concessionary rights by the British colonial government to carry out intense exploratory activities in Nigeria and by 1956 it struck its first commercial well in Oloibiri. Again, the discovery of crude oil in commercial quantities in 1970’s relegated agriculture and other functioning sectors of the Nigerian economy to the background bringing about a sizeable reduction in its share of GDP from 64% in 1960 to 41.3% in 1970 and in 1971 when Nigeria joined OPEC (The Organization of Petroleum Export Countries), the output from the agricultural sector fell to 40.04% and it has been reducing since then. Thus with the rise in the relative importance of crude oil in the economy, the neglect of the agricultural sector led to the ‘‘Dutch disease syndrome’’. This simply implies the negative impact a specific sector has on an economy as a result of a sharp rise in the inflow of foreign currency because of that sector thus leading to a decline or neglect of all other sectors in the economy. The Dutch disease syndrome affected the Nigerian economy as there was a total neglect of agriculture as soon as crude oil was discovered in the economy because of the quick inflow of foreign currency that the oil sector was providing for the economy. The agricultural sector was not the only affected sector during that period, the output of the industrial and manufacturing sectors fell during that same year.
Nigeria since the 1970’s has been a mono-cultural economy relying solely on oil as its major source of income. The negative implications of this is that the working and functioning of the economy is at whims and caprices of the crude oil price which is determined by the world market. As at 1970’s the Nigerian economy was said to have experienced ‘oil boom’ and in that same decade the economy was virtually flourishing and was stable as the government had adequate funds to disburse to various sectors of the economy for instance, the educational sector for all its conceivable project. During this period, crude oil constituted about 90% of the total export in Nigeria.
Although for some decades, the petroleum sector stood as Nigeria’s main source of revenue, however ‘this oil boom and inflow of revenue was not destined to last long’ Cochrane and Struthers (1983). Following this, the World oil market collapsed and thus the so called oil boom became oil glut resulting in quite a number of issues such as; drought in crude oil earnings and budgetary receipts without a proportionate slowdown in fiscal and external deficits. As a result of these problems, the government resulted in borrowing from various banking systems, International financial institutions and also relying on gifts, aids or grants from other most developed countries. Because of the initial dependence and reliance on crude oil and also the neglect of other sectors, the oil glut also led to a decline in foreign exchange earnings. This negative development led to the introduction of the Structural Adjustment Programme (SAP) in1986 as a panacea for the problems the economy was faced with. SAP was adopted by President Ibrahim Babangida and it was aimed at liberalizing and diversifying the economy and it also paid more attention to the non-oil export especially those relating to the Agricultural sector.
Although the main objective of SAP was to diversify the Nigerian economy by redirecting our minds to the non-oil export trade and also reducing dependence on crude oil. Thus, the question still remains; has the Nigerian economy even after SAP been diversified, is non-oil export our main source of income, is the Nigerian economy still mono-cultural, has there been restructuring of all the sectors of the economy or is the economy still relying on crude oil and patiently waiting for another oil boom??
Furthermore, having consolidated all of these, it is thus necessary to point out Nigeria’s economic growth in relation to non-oil exports. Again, it is quite essential to know that in a country like Nigeria, where the level of investment is low, exportation is necessary to enhance or improve revenue in a bid to promote economic growth and development. Therefore, non-oil export earnings is needed as a source of revenue for the Nigerian economy but the growth of Nigeria’s non-oil export has been torpid and discouraging in the post-independence period. The growth of Nigeria’s non-oil export averaged about 2.3%during 1960-1990. It is also noteworthy to state that a well-developed export sector will not only provide employment opportunities for the purpose but also may lead to reduction in social cost of unemployment and reduce the strain of balance of payment by improving it. There was an assessment of the trend and patterns of the activities in the Nigerian non-oil sector which showed that in spite of all the multi-hued policies, strategies and programmes put in place to ensure a functioning non-oil sector, the contributions in the sector have been below its full potential.
Although, the non-oil sector is somewhat being overshadowed by the oil sector export trade, it is also being challenged by its non-competitiveness in the Nigerian economy.
Today, although Nigeria is regarded as a blessed economy it is ruled by poverty and other social vices despite the efforts of many policies and programmes put in place to eradicate all of this. What then is the way forward for the Nigerian economy? In the light of the above, the purpose of the research work is to analyze the effect of non-oil export earnings on the growth of the economy and clearly examine the relationship between non-oil export and economic growth thus raising the question on what really needs to be done in order to enable a smooth functioning economy in a bid to achieve Nigeria’s economic goals.
1.2    STATEMENT OF RESEARCH PROBLEM
Nigeria as earlier stated is generously endowed with a vast range of natural resources like coal, tin, limestone, lead, iron ore and so on, which serve various industrial purposes and also there is abundance of agricultural products like cocoa, rubber, groundnut, palm oil etc. That can serve as raw materials for the purpose of further production.
Regardless of these abundance, Nigeria is yet to attain the level of a developed country as a result of some factors which includes the lack of economic diversity that has caused the economy to rely solely on crude oil for revenues and as a major export commodity in the economy (Osuntogun et al; 1997). This heavy reliance subjects this country to difficulties especially during the fluctuations of oil prices.
Furthermore, there has been incessant failure of various programmes and policies put in place to alleviate the problem faced in this country. But the failures of these programmes were as a result of lack of follow up, corruption and inconsistency on the part of the leaders. For instance, the Structural Adjustment Programme of 1986 was introduced to serve as a panacea for the economy. Although there have been plans put in place year in year out, there is however still a presence of dependence on oil and neglect of all other viable sectors of the economy. Hence, there is still a trail of the Dutch disease syndrome in our economy. The problem here is that all attention should not be laid on one sector at the expense of another sector in the economy be it the oil, industrial, or the agricultural sectors.
