Natural Resources Abundance and Macroeconomic Performance in Nigeria

Abstract

Since the “Dutch disease”, more studies are establishing a negative relationship between natural resource abundance and a nation’s economic performance that have termed a ‘resource curse’. Nigeria being of such countries with abundant natural resources this study sought to examine the impact of natural resources abundance on the performance of selected macroeconomic development. Annual time series data from 1981-2021 about the variables were obtained from various sources like Central Bank of Nigeria statistical bulletin, National Bureau of Statistics and World Bank data base were used for the analysis. The Autoregressive Distributed Lag (ARDL) model was adopted. The results obtained indicate that natural resource abundance (in terms of crude oil and natural gas revenue, mineral rent, oil rent and solid mineral revenue) have: 1) mix and unfavourable effect on balance of payments in both short and long run; 2) a positive effect on income per head in the short run and long run, but with the short-run effect different from that of the long run; and 3) only long-run positive effect on unemployment rate, with crude oil and natural gas revenue having a negative effect. Thus, natural resources considered have significant effect on gross domestic product per capital but do not have the desired effect on balance of payments and unemployment rate. This led to the conclusion that Nigeria’s abundant natural resource have only partial impart on macroeconomic performance. These findings will help to drive policy towards optimal natural resource utilization for enhanced macroeconomic performance as suggested.