Revisiting oil rents-output growth nexus in Nigeria: evidence from dynamic autoregressive distributive lag model and kernel-based regularized least squares approach.

Given the dominant role of oil in terms of foreign exchange earnings in Nigeria, this study revisits the oil rents and output growth nexus, using the novel dynamic autoregressive distributive lag (DYNARDL) model and kernel-based regularized least squares (KRLS) approach over the period 1973-2020. The major finding from this study is that oil rents are less significant for output and also exhibit decreasing marginal effect on output growth in Nigeria. However, our robustness result shows that oil revenue is positive and significantly affects output growth, while corruption dampens output growth. Result from the oil revenue model with a minimum root square mean error, when compared with the oil rents model, corroborate the finding. We are thus of the opinion that oil revenue is more important for output growth in Nigeria than oil rents. Having established this fact, it is recommended that policymakers and the government should accord utmost attention to boosting oil revenue via transparency and accountability. They should also ensure a lasting solution to the nation's high dependency on refined crude oil products importation for a sustainable economic growth and development. Also, more efforts should be directed at developing the seven identified strategic solid minerals to further enhance the revenue base of the government.