Do Economic and Institutional Policies Matter for Sustained Economic Growth for an Oil–Dependent Nigerian Economy in Recession?
HASSAN O. OZEKHOME and ADENIYI I. OKEOWO
IJED, Vol. 15 No. 2, 93-121 (2022)
The Nigerian economy plunged into deep recession in the latter part of 2014, generating a lot of empirical and policy interests. Empirical evidence indicates that oil-dependent economies are usually subjected to negatively externally generated and transmitted shocks resulting from variations in commodity prices that tend to diminish growth. Given the Nigerian economy is highly dependent on oil exports and the resulting revenue, the volatile influence of an overbearing dependence on oil causes negative reverberations that induce economic contraction. Nevertheless, sound macroeconomic policies and institutional reforms can guarantee sustained economic growth. It is against this backdrop that this paper sought to examine the role of economic and institutional policy management for sustained economic growth in Nigeria over the period 1981-2021. The study utilizes the ordinary least squares (OLS) technique to first, determine the link between oil and growth in the absence of economic and institutional management, and the Generalised Method of Moments (GMM) estimation techniques to investigate the link between oil and growth, incorporating economic and institutional policy variables. The empirical results show that sustained economic is guaranteed when oil resource is accompanied by institutional and economic reforms. In particular, genuine savings, investments in human capital, industrial development, as well as macroeconomic and institutional policy reforms in the presence of oil, are more critical to sustained economic growth