Nexus between Oil Revenue, Non-oil Export and Industrial Output in Nigeria: An Application of the VAR Model
Journal Title: International Journal of Financial Economics - Year 2013, Vol 1, Issue 2
Abstract
The study had set forth to explore the intertwining relationship that exist between oil revenue shock, non-oil export and industrial output in Nigeria. In achieving this objective the study utilized data spanning the period 1970-2010. This period captured the major era of regime shift (changes in governance) and policy administration in Nigeria. Vector Autoregressive (VAR) model and cointegration technique were used to examine the long run relationship, while the Vector Error Correction Model (VECM) was used to analyze the short-run behavior of the variables. The Johansen cointegration analysis suggests that a long run behavior exist between oil revenue shock, non-oil export, policy/regime shift and industrial output in Nigeria. The short-run result showed that the speed at which industrial output will converge towards long-run equilibrium after experiencing shock from oil revenue is very slow. It therefore would take a very slow process for industrial output to recover from shock arising from variation in oil revenue. The long run result shows that oil revenue shock and policy/regime shift had negative impact on industrial output and non-oil export. The impulse response function and variance decomposition analysis suggest that the major drivers of industrial development in Nigeria are non-oil export, regime shift and oil revenue. Thus innovations from these variables impact severely on industrial growth in Nigeria. The study therefore suggest among other things that the panacea to industrial growth in Nigeria rest on diversifying the economy away from crude oil export and ensuring a stable government in Nigeria that will endure long enough to sustain industrial and other economic policies.
Authors and Affiliations
Hodo B. Riman, Emmanuel S. Akpan, Amenawo I. Offiong, Cornelius M. Ojong
Keywords
Related Articles
- EP ID EP27241
- DOI -
- Views 426
- Downloads 12
An Explanatory Study of Women Entrepreneurs: The Key Success Factors to Start-up a Micro Business
The purpose of this paper is to examine the key success factors to start-up a micro business. This study has been limited for women entrepreneurs in micro business, who graduated from Entrepreneurship Short Courses (ES...
From Governance to the Efficiency of the Tunisian Banks
The objective of this paper is to reveal the importance of internal mechanisms of governance in knowing the board of directors and the property structure for the performance of Tunisian banks. The empirical investigati...
Corporate Governance and Maqasid Shariah: An Empirical Study on Management Practices of Takaful Operators in Malaysia
The development of the takaful industry in Malaysia has seen tremendous growth since its inception and has emerged as an important component of the Islamic financial system in Malaysia. Being an Islamic institution, th...
Affection of Estimated Depreciation Rate on Decreased Sharing Machine Contract in Islamic Banks
This study is one of very few studies which have investigated affection of estimated depreciation rates on decreased sharing machine contract. As result to study, there are many expecting depreciation rates for same ma...
The Importance of Mathematics in the Recording and Interpretation of Accounting
Everyone has heard that Mathematics and accounting go hand in hand, though not as intertwined as people may believe or sometimes that you should have a lot of math to take accounting. Unfortunately, for many people, ju...