How did crude oil affect the economic growth and the poverty of Nigeria? This paper is going to analyze effect of crude oil on the Nigerian economy. We examine the correlation between fuel exports and GDP per capita growth, and poverty headcount ratio between 1960 and 2012.
Since the discovery of crude oil in Nigeria the economy of Nigeria has improved, increasing the GDP through the sales of oil barrels abroad. The paper observes that the blessings from crude oil resource in Nigeria at large takes the form of increased government revenues, increased export earnings, the attendant improvement, opportunities and linkage effects in the economy.
However the paper is majorly going to focus on the variables between the increased GDP and the increase poverty level. This paper is of the view that crude oil resource is more of curse than a blessing to the Nigerian economy.
Table of Contents
ABSTRACT
INTRODUCTION
LITERATURE REVIEW
DATA ANALYSIS
CONCLUSION
Research Objectives and Core Themes
This paper investigates whether the discovery and exploitation of crude oil in Nigeria serves as a developmental blessing or an economic curse. By analyzing the correlation between fuel exports, GDP growth, and poverty levels between 1960 and 2012, the research seeks to understand the paradox of increasing national wealth alongside persistent poverty.
- The historical development of the Nigerian oil industry since 1859.
- Evaluation of the correlation between fuel export growth and GDP per capita.
- Analysis of the relationship between rising GDP and poverty headcount ratios.
- Identification of structural issues such as corruption, mismanagement, and over-dependency on the oil sector.
- Strategic recommendations for economic diversification and natural gas development.
Excerpt from the Publication
Introduction
The origin of oil exploration and exploitation started in 1859, where the first oil well was drilled by Edwin L. Darke. This was the first time crude oil was discovered in commercial quantity at Oloibiri in the present day Bayelsa State in Nigeria (Tamuno, 2006). However, serious and sustained efforts did not happen until Shell Darcy Petroleum Company commenced operation in 1956. As the local demand for these products increased, two major oil companies - Shell and British Petroleum - formed a 50/50 joint venture refining company in Nigeria: The Nigerian Petroleum Refining Company (NPRC) in 1960. The NPRC built a 38,000b/d refinery at Alesa-Eleme near Port-Harcourt to refine local crude (Tamuno, 2006).
The impact of crude oil in the Nigerian economy has a paradoxical effect in the sense that it should have only positive impact on the economy and the population, but this is not the case. Wealth generated by oil revenues has not passed down to the citizens of Nigeria: around 70% of the population still lives below the poverty line. For many years Nigeria’s oil industry has been plagued by corruption and mismanagement. The United Nations has estimated that as a result of corruption, 80% of energy revenues in the country only benefit 1% of the population (United Nations, 2003). This topic was chosen specifically to analyze the changes the economy has had from the time the crude oil was found till now and why the economy is not growing and developing as it should.
Summary of Chapters
ABSTRACT: Provides an overview of the research focus regarding crude oil's impact on Nigeria and states the author's position that it currently acts more as a curse than a blessing.
INTRODUCTION: Traces the history of oil exploration in Nigeria and introduces the central problem of the "resource curse" where oil wealth has not translated into improved standards of living for the population.
LITERATURE REVIEW: Examines existing academic perspectives on oil dependency, emphasizing how reliance on natural resources can suppress other economic sectors and increase inequality.
DATA ANALYSIS: Presents a statistical examination of World Bank data from 1960 to 2012, utilizing linear regression to assess the correlation between fuel exports and GDP per capita.
CONCLUSION: Summarizes the findings and proposes policy recommendations, including the diversification of the economy into manufacturing, agriculture, and the natural gas sector.
Keywords
Crude oil, Nigeria, GDP per capita, poverty headcount ratio, economic growth, resource curse, fuel exports, corruption, mismanagement, economic diversification, natural gas, energy revenues, oil refineries, public investment, development.
Frequently Asked Questions
What is the primary focus of this paper?
The paper examines whether crude oil resources have acted as a blessing or a curse for the Nigerian economy, specifically focusing on the disparity between GDP growth and the rising poverty levels.
What are the central themes discussed in the study?
The study focuses on oil exploration history, the paradox of resource wealth, the impact of corruption on revenue distribution, and the necessity of economic diversification.
What is the central research question?
The central question is: How did crude oil affect the economic growth and the poverty of Nigeria?
Which methodology is employed in this research?
The author uses a quantitative approach, specifically conducting a linear regression analysis on socio-economic indicators provided by the World Bank using the statistical software Stata 12.
What does the main body of the work cover?
The main body covers historical developments, reviews existing literature on oil-dependent economies, analyzes statistical data regarding GDP and poverty, and concludes with policy suggestions.
Which keywords best describe this research?
Key terms include Nigeria, crude oil, GDP per capita, resource curse, poverty reduction, and economic reform.
What is the specific finding regarding the correlation between fuel exports and GDP?
The analysis indicates a moderate uphill relationship, where a one percent increase in fuel exports growth leads to approximately a 0.13 percent increase in GDP per capita growth.
What does the author suggest to solve the identified economic challenges?
The author suggests that the Nigerian government should implement reforms in the non-oil sector, diversify the economy, improve refining capacity, and better manage revenues to alleviate poverty.
How does the author characterize the impact of oil on the Nigerian population?
The author describes it as a "paradoxical effect," noting that while it should theoretically benefit the population, approximately 70% of citizens still live below the poverty line due to mismanagement and corruption.
Why is the development of the natural gas sector considered important by the author?
The author argues that natural gas offers a more stable, environmentally friendly income source through long-term contracts, which could help reduce revenue volatility compared to crude oil.
- Arbeit zitieren
- Bachelor of Arts Nico Grünewälder (Autor:in), 2013, The Impact of Crude Oil in Nigeria. A Blessing or a Curse?, München, GRIN Verlag, https://www.grin.com/document/314354
