Analyzing the Impact of Natural Resources on Nigeria's Economy

This research investigates the impact of Nigeria's over-reliance on natural resources, particularly oil and gas, on its economic well-being. The study examines both the positive and negative influences of these resources on the country's development, using statistical analysis to assess the effects on the Human Development Index (HDI), per capita GDP, inflation, and unemployment. While increased crude oil and natural gas production show potential for improving overall development and creating employment opportunities, the effect on inflation remains ambiguous. The research concludes with recommendations for sustainable resource management and economic diversification to enhance Nigeria's long-term economic stability and the well-being of its population. Desklib provides access to this thesis and a wealth of other solved assignments and study tools to aid students in their academic pursuits.

Running head: THE EFFECT OF OVER RELIANCE ON NATURAL RESOURCES ON
THE NIGERIAN ECONOMIC WELL-BEING
The Effect of Over Reliance on Natural Resources on the Nigerian Economic Well-being
Name of the Student
Name of the University
Author Note

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THE EFFECT OF OVER RELIANCE ON NATURAL RESOURCES ON THE NIGERIAN
ECONOMIC WELL-BEING
Acknowledgement
The concerned research has been a learning experience for me and I would like to take this
opportunity to thank my professor for being a constant support and for guiding me in the
research related activities. I would also like to convey my sincere gratitude to my mentors
and my colleagues who have provided extremely valuable insights and suggestions which
have helped me not only in writing this thesis but also in developing my personal insights
which I believe will help me in my future endeavours.

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THE EFFECT OF OVER RELIANCE ON NATURAL RESOURCES ON THE NIGERIAN
ECONOMIC WELL-BEING
Abstract
In the contemporary period, with Globalisation, trade liberalisation as well as industrial
revolution, the issues of natural resources depletion and environmental degradation have been
becoming issues of immense concern across different countries across the globe. This in turn,
makes it immensely crucial for the governments of different countries, to take into
consideration the costs as well as the benefits of usage and extractions of natural resources
and the implications of the exploitation of such resources on the overall welfare of the
population of the countries across the globe. This over reliance of the countries and especially
the economies and industrial aspects of the countries have both positive and also negative
implications on the economic well-being of countries. The concerned research, keeping this
into consideration tries to analyse the impacts of such over reliance on natural resources
(especially oil and natural gas) by Nigeria, on the economic well-being of the concerned
country. The analysis has found both positive and negative influence of natural resources on
economic well-being of people in Nigeria. There is an improvement in Human Development
Index with increase in crude oil and natural gas production. It can thus be confirmed that
increasing production of crude oil and natural gas has an opportunity to improve overall
development of Nigeria. With expansion of extraction and production, there is scope for new
employment opportunities in industries directly or indirectly related with these resources.
This in turn helps to lower unemployment and increases average income and living standard
of people living there. The effect of resource extraction on inflation however is ambiguous.
For crude oil production, the impact is positive while for natural gas the effect is negative.
The inflationary influence of neither of the two resources however is statistically significant.

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THE EFFECT OF OVER RELIANCE ON NATURAL RESOURCES ON THE NIGERIAN
ECONOMIC WELL-BEING
Table of Contents
Chapter 1: INTRODUCTION....................................................................................................8
1.1 Introduction......................................................................................................................8
1.2 Background of the Research............................................................................................9
1.3 Research Significance....................................................................................................10
1.4 Problem Statement.........................................................................................................11
1.5 Research Aim.................................................................................................................11
1.6 Research Objectives.......................................................................................................11
1.7 Research Questions............................................................................................................12
1.8 Structure of the Thesis...................................................................................................13
Chapter 2: LITERATURE REVIEW.......................................................................................15
2.1 Introduction....................................................................................................................15
2.2 Natural Resources: Meaning and Definition..................................................................15
2.2.1 Types of Natural Resources....................................................................................16
2.3 Importance of natural resources.....................................................................................18
2.3.1 Economic importance of natural resources.............................................................19
2.3.2 Role of natural resources in economies across the globe........................................20
2.4 Reasons behind over reliance and over exploitation of natural resources.....................21
2.5 Over exploitation of natural resources and economic performance...............................23
2.6 Natural resources and over reliance: Case study of Nigeria..........................................24
2.7 Economic condition of Nigeria......................................................................................26
2.8 Literature Gap................................................................................................................28

