IMF Working Papers

Do Resource Windfalls Improve the Standard of Living in Sub-Saharan African Countries? : Evidence from a Panel of Countries

Author/Editor:

Munseob Lee ; Cheikh A. Gueye

Publication Date:

April 28, 2015

Electronic Access:

Free Full Text. Use the free Adobe Acrobat Reader to view this PDF file

Summary:

We examine the impact of resource windfall on the standard of living both in the short-run and long-run, using a sample of 130 countries, 1963-2007. Then, we systematically investigate the effect of resource windfall on welfare in three different groups of countries: We find that in the short-run resource windfall is welfare enhancing in the whole sample, especially via increases in income and decreases in inequality. However, in SSA countries, the size of welfare improvement is small and it is smaller and almost zero after one year in fragile Sub-Saharan African (SSA) countries. In the whole sample, a resource windfall shock leads to significant welfare growth even in the long-run, but we couldn’t find any significant long-run effect of resource windfall in SSA countries.

Series:

Working Paper No. 15/83

Subject:

Africa Angola Benin Botswana Burkina Faso Burundi Cameroon Central African Republic Chad Commodity boom Commodity prices Comoros Congo, Democratic Republic of the Congo, Republic of Corruption Cross country analysis Djibouti Equatorial Guinea Eritrea Ethiopia Gabon Gambia, The Ghana Governance Guinea Guinea-Bissau Inclusive growth Income Kenya Lesotho Liberia Madagascar Malawi Mali Mauritania Mauritius Mozambique Namibia Natural resources Niger Nigeria Panel analysis Rent Rwanda Senegal Seychelles Sierra Leone South Africa Sub-Saharan Africa Sudan Swaziland Tanzania Togo Uganda Welfare Zambia Zimbabwe