Oil, Policy Space and the Politics of Central Bank Policy in Nigeria

The academic literature has focused on institutional factors to account for the tendency of officials in resource dependent developing countries to pursue expansionary and state-led economic development policies. This paper provides an explanation for the orientation of economic policy in resource dependent developing countries that focuses on power, which has not received much attention in the literature. It argues that variations in the access to resource revenues by the state imply shifts in structural power that induce variations in the orientation of economic policy. This argument is based on a case study analysis of central bank policy in Nigeria. The evidence presented in this paper suggests that an approach focused on structural power can explain variation in the central bank policy stance in Nigeria over time. The analysis provides the basis for broader propositions about the role of power relationships in shaping economic policy in resource dependent developing countries.