Economic Growth of Nigeria: Does Oil Revenue Matters?

Oil, a very versatile and flexible non-productive, depleting, natural (hydrocarbon) resource is a fundamental input to modern economic activities providing about 50 percent of the total energy demanded in the world apart from the former centrally planned economy. The countries dealing with oil exploiting in the world depend heavily on oil revenue for foreign exchange earnings and for the government budget, in most cases, reaching 90 percent or above. Few studies have been carried out in this regard yet there is no conclusion as to the key factors that determine economic growth. This study determines the influence of Oil revenue on economic growth of Nigeria. The study uses domestic consumption and export as proxies for Oil revenue, and represents economic growth with real gross domestic product. Using 33 years time series observations, the study used Ordinary least square method. The study covers the period from 1980 to 2013. Secondary data source was acquired from the central Bank of Nigeria (CBN) Statistical bulletin. The study found that both domestic consumption and export has positive and significant influence on economic growth of Nigeria. The study recommends that, the domestic consumption and crude oil export sales should be increased in order to have the gross domestic product increased as this will put the country on a better scale. But this will have to be done by balancing the domestic consumption with the export of oil.