Assessment of the impacts of oil: Opportunities and challenges for economic development in Sudan
Samia S. O. M. Nour
#2011-006
This paper provides an assessment of the impacts of oil and discusses
the opportunities and challenges for enhancing economic development in
Sudan. One advantage of our analysis in this paper is that we provide a
more comprehensive analysis using the most recent secondary data to
discuss the positive and negative impacts of oil for enhancing economic
development in Sudan. We explain that the various positive impacts of
oil and the opportunities for enhancing development in Sudan's economy
include the impacts of oil in satisfying domestic consumption and
achievement of self sufficiency, increasing government and public
revenues, rapid and impressive economic growth as measured by the growth
in the GDP and its composition and structure, increasing foreign direct
investment (FDI) and increasing the volume of foreign trade as measured
by the volume and structure of exports. We find that while oil has
recently contributed to the improvement of economic performance in the
country, the recent heavy dependence on it, may lead to negative impacts
and serious challenges for the Sudan since oil is an exhaustible
resource and because of the instability of oil prices in the
international market the revenue from oil is uncertain and volatile and
may lead to instability of economic growth. Moreover, the increasing
dependence on oil leads to increasing debate for and against the
incidence of the Dutch Disease in Sudan economy, the lack of
diversification and the challenges related to potential north-south
conflict and division of the country.
Keywords: Oil economy, oil impacts, economic development, Sudan
JEL classification: O10, O11, Q30, Q32, Q40, Q43