Petroleum Resource, institutions and economic growth in Nigeria

Authors

  • Frances N. Obafemi, Dr. University of Calabar, Calabar, Nigeria
  • Uchechi R. Ogbuagu University of Calabar, Calabar, Nigeria
  • Emmanuel Nathan University of Calabar, Calabar, Nigeria

Keywords:

Nigeria, error correction, economic growth, petroleum, institution, Resource curse

Abstract

Empirically, the importance of natural resource abundance on economic growth in natural-resource-rich countries has not been in doubt. In this paper, we investigate this role in the context of petroleum resource abundance, institutional quality and economic growth in Nigeria. Share of oil exports to GDP as a measure of petroleum resource abundance and institutional quality were examined using time series data and error correction econometric technique. Findings show that petroleum sector in Nigeria need to be encouraged to play the leading role in the economic growth and development process by improving on the performance of institutions through less corrupt activities, effective governance and sound contract enforcement in order to have a sizeable positive effect on economic growth. Macroeconomic indicators like openness and inflation play crucial role to ensure regular and significant impact of petroleum resources on economic growth in Nigeria. The paper concluded that, an abundance of petroleum resources may in fact be much less of a curse and more of a boom for economic performance than often believed if quality institutions are in place. The petroleum sector remains very strategic to the sustenance of rapid economic growth and development in Nigeria.

Downloads

Download data is not yet available.

Author Biography

Frances N. Obafemi, Dr., University of Calabar, Calabar, Nigeria

Frances N Obafemi (Ph.D) and Uchechi R Ogbuagu (Ph.D) are Senior Lecturers in the Department of Economics, University of Calabar, Calabar, Nigeria; while Emmanuel Nathan

is a Ph.D student in the same Department

References

Acemoglu, Daron, Simon, and James, R., (2001). The Colonial Origins of Comparative Development: An Empirical Investigation. American Economic Review 91, 5: 1369–1401.

Acemoglu, Daron, Simon Johnson and James A. Robinson (2003). “Institutional Causes, Macroeconomic Symptoms: Volatility, Crises and Growth”. Journal of Monetary Economics 50: 49-123.

Arezki, R. and F. van der Ploeg (2007). Can the Natural Resource Curse Be Turned into a Blessing? The Role of Trade Policies and Institutions. EUI Working Paper ECO 2007/35. Department of Economics, European University Institute.

Atkinson, G., & Hamilton K., (2003). “Savings, Growth and the Resource Curse Hypothesis” World Development, 31(11), 1793-1807.

Auty, M. R. (2001). Introduction and Overview. In R. M. Auty, ed., Resource Abundance and Economic Development (Oxford University Press): 1–16.

Barro, J. R. (1999). Determinants of Democracy. Journal of Political Economy 107, 6: S158–83.

Boschini, D. A, J. Petterson, and J. Roine (2003). Resource Curse or Not: A Question of Appropriability. SSE/EFI Working Paper Series in Economics and Finance, No. 534. Stockholm University.

Bulte, E.; Damania, R and Deacon, R (2005). Resource intensity, institutions and development. World Developoment, 33: 1029-1044.

Brunnschweiler, N. Crista, and Erwin H. Bulte (December 2006). The Resource Curse Revisited and Revisited: A Tale of Paradoxes and Red Herrings. Economics Working Paper Series, no. 06/61. Swiss Federal Institute of Technology Zurich.

Caselli, F. and Michaels, G., (2009), ‘Do Oil Windfalls Improve Living Standards? Evidence from Brazil’, OxCarre Research Paper 28, University of Oxford.

Central Bank of Nigeria (CBN) (1998): The Changing Structure of the Nigerian Economy and Implications for Development Research Washington, D.C. Department, Abuja pp.102-105.

Central Bank of Nigeria (2000), The Changing Structure of the Nigerian Economy (2000).


CIA (2008): CIA World Factbook: Nigeria. Available at www.cia.gov/library/publications/the world factbook/print/ni/html.

CIA (2011): CIA World Factbook: Nigeria. Available at www.cia.gov/library/publications/the world factbook/print/ni/html.

Clague, C., Keefer, P., Knack, S. and Olson, M. (1999). “Contract Intensive Money:
Contract Enforcement, Property Rights, and Economic Performance”. Journal of
Economic Growth, 4 (2): 185-211.

