IMPACT OF OIL EXPORT ON ECONOMIC GROWTH IN NIGERIA FROM 1970-2006

TABLE OF CONTENTS

CHAPTER ONE

INTRODUCTION

1.0 PREAMBLE

1.1 STATEMENT OF THE PROBLEM.

1.2 OBJECTIVES OF THE STUDY.

1.3 SIGNIFICANCE OF THE STUDY.

1.4 HYPOTHESES OF THE STUDY.

1.5 METHODOLOGY.

1.6 ORGANISATION OF THE STUDY.

CHAPTER TWO

BACKGROUND OF THE STUDY.

2.1 HISTORY OF CRUDE OIL IN NIGERIA

2.2 THE PERFORMANCE OF OIL SECTOR TO GDP IN NIGERIA.

2.2.1 THE BOOM PERIOD

2.2.2. THE NON-BOOM PERIOD AND POLICIES RESPONSES.

2.4. CONTRIBUTION OF OIL INDUSTRY.

2.5 CHALLENGES IN THE OIL SECTOR.

2.6 NIGERIA'S EXPORTS PERFORMANCE.

2.7 CONTRIBUTION OF EXPORTS TO ECONOMIC GROWTH.

CHAPTER THREE

LITERATURE REVIEW

3.1 CONCEPTUAL LITERATURE.

3.1.1 EXPORT

3.1.2 CRUDE OIL EXPORT

3.2.1. TYPES OF GROWTH

3.2.2. GROWTH DOMESTIC PRODUCT

3.2.3. TYPES OF GROSS DOMESTIC PRODUCT.

3.2.4. THEORTICAL LITERATURE.

3.2.5. EXPORT LED ECONOMIC GROWTH.

3.2.6 ECONOMIC GROWTH THEORY

3.3 EMPIRICAL LITERATURE

3.4. THEORETICAL FRAMEWORK.

CHAPTER FOUR

4.0 INTRODUCTION

4.1 MODEL SPECIFICATION

4.2 SOURCES OF DATA

4.3 ECONOMETRICS TECHNIQUES

4.4 SAMPLING TECHNIQUE

CHAPTER FIVE

DATA PRESENTATION AND INTERPRETATION OF RESULTS

5.1 INTERPRETATION & DISCUSSION OF RESULTS

5.2 HYPOTHESIS TESTING

CHAPTER SIX

SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

6.1 SUMMARY OF FINDINGS

6.2 CONCLUSION

6.3 RECOMMENDATIONS

REFERENCES

CHAPTER ONE 
INTRODUCTION 
1.0 PREAMBLE 
Nigeria economy is basically an open economy with international transactions constituting an important proportion of her aggregate economic activities. Over the years, the degree of openness of the economy has grown considerably. 
Before Nigeria gain her political independence in 1960, agriculture was the dominant sector in the economy, which provides both cash crops and food crops to the economy and accounted for the largest part of the foreign exchange of the country. But, the discovery of crude oil production in commercial quantities changed the structure of the Nigerian economy. This led to the neglect of agricultural product, making the economy to depend heavily on production of crude oil. In 2000, oil and gas export accounted for more than 98% of export and about 83% of federal Government Revenue. (Odularu 2008). Nigeria's proven oil reserves are estimated to 35billion barrels, Natural gas reserves are 1000 trillion fti (2,800kmi) and its crude oil production was around 2.2million barrels (350,000mi) per day. (Odularu 2008). 
Furthermore, the oil and natural gas export generated huge revenue to the government and have a surplus balance of payment over the years. It was reported that 80% of Nigeria's revenue goes to the government, 16% spent on administrative expenses and 4% go to investors. The huge revenue from oil export only benefit 1% of the population due to corruption in Nigeria. ( Odularu 2008). Mismanagement over the years back hindered economic reforms from achieving its full economic potentials. 
However, Nigeria Gross Domestic Product at purchasing power parity became more than doubled from $170.7billion in 2005 to $374.3billion in 2010, with informal sector putting the actual numbers greater than $374billion. The Gross domestic Product per capita doubled from $1,200 per person in 2005 to an estimated $2,500 per person in 2009, with the informal sector included, the Gross Domestic Product per capita was estimated around $3,500 per person. (Nigeria economy). 
Furthermore, the united states remains Nigeria's largest customer for crude oil export accounting for 40% of the country total oil exports, providing about 10% of overall united state oil imports and ranked as the fifty-largest source for united state imported oil.(Odularu 2008). 
1.1 STATEMENT OF THE PROBLEM. 
Owing to both external and internal factors, the growth performance of the Nigeria economy has been less than satisfactorily during the past three decades. Since the first oil price shock of 1974, oil has annually produced over 90% of Nigeria's export income from 1970 to 1999, oil generated almost $231 billion in rents for the Nigeria economy and these rents have constituted between 21% and 48% of Gross Domestic Product, but yet these rents have failed to raise Nigeria incomes and done little to reduced poverty. Since 1970, Nigeria's per capita income has fallen by about 4% in constant dollars. 
