Oil and Development - A Formula for Sustained Economic Growth?

Sammanfattning: The purpose of our study is to determine the importance of oil exports in relation to GDP in countries located in Sub-Saharan Africa when it comes to promoting economic growth. Due to the fact that oil accounts for approximately 40 percent of the world’s total energy production, and is predicted to do so for at least 45 more years to come, we found this a highly relevant topic to look into. At the moment, Sub-Saharan Africa is in the middle of an oil-boom. Eastern and Western Africa have become promising exploration areas and thus attracted a lot of interest all around the globe. Therefore, we chose to include 14 Sub-Saharan African countries in our econometric study. We look at how the value of oil exports as a ratio of GDP affects economic growth in these countries during a time period of 27 years, stretching from 1983- 2010. Our hypothesis deals with the presence of a “Resource Curse”, stipulating that an economy which is overly dependent on oil tends to lead to none, or negative, economic growth. With this report, we conclude that an increase in the ratio of oil exports to GDP will generate higher economic growth in our chosen Sub-Saharan African countries. However, we find evidence against a “Resource Curse” taking place in the region. On the other hand, as it is a relatively under-developed region there is still a possibility that the oil sector has yet to gain enough influence in many economies to actually suffer the consequences of the phenomena. Perhaps this could be something for these countries to take into account as they become more reliant on oil as a means of production.