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ECONOMIC WELL-BEING
2.9 Conceptual Framework..................................................................................................28
Chapter 3: RESEARCH METHODOLOGY...........................................................................29
3.1 Introduction....................................................................................................................29
3.2 Research Philosophy......................................................................................................29
3.3 Research Design.............................................................................................................30
3.4 Research Approach........................................................................................................31
3.5 Data Types, Collection and Analysis.............................................................................32
3.5.1 Data Type................................................................................................................32
3.5.2 Data Collection........................................................................................................33
3.5.3 Data Analysis..........................................................................................................34
3.6 Research Hypotheses.....................................................................................................34
3.7 Ethical Consideration.....................................................................................................35
Chapter 4: RESULT AND DISCUSSION...............................................................................36
4.1 Introduction....................................................................................................................36
4.2 Results............................................................................................................................36
4.2.1 Descriptive Statistics...............................................................................................36
4.2.2 Analysis of correlation............................................................................................39
4.2.3 Regression analysis.................................................................................................40
4.3 Discussion......................................................................................................................49
4.4 Conclusion......................................................................................................................52
Chapter 5: CONCLUSION AND RECOMMENDATION.....................................................52

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THE EFFECT OF OVER RELIANCE ON NATURAL RESOURCES ON THE NIGERIAN
ECONOMIC WELL-BEING
5.1 Conclusion......................................................................................................................52
5.2 Linkage to the literature.................................................................................................53
5.3 Limitation.......................................................................................................................53
5.4 Recommendation............................................................................................................54
Summary..................................................................................................................................54
References................................................................................................................................55
Declaration...............................................................................................................................61

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THE EFFECT OF OVER RELIANCE ON NATURAL RESOURCES ON THE NIGERIAN
ECONOMIC WELL-BEING
List of Figures
Figure 1: Thesis Structure........................................................................................................13
Figure 2: Types of Natural Resources on the earth..................................................................17
Figure 3: Herman Daly’s Pyramid...........................................................................................20
Figure 4: Global population growth over the years.................................................................22
Figure 5: Increase in oil production and consumption of Nigeria (1980-2005)......................24
Figure 6: Production and consumption of natural gas in Nigeria (1980-2003).......................25
Figure 7: Sector-wise divisions of the economy of Nigeria in the contemporary period........26
Figure 8: Unemployment conditions in Nigeria over the years...............................................27
Figure 9: GDP growth rate of Nigeria over the years..............................................................27
Figure 10: Conceptual framework...........................................................................................28
Figure 11: Types of Research Philosophies.............................................................................29
Figure 12: Types of Research Design......................................................................................30
Figure 13: Types of Research Approaches..............................................................................31
Figure 14: Types of Data..........................................................................................................32
Figure 15: Types of Data Sources............................................................................................33

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THE EFFECT OF OVER RELIANCE ON NATURAL RESOURCES ON THE NIGERIAN
ECONOMIC WELL-BEING
List of Tables
Table 1: Descriptive statistics for crude oil and natural gas....................................................36
Table 2: Descriptive statistics for HDI, per capita GDP, inflation and unemployment...........37
Table 3: Correlation matrix......................................................................................................39
Table 4: Impact of crude oil production on HDI of Nigeria....................................................40
Table 5: Impact of crude oil production on per capita GDP of Nigeria...................................41
Table 6: Impact of crude oil production on inflation of Nigeria..............................................42
Table 7: Impact of crude oil production on unemployment of Nigeria...................................43
Table 8: Impact of natural gas production on HDI of Nigeria.................................................43
Table 9: Impact of natural gas production on per capita GDP of Nigeria...............................44
Table 10: Impact of natural gas production on inflation of Nigeria........................................45
Table 11: Impact of natural gas production on unemployment of Nigeria..............................46

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THE EFFECT OF OVER RELIANCE ON NATURAL RESOURCES ON THE NIGERIAN
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Chapter 1: INTRODUCTION
1.1 Introduction
The international economic and commercial scenario has developed to a considerable
extent and has undergone considerably dynamics over the last few decades. Various factors
like that of Globalisation, liberalisation of trade, industrial revolutions as well as
technological advancements and infrastructural developments can be considered as the
primary factors behind the development of the economic and commercial aspects across the
globe (Leigh—Blakely, 2016). The development of industries over the years as well as the
economies of different countries, on the other hand, can also be seen to be coming at the cost
of utilisation of various natural resources and reserves in different countries, especially those
of oil, gas and other natural energy resources. These resources have appeared as absolute
necessities for the development of almost all types of industries, for facilitation of
international as well as domestic commercial movements and thereby for the overall
economic development of the countries and the well-being of the populations of the same in
these aspects (Cypher, 2014).
However, with the progress and increased dynamics of the global economic and
industrial scenario as well as with the boom in the overall population across the globe and in
different countries in particular, the usage of natural resources for both consumption as well
as production has increased manifolds (Tonts—Plummer, 2012). However, this continuous
consumption and usage of various types of natural resources, across the globe, has led to the
creation of the problem of over-utilisation and often abuse of these resources, which can be
seen to be becoming an issue of immense concern in the contemporary period, among people
across the globe, due to its adverse impacts on the environmental, economic as well as overall
aspects of human lives, especially in those places where these resources are present in
abundant and are also used in a non-sustainable and aggressive manner (Veltmeyer, 2013).

