DOES OIL PRICE AND PRODUCTION INFLUENCE ECONOMIC GROWTH? EVIDENCE FROM NIGERIA

Abstract

The study examined the effect of oil price and oil production on economic growth in Nigeria over the period 1989-2020. Applying the Augmented Dickey Fuller test, the study found mixed order of integration among the variables, thereby warranting the application of the Autoregressive Distributed Lag (ARDL) model. The results of the ARDL bounds test indicated the presence of cointegration among the variables.  The estimates of the ARDL model revealed that there is a positive influence of oil price on economic growth both in the long run and short run. As oil price increases, real GDP increases both in the short-run and in the long-run. Regarding the effects of oil production, the result showed a negative effect on real GDP in the short run, while the long-run effect is statistically insignificant. The study recommends amongst others that, the NNPC should explore more efficient means of oil production to avert the current negative short-run effect on Nigeria’s real GDP.