Oil Sector Performance and Nigerian Macroeconomic Variables


  • Adegbemi Babatunde Onakoya Babcock University
  • Oyinkansola Agunbiade Babcock University Ilishan Remo, Nigeria


Oil sector, Macroeconomic variables, Gross Domestic Product, Exchange rate, Foreign Direct Investment


Nigeria as an oil exporting mono-economy is vulnerable to world oil prices fluctuations. About10 percent of GDP and 86 percent of the government’s export revenues come from the oil and gas sector. The study assessed the impact of the Nigerian oil sector performance on the macroeconomic variables between 1980 and 2017 in light of this overdependence. It carried out pre-estimation tests namely descriptive statistics in order to understand the nature of the variables. The Augmented Dickey Fuller and Phillip Perron tests were also deployed to determine stationarity level of the variables. The long-run co-integration test was conducted after determining the optimal lag. The Error Correction model technique was applied to determine the possible existence of short-run relationship among the variables. The Toda Yamamoto modified Wald’s test was employed in order to know the direction of causality. The Impulse Response Function together with other post-estimation tests was also used. The result showed a uni-causality direction from oil revenue in the direction of all the macroeconomic variables. It also revealed significant positive long run relationship between the oil sector and both GDP and unemployment. The other variables were however inversely associated. The study recommended that the government of Nigeria take diversification more seriously, besides investing in refinery acquisition and management.

Author Biography

Oyinkansola Agunbiade, Babcock University Ilishan Remo, Nigeria

Department of Economics


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How to Cite

Onakoya, A. B., & Agunbiade, O. (2020). Oil Sector Performance and Nigerian Macroeconomic Variables . International Journal of Economics, Management and Accounting, 28(1), 35–62. Retrieved from https://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/700