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Determinants of backward linkages of oil and gas industry in the Nigerian economy


  • Adewuyi, Adeolu O.
  • Ademola Oyejide, T.


This paper examines the determinants of backward linkages from the oil and gas industry in Nigeria. Secondary and primary data collected cover firms engaging in fabrication and construction; well-construction and completion, and control systems and ICT. Both descriptive and inferential statistical approaches were employed in the paper. Despite the widespread view that local content in the Nigerian oil industry is very low, there is a clear evidence for the existence of linkages – at least insofar as the three sub-sectors considered in this analysis are concerned. The paper shows that many of the linkages in the Nigerian oil value chain involve local firms, and that this has been a consequence of local content policies and investments in telecommunications and transport. Linkages have been held back by weaknesses in power and water infrastructure. The large investment in higher education in Nigeria suggests that skill-constraints have not been a major obstacle to linkage development in the three sub-sectors. The flow of labour to and from other sectors is indicative of learning spillovers, both within Nigeria and in the West African regional economy. Regression analysis shows that skills, policies, the quality of the national innovation system and their interactions are the major drivers of backward linkages. A number of policy implications to enhance linkage development in Nigeria's oil and gas value chain are identified.

Suggested Citation

  • Adewuyi, Adeolu O. & Ademola Oyejide, T., 2012. "Determinants of backward linkages of oil and gas industry in the Nigerian economy," Resources Policy, Elsevier, vol. 37(4), pages 452-460.
  • Handle: RePEc:eee:jrpoli:v:37:y:2012:i:4:p:452-460
    DOI: 10.1016/j.resourpol.2012.06.007

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    References listed on IDEAS

    1. Belderbos, Rene & Capannelli, Giovanni & Fukao, Kyoji, 2001. "Backward Vertical Linkages of Foreign Manufacturing Affiliates: Evidence from Japanese Multinationals," World Development, Elsevier, vol. 29(1), pages 189-208, January.
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    2. Wegenast, Tim & Beck, Jule, 2020. "Mining, rural livelihoods and food security: A disaggregated analysis of sub-Saharan Africa," World Development, Elsevier, vol. 130(C).
    3. Narula, Rajneesh, 2018. "Multinational firms and the extractive sectors in the 21st century: Can they drive development?," Journal of World Business, Elsevier, vol. 53(1), pages 85-91.
    4. Mia Ellis & Margaret McMillan, 2018. "Optimal local content for extractive industries: How can policies best create benefits for Tanzania?," WIDER Working Paper Series wp-2018-133, World Institute for Development Economic Research (UNU-WIDER).
    5. Macatangay, Rafael Emmanuel “Manny”, 2016. "Optimal local content requirement policies for extractive industries," Resources Policy, Elsevier, vol. 50(C), pages 244-252.
    6. Mancini, Lorenzo & Paz, María José, 2018. "Oil sector and technological development: Effects of the mandatory research and development (R&D) investment clause on oil companies in Brazil," Resources Policy, Elsevier, vol. 58(C), pages 131-143.
    7. Kegomoditswe Koitsiwe & Tsuyoshi Adachi, 2017. "Linkages between mining and non-mining sectors in Botswana," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 30(2), pages 95-105, July.
    8. Filippo Bontadini & Maria Savona, 2019. "Revisiting the Natural Resource ‘Curse’ in the Context of Trade in Value Added: Enclave or High-development Backward Linkages?," SPRU Working Paper Series 2019-15, SPRU - Science Policy Research Unit, University of Sussex Business School.
    9. Obaya, Martín & López, Andrés & Pascuini, Paulo, 2021. "Curb your enthusiasm. Challenges to the development of lithium-based linkages in Argentina," Resources Policy, Elsevier, vol. 70(C).
    10. Mia Ellis & Margaret McMillan, 2018. "Optimal local content for extractive industries: How can policies best create benefits for Tanzania?," WIDER Working Paper Series 133, World Institute for Development Economic Research (UNU-WIDER).
    11. Adewuyi, Adeolu O., 2016. "Determinants of import demand for non-renewable energy (petroleum) products: Empirical evidence from Nigeria," Energy Policy, Elsevier, vol. 95(C), pages 73-93.

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