Investigating the Impact of Oil Export on Gross Capital Formation in Nigeria

Chinyere, Udude Celina; Idenyi, Odo Stephen; Okpoto, Ituma; Favour, Elom-Obed

doi:10.9734/arjass/2017/32605

Cited by 4 publications

(4 citation statements)

References 2 publications

(3 reference statements)

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“…But one of the major factor needs to be noted that such oil booms are channelizing investment towards in oil production and extraction related areas, this leading to “resource movement effect” proposed by Corden and Neary (1982). We are accepting the above results by strongly contradicting the findings of Chinyere et al (2017) as it quotes that oil exports are inversely related to gross capital formation.…”

Section: Empirical Analysismentioning

confidence: 74%

“…It is implicitly suggested that encouraging non-oil export activities can stimulate long-term economic growth. Chinyere et al (2017) state that oil export inversely and significantly impacts gross capital formation in Nigeria both in long run and short run. The above studies strongly opposing the theoretical framework suggested by Corden and Neary (1982) for resource endowed economies.…”

Section: Literature Reviewmentioning

confidence: 99%

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Integration of oil with macroeconomic indicators and policy challenges in regard to Oman

Aravind¹,

Nayar²

2020

IJESM

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Purpose The Oman economy is dominated by production and export of petroleum products and an overdependence on oil revenue, which may have contributed to the continuance of the “resource curse” phenomenon. The purpose of this research is to examine the co-integration of oil with macroeconomic indicators of Oman and of suggesting some policy reform measures to trim down overdependence on oil. Design/methodology/approach The authors culled out data from the annual reports published by the Central Bank of Oman from 1975 to 2016. Considering oil price and oil export volume as regressors, the long-term integration with other macroeconomic indicators was examined by using the bound test. Further, auto regressive distributed lag (ARDL) model was also derived to check the impact of these cross-sectional relations. Findings Oil price is observed to have a strong long-term significant relation with all the macroeconomic variables used in this study. However, the volumes of oil exports do not appear to have significant influence on GDP and consumption but do naturally sway other variables. This indicates that less elasticity of consumption to the flow of macro income, because the consumption in the Omani economy is driven by perceived future income. Oil export revenue is not seems to be much impacting on the real sector as the deficits are funded by the government through compensatory spending. Oil prices and oil exports have exhibited a strong long-term integration with variables such as gross domestic savings (GDS), credit to government (C2G), credit to private (C2P), demand deposits (DD) and time deposits (TD). This hints that oil boom does constitute the key source of funding of the financial sector of Oman. Research limitations/implications This study offers a generalized submission to support the real sector of Oman to lead out of a resource curse through diversification. The study however does not provide industrial groupings to assess the impact of fluctuations in oil prices. Originality/value This research has confirmed the existence of “resource movement” effect and “spending effect” in Oman economy. The nation needs to take radical measures to come out of this phenomenon. For addressing this we have suggested the modified version of Shumpeterian model of creative destruction. In this model we call for demolishing the oil dependent structure with a diversification structure. The new move can bring more positive effect on real and financial sectors of the economy.

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Section: Empirical Analysismentioning

confidence: 74%

Section: Literature Reviewmentioning

confidence: 99%

Integration of oil with macroeconomic indicators and policy challenges in regard to Oman

Aravind¹,

Nayar²

2020

IJESM

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“…This study is one that is closer to the present study because it gave attention to an aspect of globalization which is trade. Ozuzu and Ewubare [26] extending the study by Udude et al [27] also investigated the impact of export earnings on capital formation in Nigeria. Data analysis was done using OLS technique.…”

Section: Import/export and Capital Formationmentioning

confidence: 99%

Globalization and capital formation in Nigeria

Uzoechina,

Okafor,

Ezenwobi

et al. 2024

Forum. Econ. Fin. Stud.

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No country can achieve sustained economic growth without substantial investments in capital formation. Nigeria is rich in natural resources but due to inadequate capital and technology, these resources have not been fully tapped and maximized. This study seeks to provide another gate way to unlocking the dearth of capital formation for development by specifically investigating the impact of financial and trade globalization on capital formation in Nigeria within the period 1990–2022. Autoregressive distributed lag (ARDL) technique was adopted for data analysis. The findings of this study indicate that while trade globalization has negative effect on capital formation in both the long run and short run respectively, financial globalization exerts negative effect on capital formation in the long run but a positive effect in the short run. Nevertheless, Financial and trade globalization exert detrimental effect on capital formation in the long run. A major policy recommendation is that Nigeria should play a key role in the African Continental Free Trade Area in order to boost her trade and financial competitiveness within Africa and so be able to lunch herself into the global space, and thus tap the potential benefits of trade and financial globalization.

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“…In examining the impact of oil export on gross capital formation in Nigeria from 1980 to 2015, Udude et al [20] developed a model using the VECM technique. Their result showed that oil export inversely and significantly impacts gross capital formation in Nigeria in short run and long run within the period under review.…”

Section: Luckymentioning

confidence: 99%

On Exports and Capital Formation in Nigeria

Nnamaka

Joyce

2021

AJEBA

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One remarkable importance of exports is that it enables countries generate the required foreign capital needed to drive sustainable growth and development. This is to say that export earnings are capable of increasing capital formation through real investment. This study therefore focused on the impact of exports to capital formation in Nigeria for a 40-year time period spanning from 1981 to 2020. Related works on the subject matter were reviewed. The unit root test showed that all the variables attained stationarity after first difference. The Johansen cointegration test result showed that there exists a stable long run relationship between gross fixed capital formation, oil export, non-oil export and exchange rate in the model. Using the ordinary least square (OLS) estimation technique in analyzing the data sourced, the results showed that oil export had a negative and insignificant impact on capital formation in Nigeria. Similarly, non-oil export and exchange rate exerted insignificant negative influences on capital formation in Nigeria for the period covered by the study. Based on the findings from the study, the following recommendations were made. First is that the proceeds from crude oil export should be used to acquire capital assets for investment which will in turn drive growth in the economy. Also the government through the central bank of Nigeria (CBN) and relevant agencies should pay more attention to the non-oil sector in terms of the implementation of favourable policies, grants and loans, tax incentives, research and development, etc. to improve the export of the sector, making it compete favourably in the international market. This is because crude oil is an exhaustible asset that is liable to depletion. Finally, efficient exchange rate policies should be implemented by government through the relevant authorities to protect the value of the naira while ensuring that the products are not too dare in the international market.

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Investigating the Impact of Oil Export on Gross Capital Formation in Nigeria

Cited by 4 publications

References 2 publications

Integration of oil with macroeconomic indicators and policy challenges in regard to Oman

Integration of oil with macroeconomic indicators and policy challenges in regard to Oman

Globalization and capital formation in Nigeria

On Exports and Capital Formation in Nigeria

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