ABSTRACT

This study examines the effect of oil revenue on economic growth and development in Nigeria covering a period of 1986 to 2017. The variables used are petroleum profit tax, domestic crude sales and export sales as proxies for oil revenue being the independent variable whereas gross domestic product, inflation and unemployment as proxies for economic growth and development being the dependent variables. To achieve this objective, secondary data were collected from the CBN statistical bulletin, NNPC annual report and National Bureau of Statistics. The secondary data collected were analysed with relevant econometric tests of Breusch -Godfrey Serial Correlation LM, White Heteroskedasticity, Johansen Co-integration, and vector error correction model. the coefficient ECM is -0.012, which is correctly signed and has a prob value of 0.004 which is greater than 0.05, this implies that there is a short run relationship running between Economic growth and oil revenue in Nigeria. The coefficient of Petroleum Profit Tax is 0.861, this signifies that Petroleum Profit Tax has a positive impact on Economic growth of Nigeria The results from the analyses shows that, petroleum profit tax ,domestic crude and export sales have positive significant impact on gross domestic product and inflation rate whereas petroleum profit tax , domestic crude and export sales has negative impact on unemployment rate. On the basis of the empirical analysis, the researcher concludes that oil revenue significantly affects the economic growth and development of the country. The researcher therefore recommends that government should consider developing the sector instead of leaving it in the hand of foreign explorers. This will enables the country to benefit more from the sector. They should encourage local participation as this will create more employment opportunities and also put necessary law in place to guide the operation of the sector so as to reduce the level of evasion by petroleum exploration companies in Nigeria.