European Journal of Accounting, Auditing and Finance Research (EJAAFR)

EA Journals

The Tenuous Relationship between Oil Revenue and Nigeria’s Economic Growth

This study examined the relationship between revenue generation and economic growth in Nigeria during the 45-year period, 1971 to 2015. This period heralded the sweet side of global energy crisis that precipitated the petrodollar windfall following steep rise in crude oil prices and the sour side that saw the economy shrink as a result of downward spiral of or crash in global energy prices and/or decline in oil production (slump non-oil boom). Using the ANCOVA model, the study expressed the change in growth rate of GDP as a function of various dimensions of tax, chiefly, change in period lag values of value added tax, personal income tax, company income tax, petroleum profit tax and custom and excise duties with a dummy variable that captures the contribution of oil revenue windfall. The results showed no significant difference in average changes in economic growth between the oil boom and oil slump periods. This suggests that Nigeria’s petrodollar windfall had no significantly stimulating effect on the country’s growth and development trajectory during the 45 years. The findings of this study adumbrate the anecdotal evidence of poor resource governance architecture that has characterized not just Nigeria’s petroleum industry but also the country’s macroeconomic management. The resonance with, and the attendant lesson from, the Dutch Disease Syndrome sequel to the country’s historicity of mismanagement of resources including the petro-dollar windfalls, is the major policy implication of this study

Keywords: Dutch Disease, Nigeria, Oil Boom And Slump, Oil Revenue Windfall, Resource Course, economic growth

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