ABSTRACT
The study examined the impact of non-oil export on Nigerian economic growth using annual time series data from 1990-2016. The data was sourced from the central bank of Nigeria statistical bulletin and world trade organization bulletins. The study was analyzed using multiple regression analysis. The findings revealed that the manufacturing export components and the agricultural export components had a positive and significant impact on the economic growth of Nigeria, while the solid minerals sector and the services sector components had negative and insignificant impact on the economic growth of Nigeria. Based on the findings, the study recommended that technologies required in transforming raw materials to finished goods be acquired so as to stimulate the level of manufacturing output towards higher exportation, it also stated that local farmers should be empowered with modern technologies that can facilitate greater productivity. The study also recommended that government should intensify effort in the solid mineral resources areas so that their impact will contribute to the non-oil export in Nigeria since 90% of Nigeria solid minerals are untapped and also give equal attention to the service sector.
TABLE
OF CONTENTS
Title
Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Table
of Contents vi
Lists
of Tables vii
Abstract viii
CHAPTER ONE
1.0
Introduction 1
1.1 Background to
the Study 1
1.2 Statement of
the Problem 4
1.3 Objective of
the Study 5
1.4 Research
Questions 5
1.5 Statement of
Hypotheses 6
1.6 Significance of the Study 6
1.7 Scope of the Study 7
1.8 Definition of
terms 7
CHAPTER TWO
2.0 Literature
Review 9
2.1 Conceptual
Framework 9
2.1.1The Non-oil
Export Components 9
2.1.2 Importance
of Non-oil sector 9
2.1.3 Problems of
Non-oil Export Sector 13
2.1.4
Recommendation for Improving the Non-oil Export performance 15
2.1.5
Government Policies to Promote Non-oil Export 16
2. 6
Institutional Arrangement 16
2.2 Theoretical Review 19
2.2.1 Mercantilist theory 19
2.2.2 Theory of
Absolute Advantage 19
2.2.3 Theory of Comparative Advantage 21
2.2.4 Endogenous Growth Theory 21
2.2.5 Heckscher Ohlin theory of factor endowment 22
2.3 Empirical Review 23
CHAPTER THREE
3.0 Research Methodology 27
3.1Research Design 27
3.2 Nature and Sources of Data 27
3.3 Population of Study and Sample Size 27
3.4 Research Area 27
3.5 Model Specification
28
3.5 Description of
Research Variables 29
3.5.1.1
Dependent variable 29
3.5.1.2 Independent
variables 29
3.6
Analytical Technique 30
CHAPTER FOUR
4.0 Presentation of Data, Analysis and Discussion of Results 31
4.1 Presentation
of Data 31
4.2 Descriptive
Statistic 32
4.3 Regression
Analysis 33
4.4 Hypotheses
testing 34
4.5
Discussion of Findings 35
CHAPTER FIVE
5.0 Summary of Findings, Conclusions and
Recommendations 36
5.1 Summary of
Findings 36
5.2 Conclusion 36
5.3
Recommendations 37
References 38
Appendix 41
LIST OF TABLES
Table 4.1: Time
series dataset used for the study 31
Table 4.2: Summary
of descriptive statistic 32
Table 4.3:
Regression Analysis (Dependent variable, RGDP) 33
CHAPTER ONE
INTRODUCTION
1.1
Background to the Study
Export to an economy is a major catalyst which drives
her development. The major importance of export to any country is to increase
the value of the domestic output, thereby boosting its economy. An increased
level of export over import will bring about an increase in aggregate demand of
its product and also boost the balance of payment.
The importance of export to a
developing economy like Nigeria cannot be overstretched; export is a necessity
for the general development of the economy. The primary objectives of export
policies in any economy is to increase the level of economic activities, it
shows therefore that export policies should be directed towards the sector in
which the nation has factor endowment in. Export is a source of foreign
exchange earnings since trade among nations are settled in foreign exchange,
(Igwe, 2015). Since 1960 the Nigerian export sector has remained unchanged,
being characterized by the dominance of single export commodity. In the decades
of the 1960s and 1970s, the Nigerian economy was dominated by agricultural
commodity exports which included commodities like cocoa, groundnut, cotton and
palm produce, (Enoma and Mustafa, 2011).
Nigeria since the 70s has been a
mono-cultural economy relying heavily on oil as its major income earner, the implication
is that the movements of the economy is at the whims of the price of oil which
most times are volatile, (Igwe, 2015).
