Tag Archives: Dutch Disease

Evidence of Dutch Disease and Cross-sectional Dependence in Rent-Seeking Sub-Saharan African Countries (Published)

This study assessed the evidence of Dutch disease and cross-sectional dependence in resource-led growth sub-Saharan African countries economies. In an atempt to achieve this, a consistent econometric model developed by Cavalcanti, Mohaddes, and Raissi (2010) was adopted which showed that there is a long run relationship between real income, natural resource rents and export revenue from natural resource in resource-led economy in sub-Saharan African Countries. The study used Secondary data. Annual data from 1981 to 2016. The study account for cross-country dependencies (both in the properties of the data and the long-run estimation) that arise potentially from resource price shocks and other unobserved common factors, and allow countries to respond differently to these shocks. four cross-sectional dependence tests namely, Breusch and Pagan LM test (CD1), Pesaran CD test (CD2), Frees’ test (CD3) and Friedman’s test (CD4) where tested. The study adopted the methodology developed by Pesaran (2006) for estimation which is consistent under both cross-sectional dependence and cross-country heterogeneity. Using natural resource rent as a proxy for rent-seeking economy, the results indicated that natural resource contributed positively to real income of sub-Saharan African Countries, and cross-country dependencies is much evident among these countries.

Keywords: Dutch Disease, cross-sectional dependence, rent-seeking and natural resource

Nigeria beyond Oil: The Imperative of Diversification of the Nigerian Economy (Published)

This study appraised the nexus between economic growth and the diversification of the Nigerian economy, via the non-oil sector, with specific reference to the danger posed by over-reliance on oil export. The annual time series data that span through the period of 1980 and 2018 were applied. The Error Correction Mechanism (ECM) was adopted to help gauge the long-run and short-run dynamics of the Nigerian economic growth. Results of the empirical analysis revealed that the non-oil sector is actually the future of the Nigerian economy, as all the non-oil variables shown positive and significant relationship between them and economic growth, except ICT and Tax Revenue that were not significant and negative respectively. It is therefore recommended that policy makers should think in the direction of a non-oil economy to guarantee speedy growth of the Nigerian economy.

 

Keywords: Diversification, Dutch Disease, Tax Revenue, oil-rich economies

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

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