Nonoil Export – Growth Nexus in Nigeria: Macroeconomic Base for Nonoil Export- LED Growth Policy

Abstract

Public hue and cry about Nigeria’s overdependence on oil has now faded into an inaudible whisper and a mere rhetoric as diversification of the Nigerian economy still remains an unsettled issue. However, the dwindling international oil price has rendered the country insolvent thereby creating a need to exploit nonoil sources. Therefore, the study was aimed at devising a viable nonoil export-led growth policy. Study covered the period 1980 to 2014. Data were sourced from Central Bank of Nigeria, National Bureau of Statistics and World Development Indicators. This study revealed a preferred choice for a more robust factor analytic model to isolate potent factors influencing nonoil export–growth nexus in Nigeria. Results indicate that there was positive significant relationship between nonoil export and growth in Nigeria which was solely attributable to the influence of foreign direct investment and trade liberalization. Moreover, the study revealed that the active variables in the constellation of foreign direct investment and trade liberalization provided the theoretical constructs for a new nonoil export-led growth policy. It was concluded that a viable nonoil export-led growth policy should comprise of such policy instruments as budgetary policy, exchange rate policy, human resource development policy, credit policy, and import substitution/export promotion policy. It was recommended, inter alia, that petroleum exporting countries should channel foreign direct investment to nonoil sectors in order to render the sectors viable and so augment their productive bases.