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Financial Development and Economic Growth in a Natural Resource Based Economy: Evidence from Angola

Author

Listed:
  • Yuri Quixina

    (Faculdade de Economia, Universidade do Porto)

  • Álvaro Almeida

    (CEF.UP and Faculdade de Economia, Universidade do Porto)

Abstract

This paper analyzes the relationship between financial development and economic growth in Angola, an economy heavily dependent on natural resources. We extend existing literature by treating separately the oil and non-oil sectors of the economy. We test for Granger causality between three variables – oil revenues, non-oil GDP and financial development – for the Angolan economy for the period 1995-2012. The results show that the oil sector has been the great engine of Angolan economic growth, since we identified Granger causality from oil revenues to the other two variables, but none of these variables Granger causes oil revenues. On the other hand, financial development does not seem to have a significant role in economic growth in Angola: it does not Granger-cause either oil revenues or non-oil GDP, even though it is Granger-caused by both variables.

Suggested Citation

  • Yuri Quixina & Álvaro Almeida, 2014. "Financial Development and Economic Growth in a Natural Resource Based Economy: Evidence from Angola," FEP Working Papers 542, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:542
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    More about this item

    Keywords

    Financial Development; Economic Growth; Natural Resources; Angola;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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