The Impact of Volatility of Oil Price on the Economic Growth in Sub-Saharan Africa

Abstract

This study examines the impact of the volatility of oil price on economic growth in 20 sub-Saharan African countries from the period of 1986-2012. These countries were divided into group A and group B. Group A consists of 10 oil exporting countries, while group B consists of non oil exporting countries in sub-Saharan Africa. Panel data were used for the analysis. Panel Pooled OLS, panel Fixed Effect Model and Generalized Method of Moment model were employed in the estimation for both oil exporting and non-oil exporting countries. The estimation of panel A model consisting of the oil exporting countries shows that the volatility of oil price has a positive and significance effect on the economic growth of oil exporting countries. The result of panel B consisting of non-oil producing countries shows that the volatility of oil price also has a positive and insignificant impact on economic growth.