ABSTRACT

This research work was conducted to investigate the impact of the oil industry on
the economic growth performance of Nigeria. In the process of the research, the
ordinary least square (OLS) regression technique was employed. Considering the
impact of time on changes in economic variables, the analysis was carried out using
the simple regression method in which Gross Domestic Product (GDP), proxy for
economic growth was used as the dependent variable, while the oil Revenue (OREV)
and time appeared as repressor’s. A two-tailed test of 5% significant levels were
conducted indicating that the two explanatory variables did not have any
significant impact on growth performance of the Nigerian economy within the same
period. The researcher therefore recommends that government should formulate
appropriate policy mix that would motivate the firm in the oil sector to enhance
improved performance and contribution of the sector.

CHAPTER ONE
INTRODUCTION
1.1 THE BACKGROUND OF THE STUDY
The economy is the backbone of any nation. Nigeria, like other development
countries of the world is paying more attention on how to accelerate the rate of
development through the various sections of the economy.
Oil, a very versatile and flexible non-productive, depleting, natural (hydrocarbon)
resource is a fundamental input to modern economic activities providing about 50%
of the total energy demanded in the world excluding the former centrally planned
economy. Oil exploiting countries of the world depend heavily on oil revenue for
foreign exchange earnings and for the government budget, in most cases, reaching
90% or above.
Petroleum or crude oil is an oily bituminous liquid, consisting of a mixture of
many substances mainly the elements of carbon and hydrogen, and thus known as
hydrocarbon. It also contains a very small amount of non-hydrocarbon element, chief
amongst which are sulphur, nitrogen, and oxygen. Petroleum industry covers the
exploration and production of crude oil as well as petroleum refining, marketing
and servicing. Specific policy objectives with respect to petroleum and mining can
be summed up us follows. Active government participation in mining
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operations, diversification of mineral products, the organization and regulation of
the development of mineral resource so as to optimize their contribution to the
overall national development effort, the conservation of the countries mineral
resources, research into efficient extraction methods and wider application and use
of mineral manpower development of internal self sufficiency in the supply and
effective distribution of petrol industry products, commercialization of gas and
the control of the environmental problems of oil production (Obudun 1987).
Though oil did not assume its present significant position in the natural economy
until the early 1970s, it is not a novel revelation that it has since become the
mainstay of contemporary Nigerian economy. Petroleum either as petrol, diesel,fuel,
oil, lubricant or petro-chemical makes Nigeria’s economy wheel go round.
Petroleum has transformed poor nations into rich ones desert into watersheds and
bankrupt nations into creditors. Specifically, with respect to Nigeria, there is no
gain saying that the oil sector has undergone tremendous transformation over the
years. (Anyanwa, et al 1997).
The industry has emerged from being merely the “supportive” economic sector it was
in the 1960’s to the predominant source of foreign exchange and most viable access
to international investment opportunities in the 80’s and 90’s,
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no other resources in Nigeria has played such a towering role over the national
economy as crude oil. The government of Nigeria has used the revenue derived from
oil through tax and royalties to carry out development projects in the country
(Iyohu 2000).
This study therefore, aims to illustrate clearly the impact of oil industry on
economic growth performance in Nigeria.
1.2 STATEMENT OF THE PROBLEM
The over – dependence on oil has created vulnerability to the vagaries in the
progressing section that shows the contribution of oil to some macroeconomic
variables. In particular, the lace of oil in the psyche of the average Nigerian oil
industry in 2003. The contradiction is more external earning for Nigeria, and also
increased tax burden on imported refined petroleum products.
Some scholars have advocated for the shifting of emphasis from the oil industry to
other sectors owing to their belief in the negative fallouts of the oil industry;
some others opined that the sectors should be promoted and developed for its
benefits. These opposing views have created the problem of acceptance or otherwise
of the oil industry in Nigeria.
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In view of the controversy with respect to the relative contribution of the oil
sector compared with other sectors, it is imperative to establish empirically the
relative impact of the oil industry in the Nigeria economy.
1.3 OBJECTIVE OF THE STUDY
With the development of petroleum in the Nigerian economy, there has been a growing
interest and concern towards its contributions to the economy and economic growth.
By the end of the research the study aims at achieving the following objectives.
 To find out the impact of oil revenue (oil sector) on gross domestic product
(GDP).
 To find the relationship between oil revenue and economic growth.
1.4 STATEMENT OF THE HYPOTHESIS
The following hypothesis will be tested in this study:
Ho: Oil has no effect on the economic growth in Nigeria
H1: Oil has a significant effect on the economic growth in Nigeria
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1.5 SIGNIFICANCE OF THE STUDY
The study will be beneficial to the following:
 It will be relevant to oil companies operating in Nigeria in many of their
operational and investment decisions.
 It will equally, serve as a source of information for the policy makers and
stakeholders in the industry.
 It will also guide the government and its agencies in regulating the industry.
 It will serve as a source of information (data) to students in their field of
study.
1.6 SCOPE AND LIMITATIONS OF THE STUDY
This research work is an investigation into the impact of oil industry on economic
growth in Nigeria (1980-2010).
In carrying out this research work, the researcher encounted some difficulties. The
first of such constraints or difficulties concerns data collection from different
sources. Also was the reluctance of some library or Liberians to make data
available.
Apart from the above mentioned constraints, which are capable of adversely
affecting the accuracy of the results of this research work, all other errors and
omissions are entirely those of the researcher.
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REFERENCES
AgbeJule T.A.O.L. (1987) “Collection of revenue in Nigeria”, seminar held at the
Federal Place Hotel, Lagos.
Ailemen, M.I. and Oleosodo, L.A. (2000), The Oil Industry and Environmental
problems in Nigeria(A Case study of Nigeria Delta Area).
Biodun, AdedipePh.D, The Impact of oil on the Nigerian economy.
Obadan M.I, (1987) The Impact of petroleum on the Nigerian Economy.

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