IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 7 NO. 3 2022
DOI: https://doi.org/10.56201/ijefm.v7.no3.2022.pg48.62

---

Diversification and Economic Development in Emerging Economies: The Nigerian Experience

Odey, Ferdinand Ite, Ph.D Oko, Innocent Odey. & Onwuneme, Lovina N.

---

Abstract

This study seeks to investigate the relationship between diversification and economic development in emerging market economies, using the Nigerian scenario. The study employed annual time series data sourced from the Central Bank of Nigeria and World Development Indicators. Economic diversification was represented by diversification index while economic development was proxy by per capita GDP. Autoregressive Distributive Lag (ARDL) and granger causality estimation techniques were used for the analysis. It was revealed that long run relationship exists among the variables in the estimated model. The granger causality results showed that no bidirectional causality was found between diversification index and per capita GDP. The bound test results showed that a long run relationship exists among the variables in the estimated equation. This signifies the relevance of these variables in promoting economic development in Nigeria. The study recommends that; the government should diversify the economy from crude oil to overcome export instability or the negative impact of terms of trade; and there should be prudent government spending and conducive and enabling environment for both the growth of other important sectors and improved domestic investment, and exports from sectors such as agriculture, manufacturing, textile as well as minerals and steel should be encouraged; monetary authorities should enhance the formulation of appropriate monetary policies that will help to control inflation and exchange rate for sustainable economic development; and exchange rate should be stabilized through the use of appropriate monetary policy tools as well as support export diversification programmes in order to diversify into the core sectors of the economy and stem the tide of the mono-product syndrome.

keywords:

Diversification, Economic development, Emerging economies, Oil, Agriculture.

---

References:

Blanchfield (1975). The history of economic thought. Harcourt Brace Jovanovich Publishers Inc.
USA.

CBN (2021). Central Bank of Nigeria annual report. Abuja.
De-Piñeres, S. A. G. & Ferrantino, M. (1997). Export diversification and structural dynamics in
the growth process: The case of Chile. Journal of development Economics, 52(2), 375-
391.

Effiong, C. E., Odey, F. I. & Nwafor, J. U. (2017). Globalization, foreign direct investment
and industrial sector performance nexus in Nigeria. International Journal of Social
Sciences and Management Research, 5 (2), 58-70.

Ekpo, A. H. & 0. J. Umoh, (2014). An overview of the Nigerian economic growth and
development, http://www.onlinenigeria.com/economics, July.

Esu, G. E. & Udonwa, U. (2015). Economic diversification and economic growth: Evidence
from Nigeria. Journal of Economics and Sustainable Development, 6 (16), 56-65.

Hamed, K., Hadi, D., & Hossein, K. (2014). Export diversification and economic growth in some
selected developing countries. African Journal of Business Management, 8(17), 1-5.

Ndem, M. E., Unuafe, B. O. & Egbe, J. E. (2019). Economic impact of effluent composition
of a process industry on the receiving environment: A study of Port Harcourt refining company. Advance Journal of Economics and Marketing
Research, 4 (3), 48-60.

Oti, P. A., Effiong, S. A. & Odey, F. I. (2017). Demographics and taxation in rural Cross River
State. International Journal of Economics and Financial Management, 2 (3),13-26.

Oti, P. A., Odigbo, B. E. & Odey, F. I. (2016). Nigeria’s debt burden and development
tangle:
The socio-economic and political implications. Journal of Economics and Sustainable
Development 7 (20), 92-101.

Udah, E. B. & Odey, F. I. (2016). Real exchange rate misalignment and economic
performance in Nigeria. Global Journal of Social Sciences, 15, 13-25.

Uzonwanne, M. C. (2015). Economic diversification in Nigeria in the face of dwindling oil
revenue. Journal of Economics and Sustainable Development, .6(4), 61-67.

World Bank (2020). World Development Indicators.

DOWNLOAD PDF

---

Back