The Nexus between Solid Mineral Development and Economic Growth in Nigeria

Abstract

As the need to achieve sustainable and high economic growth has continued to gain currency in Nigeria, researchers and policymaker are constantly advocating for diversification of Nigerian economy. Mono-cultural economies are said to be highly vulnerable to macroeconomic shocks and the only viable remedy is having an economy being supported by economic activities from broad-based sectors. It is against this backdrop, that we investigated the role of solid mineral sector in driving economic growth in Nigeria. Using time series from 1980 to 2020, we estimated a CCR (canonical cointegrating regression) model of solid mineral – economic growth nexus in Nigeria. The results obtained from CCR estimation show that solid mineral production exerts a significant positive effect on economic growth. Increase in solid mineral production translates into increase in investment in intermediate and capital goods which in turn raises the aggregate demand. If this incremental change persists and more than off sets upward prices, it will translate to economic growth. The result also shows that solid mineral export is critical for economic growth. On the other hand, the result shows that solid mineral depletion could retard economic growth. This effect could be transmitted through confidence channel. As the depletion rate increases, the business confidence of economic agents on further economic outlooks may be dampened thereby leading to decline in current economic activities. The study therefore recommended that government should increase funding and support for research and technological development that will on one hand optimize the production of solid mineral and the other hand, engender development of renewal resources.