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Ayobola Charles, Ekundayo Mesagan and Muibi Saibu

Abstract

This paper examined the relationship between resource endowment and export diversification and its implication for economic growth in Nigeria based on data from 1981 to 2015. The result of the Granger causality test suggests that unidirectional causality runs from oil production to economic growth, while export diversification does not granger cause economic growth. From the error correction result, it was established that export diversification positively impacts growth from the last two periods, while in the current period, it has negative effect on growth. This means that the key issue with Nigerian economy might not be structural but institutional. That is, even if the economy is diversified, the expected result may still be a ruse without appropriate economic institutional reform. The study concludes that specialisation is preferred to diversification for Nigeria in the current circumstance. Hence, the key issue to sustain growth in Nigeria is not in the number of productive sectors but in their efficiency.