This study was on the transmission mechanism of Dutch Disease in Nigeria. The term Dutch Disease otherwise known as Hollandis syndrome, came into existence in 1977 when the British Journal titled the Economist first used it. It was used to connote a situation in which discovery of natural gas in large quantity in the Netherland led to mass movement of labour from their industrial sector to their newly discovered gas sector, reduction in agricultural and industrial exports and increase in gas export. This study investigated at least two sources through which Dutch Disease could be transmitted to the Nigerian economy namely: through non-diversification of the economy and through foreign aid received. Data covering the period of 1960 ? 2015 were sourced from the Central Bank Statistical Bulleting and World Development Indicator 2016. Data on Gross Domestic Product (GDP), oil, agriculture, industry and manufacturing sectors were analysed using both the Ordinary Least Squares and the Bayesian Vector Autoregressive techniques and found that the oil sector dominated and relegated agricultural, industrial and especially manufacturing sub-sector of industry to the background. This confirmed existence of Dutch Disease in Nigeria. Data on foreign aid received, import and export and GDP were also analysed using the Bayesian version of autoregressive model and found that as foreign aid received was rising, import was rising and export falling which further confirmed the existence of Dutch Disease in Nigeria. Based on these findings the study recommended (i) diversification of the economy through improved and mechanised agricultural and industrial sector especially the manufacturing sub-sector. (ii) Reduction in foreign aid receive to boost export and decrease import or alternatively to divert such foreign aid to improve our agricultural and industrial productions. (iii) Government should fight corruption by demonetising the over pampered and over monetised political sector of the economy and divert such money to diversify the economy.
Dutch disease, non-diversification, Bayesian Auto regression, transmission mechanism, foreign aid
Bayo Fatukasi , Ilesanmi A.O. , Iwasokun Yekini "The Transmission Mechanism Of Dutch Disease In Nigeria" Iconic Research And Engineering Journals Volume 3 Issue 2 2019 Page 410-417
Bayo Fatukasi , Ilesanmi A.O. , Iwasokun Yekini "The Transmission Mechanism Of Dutch Disease In Nigeria" Iconic Research And Engineering Journals, 3(2)