Oil prices, armed conflict and government revenue in Nigeria

Udoma Johnson Afangideh · Augustine Ujunwa · Angela Ifeanyi Ukemenam

11 citations0/0 files storedInternational Journal of Emerging Markets

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Natural Resources and Economic Development Economic and Fiscal Studies Market Dynamics and Volatility

Abstract

Purpose Persistent wave of armed conflicts – militancy and terrorism – and the mono-cultural structure of the Nigerian economy, as well as extensive reliance on revenue from crude oil, highlights how external vulnerabilities, weakening internal structure and insecurity could significantly exacerbate public revenue loss. Understanding the nature, trend and impact of these factors on government revenue is one of the questions that still remain unsolved. The purpose of this paper is to examine the impact of global oil prices, militancy and terrorism on government revenue in Nigeria. Design/methodology/approach The study focusses on the state-failure and frustration-aggression hypotheses to explain the nature and trend of armed conflicts in Nigeria. The autoregressive distributed lag (ARDL) model is used to examine the effect of global oil prices, militancy and terrorism on government revenue. Findings The study reveals that crude oil price, terrorism and militancy have significant negative effect on government revenue in short- and long-run Nigeria. Evidence from the study therefore supports the theory that macroeconomic fluctuation is largely determined by endogenous and exogenous factors in Nigeria. Research limitations/implications In view of this review, future studies should empirically analyse the interactive impact of militancy, terrorism and global oil prices on government expenditure or a combination of government revenue and expenditure. Originality/value The study provides evidence on the role of internal and external factors on macroeconomic fluctuation, and recommended appropriate suite of policies that could mitigate external and internal vulnerabilities, especially during upsurge in armed conflicts.

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References

2001Bounds testing approaches to the analysis of level relationships 2009Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude Oil Market 2009THE IMPACT OF OIL PRICE SHOCKS ON THE U.S. STOCK MARKET*2008Understanding Crude Oil Prices 2008Exogenous Oil Supply Shocks: How Big Are They and How Much Do They Matter for the U.S. Economy?2005Oil price shocks and real GDP growth: empirical evidence for some OECD countries 2016Autoregressive Distributed Lag (ARDL) cointegration technique: application and interpretation 2005Are External Shocks Responsible For The Instability Of Output In Low Income Countries?

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