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IMPACT OF OIL PRICE ON NIGERIAN ECONOMY
Abstract
This paper examines the impact oil prices has on economic growth in Nigeria from 1980 to 2016. An exploratory data analysis is employed using secondary data, employing the unit root test for stationarity, the co-integration to test for longrun relationship between the variables and finally the OLS estimating for the relationship between the key and control variables in concordance with our objectives. The research found that there is a significant and positive relationship between oil price changes and economic growth in Nigeria. In the short-run, Nigeria was able to have increasing growth because of the high global oil prices, but in the long-run, the inconsistency of oil prices and lack of diversification of the productive base has not really helped the Nigeria economy. Thus, the research suggests that oil prices are the cause of Nigeria’s volatile growth rate. A combination of strict fiscal policy focused on the actual implementation of developmental strategy, diversification and industrialization might be effective to protect the country’s economy and lead to increasing and consistent economic progress.
Keywords: Oil price, economic growth, diversification, industrialization