Oil sector revenue, macroeconomic variables and economic growth in Nigeria

Abstract

The challenges in oil sector revenue are so enormous that can overwhelm macroeconomic variables thereby reducing their potentials of contributing to the gross domestic product and reduce the rate of unemployment. The inability to create value is the major problem which oil sector revenue are faced with in today’s dynamic economic environment. This study investigated the influence of the oil sector revenue and macroeconomic variables on gross domestic product, Nigeria. The Dynamic Capability View Theory was used to underpin the study. The study employed a time series through secondary data. Unit root test and Multiple Regression were utilised for data analysis. The findings revealed that oil sector revenue contributed negatively to growth and development process of Nigeria which is not as expected, because unit increase in oil sector revenue has negative effect on economic growth to the tune of 6%. The macroeconomic variables interest rate show negative interest on GDP as expected but government expenditure too shows negative effect on GDP as against expectation. Thus, it was recommended that government should develop alternative source of income because too much reliance on oil to the neglect of other source of revenue is harmful to the economy. Other sector of the economy can as well be functional properly through diversification of resources.