Economic Diversification: Drive Towards Sustainable Development in Nigeria

Abstract

The main focus of economic diversification is to improve economic performance in order to achieve sustainable economic growth. Diversifying an economy encourages inclusive growth and reduces inequality. Recent research confirms that there is indeed a link between economic diversification and sustainable development. The 2014 rebasing of Nigeria’s Gross Domestic Product (GDP) made Nigeria the 26^th largest economy in the world and the biggest in Africa. Recently, the International Monetary Fund (IMF) pronounced Nigeria again as having the largest economy in Africa. Yet Africa’s largest economy faces a myriad of challenges, such as high prevalence of poverty, unemployment, under-employment especially among the youths, huge infrastructure deficits, income and social inequalities. As a nation that relies so much on crude oil for its revenues and foreign exchange earnings, the effect of oil price volatility has had negative multiplier effects on macroeconomic variables within the economy. GDP growth rates have slowed down drastically from the high levels of 7.98 percent in 2010 to about 3 percent in 2015. It is against this backdrop that this paper sets out by utilizing descriptive analytical tool to examine the transmission mechanism through which economic diversification translates to sustainable development. It presents stylized facts on the sectoral economic profile of the Nigerian economy and proceeds to adapt the model of sustainable structural transformation of selected South –East Asian Economies. Finally, the paper submits policy recommendations that will enhance the implementation of the adapted model of economic diversification thus leading the Nigerian economy through the expected path of sustainable development.

Keywords: Economic Diversification, Inclusive Growth, Sustainable Development, Transmission Mechanism