The growthof Nigeria’s non-oil exports has been sluggish and non-encouraging in
the post-independence period, it averaged about 2.3% during 1960 to 1990 but in
relative terms declined systematically as proportion of total exports fell from
about 40% in 1970 to about 5% in 2010, (World Bank, 2011). The major fallout of this fragile structure
of the Nigerian economy is a situation where the economy has been growing
without creating jobs and reducing poverty, (Onodugo, 2013).
A well-developed export sector will provide
employment opportunity for the people with the attendant reduction in social
cost of unemployment. Earnings from export will reduce the strain on the
balance of payment position and even improve it, (Usman, 2008). Also a
rewarding export drive can turn an underdeveloped economy into a prosperous economy;
income earned through exporting will help in increasing the level of demand
within the economy, (Abogan, Akinola, Baruwa, 2011). The on-hand explanation to
this economic paradox is that the oil sector that produces about 90% of total export earnings are in the hands of less
than 1% of the Nigerian population dominated by expatriates and members of the
political class who control production and the proceeds respectively, (Onodugo,
Vincent, Ikpe &Anowor, 2013). The export of crude oil now constitute about
96% of the total exports which has rendered the performance of the non-oil
export sector in the past decades withlittle or nothing contributed to the
total export,the non-oil export share of the country's total export earnings
has remained very low at an average of 2.52% over the past decades, (Igwe,
2015).
The policy concern over the years has
therefore been to expand the non-oil export sector in a bid to diversify the
nation's export base. The diversification of the Nigerian economy is necessary
for important reasons;first, the volatility of the international oil market
with the attendant volatile nature of government revenue gives credence to any
argument for diversification of exports. Secondly, the fact that crude oil is
an exhaustible asset makes it unreliable for sustainable development of the
Nigerian economy, (Utomi, 2004).
As early as the 1960s, the government
saw the need to diversify the its export base and therefore made some efforts
towards boosting the non-oil sector through implementations of policies and
strategies, (Adenugba, 2013). Abebefe, (2013), stated that Nigerian governments
on its part have shown efforts over the years to grow the non-oil export trade
by establishing supportive policies. Some of these policies with varying
degrees of successes includes but not restricted to: protectionism policy in
the mode of import substitution policy of industrialization in the 1960s; trade
liberalization policy (this took the form of Structural Adjustment Programme)
of the mid 1980s and export promotion policy of 1990s which was executed
through intensified policy support to Small and Medium Scale Enterprises (SMEs)
to enhance productivity and subsequent export of local products.
In a bid to boost the export by the
government, the Nigerian government has encountered some challenges ranging
from illegal mining of precious stones
in the northern part of Nigeria to lack of infrastructural facilities
and inadequate financial incentives to agricultural farmers, (Usman, 2010).Victoria,
(2007), stated that the Nigerian government has also experienced setbacks in
the area of service exports, because service exports also carry risks and
challenges, such as limited options for secured payment and the protection of
intellectual property rights, its challenges has also made it impossible for
the government to fully tap into.
Despite being one of the largest economies in Africa,
the country still experiences an increasing rate of unemployment and poverty,
(WDI, 2013), and this could be attributed to the over-reliance of the country
on oil earnings from the oil sector. These have brought about an unanticipated
expansion in the volume of imports of various categories by both public and
private sectors neglecting other sectors like the agricultural sector. Abogan
et al, (2014), stated that agricultural sector which should be the mainstay of
the economy and the area of non-oil exports in Nigeria is characterized by low
productivity which has been aligned to factors such as small farm size,
outdated farm implement, limited access to credit facilities among others. One
of the non-oil export promotional devices has been the massive devaluation of
the naira against foreign currencies and thus boosting the level and value of
non-oil export.
1.2 Statement of Problem
It has been noted in this research work that export
enhances the growth of an economy. It improves balance of payment position and
also increases foreign exchange earnings, (Igwe, 2015). Prior to the 1970s,
Nigeria’s export was predominantly non-oil commodities with agricultural
commodities accounting for the lion share. However in the 1970s when the prices
of oil in the international market skyrocketed, the share of non –oil exports
began falling and have remained low ever since, (Adesoji, 2013). Overdependence
on oil export and neglect of the non-oil sector as an alternative source of
export subjects the country to
difficulties when the prices of crude
oil, the major export commodity is low in the international market. In the
light of the above, government adopted various strategies to boost non-oil
export and stabilize the economy. In spite of these efforts, the performance
and contribution of the non-oil exports sector has remained very low, the
sector has continued to perform below expectation. This continued unimpressive
performance of the non-oil sector, the volatility of the world oil price, and
the vulnerability of the external sector thus dictates the urgent need for
conscious re-appraisal of the development policies and commitments to the implementation.