Also, since early 1970, the government has annually received over half of its revenues from oil sectors which are about 85%. These oil revenues are not only large but highly volatile and causing the size of government programs to fluctuate accordingly. From 1972 to 1975, government spending rose from 8.4% to 22.6% of GDP, by 1978, it dropped back to 14.2% of the economy. This fluctuation has made the government unable to adhere to wise fiscal policies during the 1970s and 1980s, when oil prices fluctuated sharply, the ability of these governments to spend their funds wisely, and limit corruption has been low. 
Although large proceeds are obtained from the domestic sales and export of petroleum products, its effect on the growth of the Nigeria economy as regards returns and productivity is still questionable, hence there is a need to evaluate the relative impact of oil export on economic growth in Nigeria. 
1.2 OBJECTIVES OF THE STUDY. 
The objectives of this study are spelt out into two, i. e. general objective and specific objectives. The general objective of this study is to examine the impact of oil export on economic growth in Nigeria. While the specific objectives are: 
1.To examine the relationship between oil export growth and economic growth. 
2.To find out if fluctuations in oil revenue also causes a fluctuation in economic growth. 
1.3 SIGNIFICANCE OF THE STUDY. 
Going by the research conducted by some scholars or economists such as Akanni (2007), Idowu (2005), Hadi et. al., (2009), Mohammed and Amirahi (2010), Odularu (2008), and Samad (2011), for instance, provides an sight on the contributions of exports to economic growth in the country. These studies also shaded light on the policies that have been taken to reform the economy and the challenges faced by the export sectors. 
However, in view of this, I tried to research on how oil export sector have contributed to economic growth in Nigeria by knowing the rate of real growth domestic product compared to the volume of oil export. By using multiple linear method and a sample size of 36years ranging from 1970-2008, which is different from the study mentioned above. 
1.4 HYPOTHESES OF THE STUDY. 
This study is designed to investigate the impact of oil export on economic growth in Nigeria. The hypothesis is therefore postulated as follow: 
Ho: There is no statistically significant relationship between oil export and economic growth in Nigeria. 
Hi: There is statistically significant relationship between oil export and economic growth in Nigeria. 
1.5 METHODOLOGY. 
In this research work, the econometric technique used is ordinary least square (OLS) in form of multiple linear regressions. The data used are purely obtained from secondary sources. The main source is Central Bank of Nigeria Statistical Bulletins (CBN), 2007,volume 18. 
1.6 ORGANISATION OF THE STUDY. 
This research work has been divided into six chapters as follows: 
Chapter one which is the general introduction of the entire study comprises of the statement of problem, objectives of the study, significance of the study, hypothesis of the study, methodology and organization of the study. 
Chapter two gives a detail the background information on the study which includes the historical background of oil sector, performances of oil export sector, its contributions, challangences faced by the oil sector and other related issues to oil sector. 
Chapter three is the literature reviews, which covers conceptual, theoretical and empirical literature as well as the theoretical framework. 
Chapter four consists of the research methodology which shows the model specification, sources of data, econometrics techniques and sampling techniques. 
Chapter five presents the data and show the analysis and interpretation of findings which as well as hypothesis testing and discussion of results. 
Chapter six which is the last chapter deals with the summary of findings, conclusions and recommendations.