UC Santa Barbara

This thesis examines how external dependence shaped growth and development in Nigeria. The argument is that the challenges of economic growth, structural transformation, and household welfare are connected by a common structural feature, which is the dependence on a narrow export base for foreign exchange together with persistent reliant on importation of production inputs. This combination repeatedly exposed the economy to external pressures and influenced macroeconomic performance, policy responses, and the available opportunities for households across different regions and sectors.This thesis analyzes the question from historical, household, and macroeconomic perspectives. First, it reviews the evolution of Nigeria’s development trajectory, focusing on the how oil dependence, foreign exchange availability, and structural transformation are connected. Second, it analyses trends in labor allocation, gendered participation in economic activities, and differences in household welfare using nationally representative household survey data from wave 5 of the Nigeria Living Standards Measurement Study. Finally, it applies the balance of payments constrained growth model to investigate whether exchange rate adjustments were enough to relax Nigeria’s external constraint from 1991-2023. The results show that periods of growth were characterized by the presence of supportive external conditions, particularly oil price booms, while periods of external pressures exposed persistent vulnerabilities linked to weak export diversification and import dependency. The household analysis shows that there are persistent differences in labor allocation and welfare outcomes across economic activities and gender groups. Also, the balance of payments analysis shows that depreciation of the currency resulted in very minimal trade responses, with the Marshall–Lerner condition not satisfied and movements in external competitiveness exerting limited effects on export and import performance. The thesis concludes that sustained development requires more than exchange-rate adjustment alone and depends on structural transformation that expands productive capacity, diversifies exports, and reduces reliance on imported production inputs.