ABSTRACT
The examined the impact of Non-oil export in Nigeria’s economic growth for the period of 1981-2014. Using the Ordinary Least Square econometric technique the empirical findings provide evidence that there is a positive significant relationship between Non-oil exports and economic growth in Nigeria. Thus, the study recommended for the continuation of the diversification of the Nigeria economy especially Non oil export base.
CHAPTER ONE
1.0Introduction
1.1 Background of the Study
Nigeria, since the 70s has been a mono-cultural economy relying heavily on oil as its major income earner. The implication is that the dynamics of the economy is at the whims and caprices of the price of oil, which for the most part has been volatile (Enoma and Mustafa, 2011). The major fallout of this fragile structure of the Nigerian economy is a situation where the economy has been growing without creating jobs and reducing poverty (Onodugo, 2013). The on-hand explanation to this economic paradox is that the oil sector that produces about 90% of export earnings are in the hands of less than one percent of the Nigerian population dominated by expatriates and members of the political class who control production and the proceeds respectively.
The adverse consequences of over dependency on oil trade heightened the need and call to diversity Nigerian economy away from oil towards the direction of oil-export argue that the non-oil trade has great potentials to propel Nigerian, Onwualu (2012) maintains that the value chain approach to agriculture has the potentials to open up the economy and generate various activities which are capable of creating jobs and enhancing industrialization and thus makes the non-oil sub-sector to hold the aces for future Nigerian sustainable economic growth.
Income earned through exporting will help in increasing the level of demand within the economy. An assessment of the trend and patterns of activities in the non-oil sector of Nigeria revealed that despite the various policies, strategies and reform programmes, the contributions of the sub-sectors of this sector have been dismal, dishearten and below its full potential. Agricultural that serves as mainstay is still characterized by low productivity. This stems from small size with crude and outdated farm implements, lacking access to credit facilities production machinery and inputs by farmers owing to inadequacies of their provision among others. The challenges of non-oil export sector is not that it is being over shadowed by the oil export trade, but traceable to declining non-oil export and loss of market share in economy. Also exports of commodities are possible when domestic demand for such are satisfied and surpluses exist in commercial quantities. There has been several research works which have examined the relationship between non-oil export and economic growth. Okoh (2004) observed that global integration had positive but not significant relationship in explaining the behavior of the non-oil exports in the long-run.
Economic growth is designed by both affluent and non-affluent economies. Economic growth is the desire for highest levels or real per capital income, real output which must grow faster than the production of the economy in question. Economists, policy makers, public and private sectors work ceaselessly towards attaining economic growth by the use of development and growth models and policies. Among the policies used are trade policy (import and export policies, monetary, exchange rate policy, fiscal policy, market, etc.). In this study, the non-oil exports and economic development in Nigeria will be examined.
1.2 Statement of the Problem
Nigeria is yet to attain the ranks of developed economy due to lack of structural change, among other factors. It is observed that a factor crucial to this lack of economic progress is the lack of economic diversity which has caused the economy to rely heavily on crude oil for revenues and as the major export commodity in the economy (Osuntogun et al, 1997). Prior to the 1970s, Nigeria’s exports were predominantly non-oil commodities with agricultural commodities accounting for the lion share. However, in the 1970s, when the price of crude oil in the international market sky rocketed, the share of non-oil exports began falling and has remained low ever since.
This is majorly due to the money spinning nature of oil exports which makes it more profitable to export oil and less profitable to export non-oil commodities. This has caused a rather heavy dependence on the oil sector and the proceeds from the exportation of crude oil. This heavy reliance subjects the country to difficulties when the price of crude oil, the major export commodity is low in the international market. In light of this, the government adopted various strategies to boost non-oil exports and stabilize the economy. In spite of their efforts, the performance and contribution of the non-oil exports sector has remained very low.
Hence, there is need to determine to what extent the diversification of the economy will help enhance the economic progress and to evaluate the impact of non-oil export on the Nigeria economy.In essence the study will seek to answer the question, to what extent has non-oil exports sector contributed to the overall Gross Domestic Product (GDP) of the economy?
1.3 Objective of the Study
This research has a particular focus that aims at examining the causes of growth in government revenue using non-oil revenue of the government as an instrument. The non-oil revenue takes the range of products as agriculture and manufacturing. The major objectives are broadly defined as follows;
- To examine the impact of non-oil export earnings on the nation Gross Domestic Product (GDP).
1.4 Statement of Hypothesis
To carry this research, the following hypothesis were formulated;
- H0: Non-oil export has no significant relationship with the Real Gross Domestic Product (GDP).
1.5 Significance of the Study
The study of the contributions of non-oil export to the growth of Nigerian economy is significant and important, for this knowledge, it will enable the policy makers to formulate appropriate policies that will aim at improving non-oil sector towards raising the living standard of Nigerians in the period under review (1981-2014) since not so much works have been done on the contributions of non-oil exports to Nigerian economic growth, this study will be of great importance.
1.7 Scope of the Study
This study intends to cover the period 1981 – 2014. It also intends to evaluate the contribution of non-oil exports to Nigeria economic growth and development.
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