The Effects of Oil and Non-Oil Export Revenue on Income Inequality in Angola

Abstract

This study examines the impact of oil and non-oil export revenue on income inequality in Angola from 1995 to 2023, aiming to contribute to the existing discourse surrounding the empirical effects of these revenue streams on income disparity within the Angolan context. Our contribution is twofold. First, there is a notable scarcity of empirical studies addressing this issue within the Angolan economy; the prevailing literature often relies on aggregated or grouped data. Second, this research pioneers the application of the Palma Ratio as a metric to assess the relationship between natural resource revenues and income inequality in Angola. To ensure the reliability and validity of our econometric analysis, we conducted rigorous pre- and post-estimation tests. This research employs a quantitative correlational design to ascertain the existence and nature of the relationship between revenues from oil and non-oil exports and income inequality in Angola. A comprehensive statistical and econometric analysis was performed utilizing data from national sources, including the National Bank of Angola, and international databases, such as the World Bank. Employing the Ordinary Least Squares (OLS) method, our findings reveal that oil export revenues significantly exacerbate the income inequality gap between the wealthiest and the poorest segments of the population. In contrast, non-oil export revenues are found to mitigate this disparity. Based on the empirical evidence presented, this study advocates for the allocation of a portion of oil revenues towards social programs, particularly in health care and education subsidies, to promote a more equitable income distribution and enhance social welfare in Angola.