Following this, if an economy is diversified and all sectors are functioning properly, then it will bring about not just economic growth but on the long run lead to economic development. Let’s take for instance a viable source of revenue for the country say tourism. In some part of the country, there has been a total neglect of tourism and also a dilapidating nature of these tourists’ sites and centres, this sector suffers from the country’s poor electricity, roads and the quality of water. Tourism is another great source of revenue for the country as a result, the Minister Of Culture, Tourism And National Orientation with the Nigerian government should lay emphasis on strengthening this sector so as to ensure its success and hence its revenue generation for the economy as a whole. Following this, the World Travel And Tourism Council estimates revenue related to tourism and travel in Nigeria to be about 10billion USD in 2007, which accounted for about 6% of GDP this however denotes that the contribution of tourism to GDP is rather low, thus improvement needs to be made in this sector.
In addition to this, there are several factors affecting tourism in Nigeria and they are:
Boko Haram Terrorism activities.
 Language barrier.
Overpopulation.
Indigenization process.
Interior conflicts.
High level of illiteracy.
Lack of electricity and other basic amenities and so on.
Finally, the agricultural sector should also be a major focus, it should not be neglected but rather it should be improved, properly established, maintained as it can be Nigeria’s major source of revenue. Thus, this research is therefore carried out to determine to what extent the diversification of the economy will help enhance the economic progress of the country, to appraise the past efforts of diversification and to discover how the current performance of the non-oil sectors can be improved.
OBJECTIVE OF THE STUDY
The general objective of the study is;
To relate the importance of non-oil export in an economy’s growth. While the specific objectives of this study are;
To examine the role of government in diversification as regards export goods.
To redirect our minds to various viable sector of the economy.
To examine the brief history of the export industry in Nigeria.
To examine a brief history of the non-oil export in Nigeria.
To access the impact/performance of non-oil sector the economy.
STATEMENT OF HYPOTHESIS
Ho: Non-oil export does not contribute significantly to Nigeria’s Gross domestic product.
Ho: Non-oil export is not an important factor in considering Nigeria’s economic growth.
Ho: Government does not play a major role in diversification.
RESEARCH QUESTION
In line with the above statement of hypothesis and statement of research problem, the following research question will be addressed in the course of this study;
What impact does non-oil export have on economy growth?
What other factors affect an economy’s growth and development other non-oil export?
SIGNIFICANCE OF THE STUDY
Given the fact that the oil sector is very crucial in the Nigerian economy, there is need for a desirable and appropriate production and exportation policy for the sector in Nigeria. Considering the fact that there are other viable sectors in the economy. It is therefore necessary for the government to pave way for new policies and programmes in a bid to lead to a successful diversification of the economy, generate revenue and reduce oil dependence.
Therefore, the significance of this research study are;
To determine the overall impact of the non-oil export on Nigeria’s growth.
To review all programmes and policies as regards diversification.
SCOPE AND LIMITATION
Every research work has its limitations which either comes as a hindrance in the achievement of a research or as a challenge to the researcher for him to put more effort. All research have various limitations depending on what the work is based on.
In the course of carrying out this research work, several limitations were faced. Firstly, there was insufficient time, time is a major factor of any successful research work, including in planning out programs and policies needed to achieve goals. Thus, sufficient time is highly important to achieve a good research work and conversely, insufficiency in time was a major limitation to this study as there was inadequate time for the research to be fully optimized and studied.
Secondly, another important factor that posed as limitation to this research study is the workload of the student. Here, it simply implies the amount of work that is expected to be done especially at a given time frame. The student finds it somewhat challenging to balance the workload and he or she is shuffling between tons of materials needed to be fully studied, loads of term papers, tests, assignments including the completion of the research work and the semesters examination. All of these are to be completed within a given time frame which is barely enough.
Finally, data used in this research is based fully on secondary sources and the quality of the estimated results depends on the data. Thus, this results relies fully on the data from secondary source.
STRUCTURE OF THE STUDY
Chapter1         INTRODUCTION
Background of the study.
Statement of the research problem.
Objective of the study.
Statement of hypothesis.
Significance of the study.
Scope and limitation.
Chapter2        LITERATURE REVIEW
History of oil in Nigeria.
Trend in non-oil export.
Conceptual literature.
Economic growth and development – conceptual approach.
Determinants of economic growth.
Challenges of non-oil export.
Theoretical literature.
Empirical literature.
Chapter 3    
Theoretical framework.
Model specification.
Apriori expectation.
Research methodology.
Method of data collection.
Chapter 4    PRESENTATION, ANALYSIS OF DATA AND DISCUSSION OF FINDINGS
Introduction.
Testing for stationarity.
Co-integration test.
Error Correction Mechanism.
CHAPTER 5   SUMMARY, RECOMMENDATIONS AND CONCLUSION
Summary of findings.
Recommendations.
Conclusion.

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Details

Type Project
Department Economics
Project ID ECO0521
Price ₦3,000 ($9)
Chapters 5 Chapters
No of Pages 110 Pages
Methodology Regression Analysis
Reference YES
Format Microsoft Word

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    Details

    Type Project
    Department Economics
    Project ID ECO0521
    Price ₦3,000 ($9)
    Chapters 5 Chapters
    No of Pages 110 Pages
    Methodology Regression Analysis
    Reference YES
    Format Microsoft Word

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