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THE IMPACT OF OIL AND NON-OIL EXPORTS ON THE ECONOMIC GROWTH OF NIGERIA

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THE IMPACT OF OIL AND NON-OIL EXPORTS ON THE ECONOMIC GROWTH OF NIGERIA

 

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

For development and growth of any society, the provision of basic infrastructure is quite necessary. This perhaps explains why the government shows great concern for a medium through which funds can be made available to achieve their set goals for the society (Fagbemi and Noah, 2010). Government needsmoney to be able to execute its social obligations to the public and these social obligations include but not limited to the provision of infrastructure and social services.Exportation is required by any economy to enhance revenue and usher in economic growth and development. Itis therefore crucial for economic progress and this has informed the idea of export-led growth. Export is acatalyst necessary for the overall development of an economy (Abou-Strait, 2005). It was also noted that foreigntrade creates an avenue for foreign capital to flow into a country (Ricardo, 1817). This increases the earnings ofthe country thereby creating an avenue for growth by raising the national income of the country. It alsoincreases the level of employment in the economy as a higher demand for exports will require more productionwhich will in turn lead to the employment of more people. Exportation by a country also helps attain afavourable balance of trade and balance of payment position for the exporting country provided its exportsreasonably exceed its imports.

In a country like Nigeria where the level of investment is low, foreign capital is very much needed in orderto accelerate the creeping rate of economic growth. The Nigerian economy is one that depends largely onforeign trade for growth and is also one which depends majorly on one export commodity at a time. Forinstance, at independence, the major export commodity was cocoa and the leading sector in the economy wasthe agricultural sector but today, the major export commodity is crude oil and the leading sector is now thepetroleum sector. This has not allowed for balanced growth in the economy as some sectors have been allowedto grow while growth has been impeded in others and this has made the country remain a developing country.

In Nigeria, crude oil is the major export because of the large revenue it

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