Collier, Paul, and Anke Hoeffler (2008). Resource Rents, Governance, and Conflict. Journal of Conflict Resolution 49: 625–33.

Guajardo, J. C., (2008), ‘Mineral Rents and Social Development in Chile’, paper prepared for the UNRISD project on Social Policy in Mineral-Rich Countries.

Gylfason, Thorvaldur (2001). Natural Resources, Education, and Economic Development. European Economic Review 45: 847–59.

Hall, Robert, and Chad I. Jones (1999). Why Do Some Countries Produce So Much More Output per Worker than Others? Quarterly Journal of Economics 114, 1: 83–116.

Hinojosa, L. et al., (2008), ‘Social Policy and State Revenues in Mineral-Rich Contexts’, Paper commissioned for UNRISD project on Social Policy in Mineral-rich Countries, Geneva.

Igbatayo S., (2004). Nigeria Petroleum industry and Export Orientation. A paper presented at the Society of Petroleum Engineers program, Abuja, Nigeria pp.18-23.

Isham, Jonathan, Micheal Woolcock, Lant Pritchett, and Gwen Busby (2005). The Varieties of Resource Experience: Natural Resource Export Structures and the Political Economy of Economic Growth. World Bank Economic Review 19, 2: 141–74.

Knack, Stephen and Philip Keefer (1995). “Institutions and Economic Performance:
Cross Country Tests Using Alternative Institutional Measures”. Economics and
Politics 7 (3): 207-227.

Kronenberg, Tobias (2004). The Curse of Natural Resources in the Transition Economies. Economics of Transition 12, 3: 399–426.

Leite, Carlos, and Jens Weidmann (1999). Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth. IMF Working Paper No. WP/99/85. International Monetary Fund.

Mauro, Paolo (1995). Corruption and Growth. Quarterly Journal of Economics 110, 3 (August): 681–712. 46 / Institutions, economic growth, and the “curse” of natural resources Fraser Institute / www.fraseramerica.org.

Mehlum, Halvor, Karl Moene, and Ragnar Torvik (2006). Institutions and the Resource Curse. Economic Journal 116 (January): 1–20.

Mikesell, F. R. (1997). Explaining the Resource Curse, with Special Reference to Mineral-Exporting Countries. Resource Policy 23, 4: 191–99.

Papyrakis, Elissaios, and Reyer Gerlagh (2004). The Resource Curse Hypothesis and Its Transmission Channels. Journal of Comparative Economics 32: 181–93.

Robinson, et al. (2006). Political foundations of the resource curse. Journal of Development Economics 79, 447-468.

Ross, L. Michael (2001). Does Oil Hinder Democracy? World Politics 53 (April): 325–61.

Sachs, D. Jeffrey, and Andrew M. Warner (1995). Natural Resource Abundance and Economic Growth. NBER Working Paper No. 5398. National Bureau of Economic Research.

Sachs, D. J. & A. M. Warner (1997). Sources of Slow Growth in African Economies. Journal of African Economies 6, 3: 335–76. Institutions, economic growth, and the “curse” of natural resources / 47 www.fraseramerica.org / Fraser Institute

Sala-i-Martin, Xavier, and Arvind Subramanian (2003). Addressing the Natural Resource Curse: An Illustration from Nigeria. IMF Working Paper No. WP/03. International Monetary Fund.

Stijns, J. C., (2006). “Natural Resources Abundance and Human Capital Accumulation” World Development, 34, 1060-1083.

Transparency International (2011). Corruption Perceptions Index. http//www.transparency.org/policy research/surveys indices/cpi/2011.

Tsalik, S., 2003, ‘Natural Resource Funds: Case Studies in Success and Failure’, Chapter 2 in Caspian Oil Windfalls: Who Will Benefit?, Caspian Revenue Watch.

UNDP (2000). Human Development Report. Nigeria 2000/2001 Millenium Ed., Lagos, Nigeria. pp.64-67.

United Nations Economic Committee for Africa (UNECA) (2005). Economic Prospects for African Countries. Addis Ababa pp.5-7.

World Bank (2000). Attacking Poverty. World Development Report. 2000/2001. Washington D.C pp.14-16

Downloads

Published

2013-10-01

Issue

Section

Articles