Assessment of the Impacts of Oil: Opportunities and Challenges for Economic Development in Sudan

Abstract

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 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.

Effect of Oil Revenue and the Sudan Economy: Econometric Model for Services Sector GDP

“…Another study conducted by Samia Satti in, (2011) examines the effect of oil revenue and the opportunities and challenges for economic development in Sudan. The study used recent secondary data in order to provide a comprehensive analysis and clarify negative and positive impact of oil on economic development in Sudan (Nour 2013). Mehdi in (2007) also evaluate the prospective impact of oil revenues on the Sudan economy.…”

The Case for an IGAD Development Bank

“…Thuo and Riddell (2014) showed how the Nile Region serves as a unifying area of analysis regardless of state borders. Sudan’s and South Sudan’s focus will likely centre on basic market development (the retail and infrastructure we described previously) as well as the transport sector and the linkages forming concomitant with resource extraction. 38 38Nour (2011) provided a reasonably good (if now outdated) overview of the structure of the Sudanese economy and the likely growth prospects around oil. Yongo-Bure (2006) provided an even more dated, but equally comprehensive, view, specifically of South Sudan. Ethiopia looks poised to develop the broader diversification of Uganda and Kenya, though with a broader focus on agriculture.…”

“…38Nour (2011) provided a reasonably good (if now outdated) overview of the structure of the Sudanese economy and the likely growth prospects around oil. Yongo-Bure (2006) provided an even more dated, but equally comprehensive, view, specifically of South Sudan.…”

Oil, export diversification and economic growth in Sudan: evidence from a VAR model

“…Oil exports grew steadily and accounted for the vast majority of total exports in the 2000s (more than 90% since the mid-2000s); see Fig. 1 and also Nour (2011) and Suliman (2016). Between 1999 and 2011, during the years when Sudan was still in control of the oil fields currently located in South Sudan, the economy grew rapidly at an average rate of 5.8%, higher than in the pre-oil extraction period beginning in the 1960s, when the growth rate was on average about 1% lower.…”