Assessing The Role Of Resource Endowment And Export Diversification In Nigeria’s Growth Trajectory

Abstract

This study examines the relationship between Nigeria’s natural resource endowment, export diversification, and economic growth (RGDP) using annual time-series data from 1981 to 2023. The analysis employs descriptive statistics, the Augmented Dickey Fuller (ADF) unit root test, Johansen cointegration technique, Granger causality test, and an Error Correction Model (ECM) to ensure robust estimation. The results show that all variables are normally distributed and integrated of order one, I(1). The Johansen cointegration test identifies three cointegrating relationships, confirming the existence of a stable long-run equilibrium among oil production, export diversification, and economic growth. The Granger causality results reveal a unidirectional causal link from oil production to economic growth, while export diversification does not directly cause growth, indicating Nigeria’s continued structural dependence on the oil sector. The ECM findings show a significant speed of adjustment of 62.4 percent, suggesting a relatively rapid correction of short-run disequilibria. Export diversification exhibits a mixed short-run effect, with contemporaneous impacts being negative but lagged effects positive and significant, reflecting delayed growth benefits due to institutional and structural constraints. The study concludes that although oil remains a key growth driver, overreliance on it heightens vulnerability to external shocks. It therefore recommends that Nigeria strategically channel oil revenues into strengthening non-oil sectors, improving institutional efficiency, and investing in human capital to ensure that export diversification fosters sustainable and inclusive economic growth.