The impact of crude oil production on economic growth of developing economies: A case study of Nigeria

The economic development of a country depends majorly on the natural resources owned by such country in most cases. However, given that the development of resources contributed to the industrial revolution in the 19th century, there is a great deal of interest in understanding how resource extraction influences economic progress. Both positive and negative pathways via which natural resource development might affect economic growth have been discovered by empirical research on this topic. Despite several findings on natural resource development and economic growth, the subject has remained inconclusive and hugely debatable. The effect of Dutch disease in Nigeria is being debated in different literatures but none of the research tries to use a system of equations analysis in determining its effects in Nigeria. As a result, the main requirement of this research study is to investigate the effect of the Dutch disease as empirically identified in this chapter on the relationship that exists between crude oil production and economic growth in Nigeria while taking into consideration other contributing variables. This research employs an ex-post facto design, utilizing time series data for the periods under investigation to acquire historical document data. The year of data coverage span from 1981 to 2021 totalling a period of 41 years. The major result provided from this analysis is that there is a positive significant impact of crude oil production on Nigeria economic growth measured with GDP per capita. The positive relationship between crude oil production and economic growth suggests that the oil sector plays a crucial role in driving overall economic performance, as measured by GDP per capita, indicating the presence of Dutch disease. Nigeria can navigate the complexities of the Dutch Disease effect, foster sustainable economic growth, and reduce its dependence on the oil sector while promoting a diversified and resilient economy.