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Oil, Growth and Political Development in Angola

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  • Kyle, Steven C.

Abstract

Angola is more dependent on oil than any other country in Sub Saharan Africa and most other countries as well, apart from a handful of OPEC members. Contributing half or more of GDP, oil revenues condition and distort every other macroeconomic variable in the country, a situation that has existed for decades. Appreciation of the real exchange rate is the main macroeconomic distortion resulting from these inflows of mineral income. The paper demonstrates a marked tendency for the Angolan Kwanza to appreciate in recent years, and continuation of this trend is one of the biggest threats to economic rehabilitation of Angola’s war-torn non-oil economy. Resulting economic distortions are quantified using an index of distortion based on Chenery-Syrquin “standard” growth paths of economic structure. Optimal savings and expenditure rates out of mineral income are calculated based on a permanent income approach to optimal expenditure over time. Finally, implications of oil revenue for the future political development of Angola’s main parties are discussed.

Suggested Citation

  • Kyle, Steven C., 2007. "Oil, Growth and Political Development in Angola," Working Papers 127007, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:127007
    DOI: 10.22004/ag.econ.127007
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    References listed on IDEAS

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