The resource curse hypothesis and its implications on the Nigerian tax system
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Keywords

oil, natural resource, curse, structural, transformation, taxation

Abstract

The study entitled the resource curse hypothesis and its implications on the Nigerian tax system provides a conceptual insight and an in-depth analysis of the dynamics of the resource curse on the political economy of Nigeria. The objective of this paper is to examine the implications of the resource curse hypothesis on the Nigeria tax system. Using extensive literature review the researcher explored the resource curse hypothesis and its implications on the Nigerian tax system. The study highlighted the perverse connections between oil dependence and weak institutional framework as well as low human development and its concomitant effect on conflict and political instability in Nigeria. Nigeria’s performance in terms of development indicators such as gross fixed capital formation; quality of governance and institutional capacity; level of inclusive human development; infrastructure performance and spread of the tax base is far below average. We conclude in line with extant literature that to some degree the low development performance of Nigeria is symptomatic of the oil resource curse and common to many other mineral exporting countries in many developing regions of the world. The policy implications of this paper implies an urgent need for structural transformation of the economy from sectors with low productivity and net employment such as mineral exploration to sectors with high productivity and employment such as agriculture and manufacturing in order to stimulate the creation of better and productive jobs for the bulging population. The study also recommends an urgent need for institutional reforms that will strengthen the governance and administrative capacity of the country in order to foster a paradigm shift from a rentier economy to more inclusive and sustainable economy.

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