UPSI Digital Repository (UDRep)
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UPSI Digital Repository (UDRep)
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| Abstract : Perpustakaan Tuanku Bainun |
| This study examines whether the effect of oil rent on economic growth in Nigeria
depends on the levels of corruption and the size of the underground economy (UE) over
the period 1990-2022. Relying on the Sachs-Warner resource‑curse theory, it employs
the autoregressive distributed lag (ARDL) approach, as well as the fully modified
ordinary least squares (FMOLS), canonical cointegration regression (CCR), and
dynamic OLS (DOLS) estimators. The estimation results show that oil rent contributes
positively to both short- and long-term growth, whereas reductions in corruption and
an expanding UE exert immediate and sustained negative effects on growth. Moreover,
the study reveals that the impact of oil rent on growth varies with both the level of
corruption and the size of the UE. Specifically, the marginal effect of oil rent on growth
is positive when corruption is low or the UE is small, but it weakens both short- and
long-term growth when corruption is high or the UE is large. In essence, the findings
imply that simultaneous increases in oil rent and corruption (or UE size) impair growth,
whereas rising oil rent alongside reduced corruption (or a smaller UE) yields greater
economic benefits. This study concludes that to fully harness oil wealth and ensure
sustainable long-term growth, economic diversification away from oil, along with
policies aimed at reducing corruption and curbing underground activity, is essen |
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