LEVERAGE OF PETROLEUM REVENUE ON ECONOMIC GROWTH IN NIGERIA. (1984-2020)

This research work examines the impact of petroleum revenue on economic growth in Nigeria from 1984-2020. The study employs Vector Error Correction Model (VECM) to analyze the short run and long run effect between dependent variable (Gross Domestic Product) and independent variables (Exchange rate, Average Price per Barrel, Crude oil Production and Petroleum Profit Tax). Time series analysis was done using Secondary data collected from FIRS, CBN, NNPC, NBS and WDI. Eviews 8 was used to conduct Estimation tests; Augmented Dickey Fuller and Philipp Perron of Unit Root Test, Cointegration, Granger Causality, were also tested. The results from the tests shows how economic growth in Nigeria is affected the variables used. However, the results indicate that independent variables precisely petroleum profit tax and crude oil production significantly affect the economic growth having higher influential rate on gross domestic product. Finding of this study postulates that Nigeria must increase the methods of redistribution of petroleum profit to other sectors of the economy, measures must be taken to diversify the economy for balance growth, lastly in the findings, the value of petroleum production is falling, and forecast predicts that petroleum value will keep depreciating as technology is advancing therefore, petroleum production must be increased to keep up with the profit level. Nigeria must change from dependence on petroleum as primary source of revenue to other sectors like agriculture and industry, because the value of petroleum is falling and soon will be below efficient level to host government budgets. Proper accounting and modern base system of taxation should be employed to keep accounts of oil production value and income generated from other sectors.