Revisiting the Resource Curse Hypothesis in Nigeria: The Roles of Financial Development, Natural Resources and Trade Openness

Muhammad Mustapha Abdullahi; Yusuf Shamsuddeen Nadabo

doi:10.59890/ijaeam.v3i3.43

Authors

Muhammad Mustapha Abdullahi Umaru Musa Yar’adua University, Katsin
Yusuf Shamsuddeen Nadabo Umaru Musa Yar’adua University, Katsin

DOI:

https://doi.org/10.59890/ijaeam.v3i3.43

Keywords:

Resource Curse, Financial Development, Trade Openness, Capital Formation

Abstract

This study investigates the resource curse hypothesis in Nigeria by analysing how financial development, natural resource abundance, trade openness, and capital formation affect economic growth. Using the Autoregressive Distributed Lag (ARDL) model with data from 1990 to 2023, the results reveal that financial development significantly boosts economic growth in both the short and long run. In contrast, natural resources negatively impact long-term growth supporting the resource curse hypothesis although they have a positive short-run effect. Trade openness consistently harms growth in both periods, while capital formation enhances long-run growth but hampers it in the short run due to inefficiencies. These findings affirm the existence of a resource curse in Nigeria, where natural wealth fails to translate into sustainable development. Financial development emerges as a key driver of economic performance, whereas trade liberalization and poorly managed capital investments pose short-term challenges. The study recommends strengthening the financial sector, diversifying the economy beyond natural resources, adopting strategic trade policies, and improving investment planning and execution. The novelty lies in the integrated analysis of these factors within Nigeria’s context, offering fresh insights into their dynamic effects over time

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