Nexus between Oil Revenue, Non-oil Export and Industrial Output in Nigeria: An Application of the VAR Model
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.
|Date of creation:||10 Oct 2013|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
- K. A. Al Mamun & H. K. Nath, 2005. "Export-led growth in Bangladesh: a time series analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 12(6), pages 361-364.
- M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
- Riman, Hodo B. & Akpan, Emmanuel S. & Duke II, Joe & Mboto, Helen, 2011. "Industrial Production and Non-oil Export: Assessing the Long-run Implication on Economic Growth in Nigeria," MPRA Paper 55214, University Library of Munich, Germany.
- Engle, Robert & Granger, Clive, 2015.
"Co-integration and error correction: Representation, estimation, and testing,"
Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
- Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-276, March.
- Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
- Ahmad, Jaleel & Harnhirun, Somchai, 1995. "Unit roots and cointegration in estimating causality between exports and economic growth: Empirical evidence from the ASEAN countries," Economics Letters, Elsevier, vol. 49(3), pages 329-334, September. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:53279. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.