From Hydrocarbon Dependence to Economic Diversification for better integration into the global economy: The Case of Equatorial Guinea

Resumen

The article entitled " Transition from a hydrocarbon mono-dependent economy to a diversified economy: the case of Equatorial Guinea " examines Equatorial Guinea's paradoxical inability to effect a sustainable structural transformation of its economy, despite two decades of exceptional oil rents that have propelled the country to the rank of an upper middle-income nation: how can we explain that a country with one of the highest GDP per capita in sub-Saharan Africa maintains its population at a poverty rate of 67% , with an export concentration of more than 90% in the extractive sector and a structural economic contraction since 2013, thus revealing the failure of a development model based exclusively on hydrocarbon rent? To address this issue, the study adopts a mixed approach articulating, on the one hand, a systematic literature analysis mobilizing the theoretical frameworks of the resource curse, the Dutch syndrome and the middle-income trap applied to the Equatorial Guinean context, and on the other hand, the Principal Component Analysis (PCA) to describe the evolution of the sectors and build a composite diversification index, and econometric modelling using the Ordinary Least Squares (OLS) method to measure the impact of different sectors on GDP per capita growth and on the trade balance. The results obtained reveal that the average index of economic diversification is around 52.07%, which indicates an average diversification. The economy, once exclusively focused on oil until 2015, is gradually shifting to other sectors. Also, in terms of sectoral correlations, the analysis shows a clear opposition between the hydrocarbons group and that of the diversification sectors (agriculture, fish farming, industries). These two groups are highly negatively correlated with each other. And finally, the impact on growth shows that forestry, refining and the restaurant-hotel sector are positively correlated with oil-related growth. In contrast, agriculture shows a negative correlation with GDP at market prices in the estimates. The hypothesis of a positive effect of all diversification sectors on growth is therefore only partially verified.