It would be difficult to exaggerate the role of oil in the Nigerian economy. Since the first oil price shock in 1974, oil has annually produced over 90 percent of Nigeria's export income. In 2000 Nigeria received 99.6 percent of its export income from oil, making it the world's most oil-dependent country.
Oil production has also had a substantial effect on Nigeria's domestic sector. One way to characterize its impact is by looking at the rents produced by oil – that is, the returns in excess of production costs – in the Nigerian economy. From 1970 to 1999, oil generated almost $ 231 billion in returns for the Nigerian economy, in constant 1999 dollars. Since 1974, these rents have instituted between 21 and 48 percent of GDP.
Yet remarkably, these rents have failed to raise Nigerian incomes and done little to reduce poverty. Since 1970, Nigeria's per capital income has … Read More