A COMPARATIVE ANALYSIS OF THE IMPACT OF FLUCTUATING OIL PRICES ON NIGERIA’S AGRICULTURAL AND INDUSTRIAL SECTORS

A COMPARATIVE ANALYSIS OF THE IMPACT OF FLUCTUATING OIL PRICES ON NIGERIA’S AGRICULTURAL AND INDUSTRIAL SECTORS

ABSTRACT

This study was the brain child of the earnest desire to unravel the impact of the incessant fluctuating oil prices on two crucial sectors of the Nigerian economy; the agricultural sector and the industrial sector which used manufacturing sector as proxy. The analysis employed the unrestricted Vector Autoregressive methodology as its empirical technique, with a quarterly time series data spanning from 1987 quarter one through 2014 quarter four which covered 112 observations. The result of the impulse response function showed that a one standard deviation shock gin oil price volatility had no significant impact on agricultural and manufacturing sectors. These results were further validated by the variance decomposition analysis which further established that amidst the oil price volatility; there exist a complementary role between the sectors. These findings therefore, necessitated the study’s conclusions. Thus it is supposed that if the country’s excessive dependence on crude oil price benchmarks for fiscal policy strategies is not mitigated, the economy may be headed for a deeper crises and instability orchestrated by the utterly negligence of other crucial sectors of the economy.