Effect of Selected Macroeconomic Variables on Oil Refining Industry Output in Nigeria

Abimbola Makanjuola – Agbola, Assoc. Prof. Abayomi Awujola and Dr. Obumneke Ezie
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Abimbola Makanjuola – Agbola: Bingham University Karu, Nasarawa State.
Assoc. Prof. Abayomi Awujola: Bingham University Karu, Nasarawa State
Dr. Obumneke Ezie: Bingham University Karu, Nasarawa State

International Journal of Research and Innovation in Social Science, 2023, vol. 7, issue 11, 1082-1095

Abstract: Nigeria runs a single-product economy where the major source of revenue for the country is crude oil exploration and exportation. The economy has over the years relied heavily on crude oil export for government revenues and its foreign exchange earnings. This dependence on the oil sector has had both salutary and deleterious impacts. Oil production crashed by vandalism and militant attacks in the Niger Delta, resulting in underperformance of the oil sector leading to poverty and a lack of infrastructural development across multiple sectors of the economy. This is why this paper seeks to investigate the impact of four key selected macroeconomic variables on Nigeria’s oil refining industry output. Autoregressive distributed lag model (ARDL) was adopted for data analysis. ADF Unit root tests revealed mixed order of integration while Co-integration Bounds test revealed the existence of long-run relationship between the dependent and independent variables. Findings revealed that there is a long-run relationship among the variables and all the variables have a positive relationship with oil refining industry output. The probability values indicate that Interest rate (INTR), Exchange rate (EXCR) and Net export (NEXP) do not have significant impact on oil refining industry output while Government capital expenditure (GCEXP) has significant impact on oil refining industry output. The paper recommends that favourable interest rate should be maintained, government should stabilize exchange rate and prioritize strategic investments in infrastructure development.

Date: 2023
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