Oil Sector Revenues and the Marginal Propensity to Import: A Focus on Oil-Exporting African Countries

Oil Sector Revenues and the Marginal Propensity to Import: A Focus on Oil-Exporting African Countries

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Countries Convertible that possess abundant natural resources are often criticized for spending a larger portion of their revenue from selling those resources on imports, as their economies tend to lack diversification.This study aims to examine whether this claim is valid for oil-rich African countries.The paper uses the panel ARDL method to investigate the effect of oil sector revenues on the marginal propensity to import in oil-exporting African countries from 2000-2020.The findings show that in the short run, oil sector revenues do not have a significant impact on the marginal propensity to import.However, in the long run, oil sector revenues have a positive and significant effect on the marginal propensity to import.

Additionally, the study reveals that exchange rates have a positive and significant impact on the marginal propensity to SPORT PROTEIN VANILLA import, while the impact of trade openness is negative and significant.Furthermore, gross domestic savings have a negative and significant effect on the marginal propensity to import during the same period.Therefore, the study concludes that increasing oil revenues in the selected countries only resulted in a rise in imports in the long run.It suggests that oil-exporting African countries should save more during periods of rising oil prices as a buffer, and channel these savings towards building facilities that encourage economic growth.It also recommends that exchange rate policies should be used to discourage excessive importation during periods of rising oil prices.