THE IMPACT OF THE SLUMP IN OIL PRICE AND PRODUCTION ON RECESSION: ALTERNATIVE OPTIONS FOR THE NIGERIAN ECONOMY

ABSTRACT

This project work investigated the impact of the slump in oil price, production and recession in Nigeria thereby postulating possible alternatives for the Nigerian Economy. The data used for the project were got from National Bureau of Statistics (NBS) bulletin on the amount of income Real Gross Domestic Product (RGDP) in % and Government expenditure on Crude oil export, Non-crude oil export, Oil Price and Crude oil production in million barrels per day. The Ordinary Least Squares Method of estimation was employed to estimate the parameters of the model for the amount of Real Gross Domestic Product (RGDP)-Y in % and Government expenditure on Crude oil export (X1), Non-crude oil export (X2), Oil Price (X3) and Crude oil production (X4) in million barrels per day. The multiple regression model for the data was given

by: Yij

= b0 + b1 X1 + b2 X 2 + b3 X 3 + b4 X 4 +  i j . It was finally discovered that the joint

contributions of all the predictors; crude oil export (X1), Non-crude oil export (X2), oil price  and crude oil production. The four factors under consideration contribute highly significantly to the real gross domestic product. This is because the P- value is less than 5% and 1% level of significance. Also the model expressed that non-crude oil export and crude oil production gave a meaningful contribution to the real gross domestic product when there was no sense of recession than the crude oil export and oil price. The joint contributions of all the predictors; crude oil export (X1), Non-crude oil export (X2), oil price and crude oil production contribute highly significantly to the real gross domestic product especially in the presence of recession. This is because the P- value is less than 5% and 1% level of significance. It was discovered that the four factors under study contribute to recession in the nation no matter how small.

TABLE OF CONTENTS                                                                                           PAGES

Title page                                                                                                                                i

Certification page                                                                                                                    ii

Dedication                                                                                                                               iii

Acknowledgement                                                                                                                  iv

Abstract                                                                                                                                   v

Table of contents                                                                                                                     vi

List of tables                                                                                                                           x

CHAPTER ONE

1. Background of the Study                                                                                            1
   1. Statement of the Problem                                                                                           5
   1. Research Objectives                                                                                                   5
   1. Research Questions                                                                                                    6
   1. Research Hypotheses                                                                                                  6
   1. Significance of the Study                                                                                            7
   1. Scope of the Study                                                                                                      8
   1. Limitations of the Study                                                                                             8
   1. Research Methodology                                                                                              9
   1. Concept Clarification                                                                                                 9

CHAPTER TWO

LITERATURE REVIEW AND THEORETICAL FRAMEWORK

• Literature Review                                                                                                       11
  • Introduction                                                                                                                11

2.2.      Conceptual Review                                                                                                     11

• Nigeria‘s Economy and Oil the Sector                                                                       15
  • Historical Development of Crude Oil in Nigeria                                                       17
  • The impact of the Oil Sector on the Nigerian Economy                                           21
  • Challenges in the Oil Sector                                                                                       30
  • Historical Perspective of Economic Recession                                                          32

2.5.      Causes of Economic Recession                                                                                  36

• Causes of Global Oil Price Fall                                                                                  38
  • Effects of Oil Price Fall on the World                                                                        41
    • Effects of Oil Price Fall on Nigeria                                                                            42
  • Theoretical Framework                                                                                              45
    • The Rentier State Theory                                                                                            45
    • Resource Curse/paradox of Plenty Theory                                                                 48

References                                                                                                                              53

CHAPTER THREE METHODOLOGY

• Introduction                                                                                                                56
  • Description of Specified Model                                                                                 56
  • Research Questions                                                                                                    58
  • Research Hypothesis                                                                                                  58
  • Study Population and Sample                                                                                     58
  • Source of Data Collection                                                                                          59
  • Full Description of the Data Source                                                                           59
  • Method of Data Analysis                                                                                            61
  • Expected Result                                                                                                          61

References                                                                                                                              63

CHAPTER FOUR

RESULT AND INTERPRETATION

• Introduction                                                                                                                64

• Presentation of Result and Discussion                                                                       64
  • Comparing Estimates Before Recession with Those Inclusive of Recession Year    67
  • Hypotheses Testing                                                                                                     68

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECCOMENDATIONS

• Summary, Conclusion and Recommendation                                                            69
  • Summary                                                                                                                     69
  • Conclusion                                                                                                                  70
  • Recommendations                                                                                                      71

Bibliography                                                                                                                           74

Appendix                                                                                                                                77

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THE IMPACT OF THE SLUMP IN OIL PRICE AND PRODUCTION ON RECESSION: ALTERNATIVE OPTIONS FOR THE NIGERIAN ECONOMY