There has been increasing interest in the so-called 'resource curse': the tendency of resource-rich countries to underperform in several socio-economic outcomes. More recently, several papers have looked beyond the traditional impact on economic growth and instead focused on the effects upon broader human welfare indicators. A separate empirical literature in recent decades has probed into the determinants of happiness and subjective well-being (using either country or household data). Our paper contributes to the literature by bringing these two empirical strands of research together. This is the first study, to our knowledge, that makes use of a large panel dataset to explore the links between changes in happiness across countries and several measures of resource wealth. Consistent with prior empirical evidence of a resource curse in oil-rich nations, we find that oil rents are negatively linked to improvements in happiness over time. This happiness 'resource curse' curse appears to be oil-specific and holds both for the levels as well as changes in happiness.
Oil has played a determinant role in the economic development of Sudan and South Sudan before and after their separation. The introduction of oil into the Sudanese economy in 1999 has been associated with many challenges, especially those related to export diversification, and institutional quality. Oil dependency increased with the growth of oil share in total exports. Therefore, the secession of South Sudan in 2011 represents a great shock to both economies. This event creates a situation in which the new country experienced a sudden influx of oil revenues. At the same time, the parent country witnessed a sudden loss of 70% of its proven oil reserves. This makes the case of Sudan unique and provides a very rare opportunity for macroeconomists to address the impacts of this shock on both economies. This paper uses the recent secondary data of both counties to analyze and compare the impact of oil revenues transfer on Sudan and South Sudan’s economies in the post-secession period. The conclusion of this paper shows that oil loss has created incentives for better economic performance in Sudan. Reciprocally, South Sudan experiences a premature oil dependence that led to export concentration, institutional degradation, and macroeconomic instability.
There is an extensive literature demonstrating a positive link between export diversification and economic growth. In parallel, the resource curse thesis posits export concentration as an important mechanism curtailing growth in mineral-rich countries. Our analysis contributes to this literature by empirically investigating the interaction between oil dependence captured by the share of oil rents in GDP and export diversification and economic growth for Sudan. We do this with the help of a VAR model using annual data between 1960 and 2018. In comparison to earlier studies, our dataset covers also Sudan’s post-oil boom period, which coincided with a substantial drop in oil dependence after the 2011 secession of South Sudan. We find that oil rents appear to have a statistically significant and negative effect on export diversification, although contemporaneously rather than in the long-term. However, we find no evidence of a statistically significant impact of either oil dependence or export diversification on economic growth, as suggested by the resource curse hypothesis.
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