Oil Price Fluctuation Case Study

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Oil price fluctuations is a germane issue in Nigeria which constituted a major disturbance in the foreign direct investment (FDI) to the Nigerian economy despite various reforms introduced and implemented by Nigerian authorities to attract FDI. The over-reliance on oil as a major revenue generation and collapse in our export are issues for concern. The linkage amongst foreign direct investment (FDI), oil price and export and economic growth are still a vital subject in the developing economies. In practice, FDI inflows consider a one of the source of a long run economic growth (Bosworth, Collins et al. 1999) and as a crucial source for increasing the capital stock of a country (Barro and Sala-i-Martin, 1995). An increase in the level of aggregate export is also a significant policy towards the reinforcement level of economy (Tyler, 1981). The study adopted Structural Vector autoregression (SVAR) method to examine the effect and long run interaction of oil price fluctuation on foreign direct investment (FDI) and economic growth in Nigeria and finds…show more content…
Oil price fluctuation has been in existence since the independence. Crude oil is the major source of revenue for Nigerian economy which has no control because its price is determined by Organization of the petroleum exporting countries. Abrupt fluctuations in oil prices makes the budget becomes complicated and often imprecise. Oil earnings volatility has resulted in unpredictable investment in Nigerian economy. The high revenues from oil export enables Nigerian government has enough to embark on several investments in the country (Umar, G. (2010)). Nigeria’s vulnerable to oil shocks caused foreign direct investment and national income

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