THE ROLE OF NON-OIL EXPORT ON ECONOMIC DEVELOPMENT OF NIGERIA

CHAPTER ONE

1.1    INTRODUCTION

It is an established historical fact that prior to 1970s, non-oil products in a wide variety of forms were the principal sources of foreign exchange earnings in Nigeria. During this period, the agricultural sector produced large quantities of food and cash crops (cocoa, palm oil, groundnut etc) for export as well as for domestic consumption. Nigeria was the world's largest producer of palm produce and groundnut, and the second largest producer of cocoa. In addition, cotton, rubber and timber products were important exports.

However, as a result of a major structural transformation from what was primarily agriculture- based since early 1970, crude oil production and marketing has been a dominant feature of Nigeria's development programme. The oil sector contributes about 80% of government revenue, as such, it is a major source of growth to the Nigeria economy. Although the oil sector has been contributing to the bulk of government revenue. The early 1980^ls witnessed a combination of demand and supply factors as well as Western political intrigues which have consistently weakened the Organization of Petroleum Exporting Countries (OPEC) market share and price stabilization policy on crude oil marketing. This has resulted downward pressures and instability of petroleum prices and consequent downward trend in government revenue from oil export from the peak attained in 1980.

Thus, the declining and unstable revenue from oil, rising demand for foreign exchange for industrial and commercial purposes external debt have combined to make it mandatory for the country to design a national program of non-oil export development. This becomes necessary if the country is to continue to meet its external financial obligations. The urgent need to diversify the country's resource based is not only economically expedient but also for immense political strategic significance.

The development of non-oil production facilities will promote, not only growth and create additional employment opportunities, but will also reduce the ever present dangers of the nation's precarious dependence on a single commodity over which the country has little control.

The main thrust of this study is to carry out a critical assessment of non-oil exports in terms of its contribution to economic development in Nigeria. Non-oil exports in Nigeria includes, Agricultural products (cocoa, cotton, palm produce rubber and groundnut), solid mineral such as tin, ore, columbine and coal and manufactures. It is useful to point out that though the non-oil sector has lost its significance as a major source of revenue generation in the economy, it is still the dominant particularly in terms of its share in employment. Thus, according to the fourth Nation Development plan 1981 - 1985, the agricultural sector alone provided employment for 60% of all those gainfully employed in 1980.

1.2    THE STATEMENT OF RESEARCH PROBLEM(S)

Traditionally, non-oil exports are mainly agricultural products that their supply depends on vagaries of nature. Changes in climatic condition, causes variations in agricultural production. When there is a good climatic condition supply expands. The reverse, however, holds when the climatic condition is unfavourable. The after-math of the variances of nature is fluctuation in prices.

In this direction, this study will;

-        Evaluate the relationship between non-oil export and the real gross domestic product

-        Examine the relationship between non-oil export and gross fixed capital formation in Nigeria.

1.3    THE AIM AND OBJECTIVES OF THE STUDY

The main objective of this study to examine the role Non-Oil Export on Economic Development of Nigeria (1980-2009). The specific objectives of this study are:

i.       To examine the relationship between non-oil export and the level of gross fixed capital formation in Nigeria.

ii.      To examine the relationship between non-oil export on real Gross Domestic Product.

iii.     To also examine provide an insight into the impact of the growth of non-oil export industry on economic development of Nigeria.

1.4    THE RESEARCH QUESTIONS

Therefore, the statement of problems is stated below by finding answers to the following questions:

i.       What are relationship between non-oil export and the level of gross  capital formation in Nigeria?

ii.      What are relationship between non-oil export on economic development and Real Gross Domestic Product?

iii.     What are the impacts of the growth of non-oil export industry on economic development of Nigeria?

1.5    THE STATEMENT OF RESEARCH HYPOTHESES

This study aimed at testing, the validity of the following;

Hypothesis One

H_o:     That there is no significant relationship between Real Gross Domestic Product and non -oil exports in Nigeria.

H_A:      That there is a significant relationship between Real Gross Domestic Product and non-oil exports in Nigeria

Hypothesis Two

H_o:     That there is no significant relationship between Real Gross Fixed Capital Formation and non-oil exports in Nigeria

H_A:      That there is a significant relationship between Real Gross Fixed Capital Formation and non-oil exports in Nigeria.

Hypothesis Three

H_o:    That there is no significant relationship between non-oil exports and economic development of Nigeria.

H_A:      That there is significant relationship between non-oil exports and economic development of Nigeria.

1.6    THE RESEARCH METHODOLOGY

The methodology adopted for this research work shall be purely statistical i.e. the Ordinary Least Square regression (OLS). A single regression analysis of various tests were carried out: Co­efficient of determination, standard error test, F -Statistics, Student T-Test etc.

1.6.2 SOURCES OF DATA

Data requirement for this study would be purely secondary data. Secondary data includes data sourced from the Central Bank of Nigeria (CBN), Financial and Economic reports, Annual and various issues, Federal Office of Statistics (FOS) Conference papers, Journals and text-books.

1.6.3   MODEL SPECIFICATION

RGDP = F (exno , exvano, extot, GCF)

RGDP = Real Gross Domestic Product

GCF = Gross Fixed Capital Formation

Exno = Non-Oil Export

Exvano = Value-added non-oil export

Extot = Total Export

β_o = Intercept or Constant term of the relationship

β_l- β₄ = Parameters of Co-efficient

U = Stochastic Variable

1.7    THE SIGNIFICANCE OF THE STUDY

The study will be of great significance on the following ground:

First, it will contribute to existing studies on the same subject. Secondly, the study will be a reference point for further researchers; and lastly, it will provide useful recommendations to policy makers as regards the viability of the national programme of non-oil export development in Nigeria.

1.8    THE SCOPE AND LIMITATION OF THE STUDY

This study will cover the period between 1980-2009 (a period of 30 years). This would afford us to obtain a robust result from the regression techniques.

The major limitations are time, finance and unavailable data. Due to these constraints, it will either directly or indirectly affect the result of the project.

1.9    ORGANIZATION OF THE STUDY

The research work will be divided into five chapters and they are as follows;

Chapter one: It consists of the introduction, the statement of the problem, the aim and objectives of the study, the research questions, the research hypotheses, significance of the study, the research methodology, the scope and limitation of the study, the organization of the study.

Chapter two: It consists of the literature review.

Chapter three: It consists of the structural composition of the study.

Chapter four: It consists of the research methodology, data analysis and interpretation of the results.

Chapt1er five: It consists of the summary, conclusion and recommendations, then the references.