Implications of Economic Diversification in Nigeria (1986-2016)
Abstract
Since its beginning, Nigeria has had a single-product economy. In the 1970s, the government shifted from relying on agriculture as the mainstay of the economy to relying on oil as a significant revenue-generating resource. This was due to the finding of oil in considerable quantities in the late 1950s, which could create or increase national income. The government shifted from agriculture to oil because oil provided more funds, particularly foreign currency. Consequently, the research investigated if diversification of the economy had any effect on the Nigerian economy from 1986 to 2016. Using an inferential statistics approach, secondary data from the National Bureau of Statistics (NBS) and United Nations Commission on Trade and Development (UNCTAD) 2018 were collected and analyzed using the Ordinary Least Square (OLS) method.
From the study's results and verification of the model using apriori expectation criteria, statistical criteria, and econometric techniques, it was determined that the theoretical statement was experimentally supported and OLS assumptions were maintained. Diversification, as measured by agricultural contribution to GDP and mining contribution to GDP, was found to have a significant impact on GDP, whereas manufacturing contribution to GDP was found to have a negative relationship with GDP and a negligible impact on economic growth in Nigeria during the period under review. The parameters (LOG (ACG), LOG (MICG)) and significance test demonstrate a positive association between the explanatory and explained variables. While the (LOG (MACG)) parameter indicates a negative association between the dependent and independent variables.
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