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THE EFFECT OF OVER RELIANCE ON NATURAL RESOURCES ON THE NIGERIAN
ECONOMIC WELL-BEING
Keeping this into consideration, the concerned research focusses on one such country,
rich in natural resources of immense importance, oil and gas. The concerned study tries to
examine the aspects of over-extraction and over reliance of the country on these natural
resources for sustenance, economic development and industrial progress and also tries to
study the impact of such over reliance on these natural resources by the country and its
population on the economic well-being of the population of the country itself.
1.2 Background of the Research
The oil and gas reserves in Nigeria are considered to be the most prized and precious
natural resources of not only the concerned country but also across the globe. Of the different
regions of the concerned country, the Niger Delta of the country accounts for the highest oil
and gas reserves in the contemporary period. Apart from that the natural resources of the
country also include limestone, coal, iron ore, lead, zinc and also arable lands (Kadafa, 2012).
However, the most used natural resources of the country are oil and gas and Nigeria owe
much of its economic growth and commercial activities to these natural resources. The
economy of the country strongly depends on the oil and gas industry which has developed in
the country robustly over the years and has, to a considerable extent, facilitated the aspects
like employment, investment, exports and overall economic welfare of the people living in
the concerned country (Omeje, 2017).
However, with increasing expansion and international commercialisation of the oil
and gas industry in the country and with its increasing international commercial activities in
these genres, Nigeria has also indulged in prolong extraction and usage of these valuable
reserves for the purpose of industrial and economic expansion, which to a considerable extent
has made the country overtly reliant on these natural resources for their sustenance and
development. On one hand, while utilisation and dependence on the natural resources like oil
and gas has increased the economic welfare of the country to some extent, in the aspects of

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THE EFFECT OF OVER RELIANCE ON NATURAL RESOURCES ON THE NIGERIAN
ECONOMIC WELL-BEING
increased exports, inflow of investments, industrial development and revenue generation,
these over exploitation and dependence on the natural resources, especially on oil and gas,
can also be seen to be affecting the economic well-being of a large section of the population
of the country (especially those not associated with these oil and gas industries of the
country) can also be seen to be getting hampered in several ways, especially in terms of
income inequality, non-uniform distribution of economic welfare and other aspects (Balouga,
2012).
1.3 Research Significance
In the contemporary period, the problems of over-utilisation and depletion of natural
resources and their implications on social, economic, political, demographical and overall
well being of the population have been becoming issue of immense concern among the
people as well as governments across the globe. This in turn makes it crucial to study the
effects of over dependence of a country on its natural resources over the well-being of the
population of the concerned country, especially that of the economic well-being of the same
as most of these natural resources are non-renewable (Prior et al., 2012). With the notion of
sustainable development of the economies getting increasing importance, emphasising on
these aspects become even more crucial. In this context, Nigeria being overly dependent on
its oil and gas reserves, analysing the implications of this dependence on the economic well-
being of the population of the country becomes extremely crucial as these resources are fast
depleting and are not only crucial for the economic development of the country but also of
immense significance for the industrial and commercial domains across the globe, which in
turn highlights the significance of the concerned research, as the same tries to explore
whether the over dependence on the natural resources have positive or negative impacts on
the economic well-being of the Nigerian population (Bergstrom—Randall, 2016).

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1.4 Problem Statement
The economy of Nigeria has developed over the years utilising the valuable natural
reserves of oil and gas, which has not only led to substantial development of the oil and gas
industry of the country but also has made the country one of the primary exporters of these
resources to different parts of the globe, including that of the United States of America.
However, there remains issues of irresponsible extraction and over utilisation of these
resources and the fruits of development of industries based on these resources also do not
seem to have percolated in all the sections of the society, as can be seen from the presence of
high poverty, inequality and deprivations among a major section of the population of the
concerned country (Sterner—Coria, 2013). This in turn, highlights the fact that the over
reliance of Nigeria on the natural resources, especially on oil and gas reserves, can have
mixed implications on the economic well-being of the overall population in this country, over
the years, which the concerned research tries to examine.
1.5 Research Aim
The primary aim of the concerned research is to examine the ways in which Nigeria
tends to overtly depend and also over utilise its natural resources, especially emphasising on
the most predominant natural resources, oil and gas, in the country. The concerned research,
also aims to study the impact of these over dependence on the non-renewable natural
resources, by the country, on the overall economic well-being of the population of the
country as a whole. The concerned research tries to incorporate and study extensively the
positive as well as negative impacts of over reliance of Nigeria on their natural resources, on
the overall economic well-being of the nation a whole and of that of the population in
general.