In view of the volatile nature of the country’s oil export earnings, it would
appear that the only way out is to curtail the rate of growth of import and
boost the rate of non-oil export. In the light of the above stated problem, the
researcher will adopt a multiple regressions as its method of analysis,
sourcing its data from the Central Bank (CBN) statistical bulletin and the
National Bureau of Statistics.
However other research work conducted on this subject
matter excluded the service export components capturing only the manufacturing,
agricultural and solid mineral export components. This research therefore
captures the service export components as one of its control variables
capturing also the manufacturing export components and agricultural export
components.
1.3 Objectives of the Study
The broad objective of the study is to investigate the
impact of non-oil export on Nigerian economic growth. The specific objectives
are as follows;
1. To
examine if the manufacturing export components has any significant impact on Nigeria
economic growth.
2. To
examine if the agricultural export components has any significant impact on the
economic growth.
3.
To evaluate the solid mineral components
and its contribution made on the economic growth of Nigeria.
4.
To
evaluate the service export components and the contribution it has made on the
economic growth of Nigeria.
1.4.Research Questions
The following research questions were generated in
this study;
1.
To what extent has the manufacturing export
components impacted on the economic growth of Nigeria?
2.
To what extent has the agricultural export
components impacted on the economic growth of Nigeria?
3.
How has solid mineral components
contributed to the economic growth of Nigeria?
4.
How has the service export components contributed
to the economic growth of Nigeria?
1.4
Research
Hypothesis
The following hypothesis will be tested in this study:
Ho1:
There is no significant impact between manufacturing export components and economic
growth of Nigeria.
H02:
There
is no significant impact between agricultural export component and economic
growth of Nigeria.
H03:
The solid
minerals export components have not made any significant contribution on the
economic growth of Nigeria.
H04: The service export components have
not made any significant contribution on the economic growth of Nigeria.
1.5.Significance of the Study
The study of the impact of non-oil export
on Nigerian economy is significant and important the following:
1. Policy Makers:
it will enable the policy makers to formulate appropriate policies that will
aim at improving on the quota of the total revenue brought about by the non-oil
sectors of the economy. It will also
guide the government and its agencies in regulating the activities related to
non-oil exports.
2.
Financial
institutions: This study through its recommendations
will enable financial institutions to provide financial incentives when
necessary to help promote the exportation of non-oil components.
3.
Students/Academicians:
This
study will also be of immense importance to students and academicians who are
interested on the subject matter. The study will also serve as a useful
reference material for students /academicians, institutions, corporate bodies
who are interested in the subject of non-oil export and economic growth in
Nigeria. The work offers opportunity for further research work into the subject
matter.
4.
General
Public: For the general public, improving the industrial,
manufacturing, agricultural sector creates job opportunities and reduces the
cost of unemployment. This study is also
important and significant in that it will examine the various ways of improving
non-oil sector towards raising the standard of living of Nigerians in the
period under review (1990-2016).
1.6.
Scope of the Study
Export in Nigeria
is composed of oil and non-oil products. This study is limited in scope to the
impact of non-oil exports on Nigerian economic growth. The study intends to
contribute to the existing literature on the subject matter by using time
series data from 1990 to 2016. The variables to be considered in the study are
agricultural components, solid mineral components, manufacturing components and
service export components.
1.7. Definition of Terms
1. Agricultural Export:
Agricultural sector is also referred to as the primary sector of the economy.
This is the sector of an economy making direct use of natural resources which
includes agriculture, forestry, fishing and mining, (precious, 2016).
2. Manufactured Export:
Manufacturing export components include production of food, chemicals,
textiles, machines and equipment. The
manufactured exports to the international export market comprises of
agro-allied and manufactured exports. The agro-allied export products are cocoa
butter, cocoa powder, cocoa cake, cocoa paste, groundnut cake and wood products
including furniture and fixtures etc. while main manufactures are textiles,
chemical products, beer and beverages, urea-ammonia, insecticides, soap and
detergents, plastics and non-metallic mineral products and processed skin,
(Adewuyi, 2005).
3. Services export: Exporting
does not only involve the delivery of physical goods to another country.
Exporting can also include the export of services such as education, consultancies,
nursing and tourism etc.
4. Solid minerals export: solid
mineral from Nigeria are cassiterite, coal, coliumbite, charcoal asbestose,
processed iron ore and marble. Exports of solid minerals to the international
market have from the time of independence had been minimal in terms of their
volume ands share of export earnings.
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