Dutch Disease And Resource Curse: Experience From Nigeria's Economic Development.

ABSTRACT

Over the years several authors have attributed the decline in Nigerian agricultural production to the neglect of the agricultural and manufacturing sector that resulted from the discovery of crude oil. The study is both empirical and historical in nature and utilises annual data for the period of 1981 to 2015. Autoregressive conditional heteroscedasticity (ARCH) model and its extension, the generalized autoregressive conditional heteroscedasticity (GARCH) model were used to estimate the conditional variance of Nigeria 's output volatility. Investigating the time varying Dutch disease and resource course in Nigeria within ARCH-GARCH framework, results reveal that output is volatile and there is a persistence shock in output like in other resource abundant countries. Results equally reveal that there is non-oil revenue volatility persistence shocks in Nigeria indicating evidence of Dutch disease in Nigeria. Unsurprisingly, results also show that there is tendency for volatility response to shocks, to display a long memory in the standard of living volatility, indicating evidence of resource curse. This suggests that the government should lay more emphasis on the agricultural and manufacturing sectors hitherto not given deserved attention. This will bring about the much desired diversified and industrial economy, with less emphasis laid on the primary extractive sector to which crude oil belongs.