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Bullion

Keywords

Natural resources, Economic growth, Exchange rate, Resource curse, GDP, Living standard, Resource control.

Abstract

The discovery of oil in commercial quantity in Oloibiri in Niger Delta in 1955 opened a new chapter in the economic landscape of Nigeria. Before the discovery of oil resources, agriculture was the main source of government revenue. Over the years however, revenue from oil export become the backbone of the economy. The annual budget, which defines economic direction the country charts, is solely based on crude oil revenue. This situation can be likened to one putting his eggs in one basket. And it is exactly this situation that has become the major source of agitation by oil producing areas of Nigeria for resource control; put in other words, fiscal federalism. lt is over dependence on oil as the only major source of revenue for the function of government that has been the major cause of instability, lack of meaningful progress and dysfunctional government we have in Nigeria. The unpredictability of international oil price which can drastically increase or reduce oil revenue with its immediate effect on the economy, a case in point is the fall of oil price in the international market in November, 20l4. This has led to a situation that many states government in Nigeria cannot pay salary for many months. Also, the phenomenon called "Dutch disease may hove terrible effect on the economy; this is a situation where the resource sector drives up the value of the local currency, thereby hurting the competitiveness of manufacturing sector, which con kill domestic production. Because of this and for reasons thot we will look of later in this study, one can safely say that the discovery of oil in commercial quantity for from being a blessing has become a curse to the economic development of Nigeria. ln this study, we found that oil revenue and government expenditure (budget) are significant variables to measure economic progress. lt was against this background that the researchers argued that the discovery of oil in Nigeria in commercial quantity, instead of being a blessing has become a curse to the development aspiration of the country. The Ordinary Least Square (OLS) method for data analysis was employed.

Author Bio

The authors are staff of Statistics department, Central Bank of Nigeria.

Publication Title

CBN Bullion

Issue

1

Volume

40

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