Dynamics of the Downstream Petroleum Sector and Economic Growth in Nigeria

Abstract

Deregulation of downstream sector has attracted a lot of studies in Nigeria. Nigeria is naturally endowed with natural oil yet there is still scarcity of petroleum product in the country. Studies have shown that every economy that wishes to grow and develop should encourage the force of market driven economy to operate. This will help eradicate market imperfection that is perceived in the regulated economy. The study investigates the performance of the downstream petroleum sector over the years and its impact on economic growth in Nigeria. The time horizon covered 1980-2012 this is because, data for previous years were not sufficiently available. The study used a simple regression model with ordinary least square (OLS) techniques of data analysis. The result shows that OR, NOR, FDI and CONSUMPT are positive and statistically significant on RGDP. Also the adjusted R² shows that the overall model is statistically significant and that deregulation of the downstream sector cannot be avoided. Therefore Government should deregulate the downstream sector in order to attract foreign investors to the sector, this has the tendency of combating unemployment problem in the country, encourage the consumption of petroleum product since competition will make petroleum products readily available and also the overall standard of living will improve.