Impact of oil dependency on agricultural development in Nigeria

Abstract

This study empirically analyzes the impact of oil dependence on agricultural development in Nigeria. To this end, annual data covering 1981 to 2013 is investigated using several econometric approaches. The findings of the Maki (2012) cointegration test reveal that there exists a long-run equilibrium relationship among agricultural value added, economic growth, oil rent, and oil production. According to the Toda-Yamamoto (1995) causality test, there are causal relationships running from oil rent, oil production, and agricultural value added to economic growth, which indicates that the Nigerian economy is oil- and agriculture-driven. Also, there is a unidirectional causality running from oil rents to agricultural value added. Dynamic ordinary least squares (DOLS) results suggest that oil rent has a positive impact, whereas oil production has a negative effect on agricultural development in Nigeria. Unlike many previous studies, our study makes a distinction between oil production and oil rent relating to the resource curse hypothesis and suggests that the oil curse is not a destiny for an oil-abundant developing country. © International Economic Society.