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GTAP Resource #4227

"The Macroeconomic Effects of an Expanding Natural Resource Sector in Niger"
by Go, Delfin S, Karen Thierfelder, Sherman Robinson and Robert Utz

Natural resources can contribute to economic growth and poverty reduction in Niger. Over the next two decades, Niger will see a dramatic increase in natural resource revenues which will greatly improve its external and fiscal position. In a brief period of time, exports of oil and uranium are expected to account for close to 20 percent of GDP by 2015 (from less than 8 percent in 2009). Likewise, total public revenue will reach 20 percent of GDP by 2015 (from less than 15 percent in 2009).

The infusion of resource money will have to be used very wisely in order to address several challenges unique to Niger. After decades of political instability and turmoil, there is much ground to catch up. Niger currently ranks near the bottom of the UNDP’s human development index. Its poverty rate is high—about 44 percent of the population lives below $1.25 a day and 75 percent below $2 a day. Its adult literacy rate, at 29 percent, is among the lowest. Health indicators, such as maternal and child mortality, are very poor. In addition, Niger’s terrain is harsh and dry – more than 50 percent of Niger is desert; only 12 percent, mainly in the south, is cultivated; and only about 1 percent is forested. Subsistent agriculture, livestock and fishing constitute the backbone of the economy, employing 86 percent of the active population. The road and infrastructure network in this landlocked economy is still very limited. Lack of water is a major problem.

In the short to medium term, if the supply response or absorptive capacity is limited in the rest of the economy, the resource windfalls may induce a rapid appreciation of the real exchange rate, a loss of competitiveness in the non-resource export sector, deindustrialization of the traditional sectors, and poorer growth prospects overall for the economy. These potential harmful effects were labeled as “Dutch disease” when they were noticed in Netherlands after the discovery of North Sea gas.


Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Version: April 2013
Created: Go, D. (4/15/2013)
Updated: Go, D. (6/6/2013)
Visits: 1,789
- Baseline development
- Economic growth
- Africa (West)

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