Economic Diversification and the Oil Sector in Nigeria

This study examined the impact of key economic sectors on diversification efforts in Nigeria from 1986 to 2023, focusing on the oil, manufacturing, services, and agricultural sectors. Using time-series data from the Central Bank of Nigeria and employing the Autoregressive Distributed Lag (ARDL) approach, the research assessed the long- and short-run relationships between sectoral contributions and economic diversification, proxied by real GDP. The findings revealed that while the manufacturing and services sectors exhibited positive but statistically insignificant contributions to diversification, the oil and agricultural sectors showed negative yet insignificant effects. The results indicated no significant individual impact from any of the sectors on economic diversification during the study period, underscoring the persistent challenges in transitioning away from oil dependence and the need for more integrated and effective diversification policies.