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This study investigated Nigeria's economic interactions with China, India, and
the USA with a view to identifying the main source of real output shock to Nigeria in the
period 1981Q1-2019Q4. The analysis followed the network approach of Diebold and
Yilmaz (2014), which uses the size and direction of normalized generalized forecast error
variance decompositions (NGFEVD) of a vector error correction model to track shock
propagation among economic entities. The results indicate that China and India are net
transmitters of real output shocks to Nigeria. The results also indicate that Nigeria is a net
real output shock receiver. The study concludes that Nigerian policymakers should evolve
policies that can insulate the economy against real output shock heatwaves from around the
world, especially China and India. Such policies should mainly target the diversification of
the economy such that crude oil will no longer be the only major source of revenue.
