Paper short abstract:

The paper aims to show how oil dependency put the economic diversity, energy security and economic stability of Sudan to the test. Assessing the drawbacks of oil dependency and its consequences when South Sudan’s separation happened, it discusses possible future options for a more diversified economy.

Paper long abstract:

Since first oil production in 1999, Sudanese economy has experienced fundamental changes. These changes appeared in the form of the growth of non-tradable sector at the expense of the tradable one, the emergence of oil as the main source of country revenue and the sharp decline in other sectors production namely the manufacturing and the agricultural. Regarding the consumption the production of oil increased the surplus in trading balance and this led to the increase in country’s imports. Sudan was importing approximately all consumable goods.

By the time of South Sudan independence (July 2011), Sudan was perfectly oil dependent economy. The cessation cost Sudan 75% of its proven reserve and oil production. This represented strong shock for the economy and if we add the armed conflicts which erupted in many parts of the country we can say that Sudanese economy was on the verge of an economic crisis.

The purpose of this paper is to address the evolution of Sudan’s economy pre and post the production of oil to identify the impact of oil production and diagnose the Dutch disease symptoms.

The importance of this research paper is that there is a debate of whether Sudan had caught the DD after the production of oil. However it is clear that Sudan experienced intrinsic changes sine oil production. But the relationship between these changes and DD is still controversial. Thus this paper will discuss the period from 1970 up to 2011 to create a descriptive and comparative analysis to see if there is strong link between those changes and the DD mechanism of the natural resource curse. Also there is little information about Oil impact on Sudanese economy, thus this paper may help in filling part of this gap by highlighting this information and building sound argument around them.

The paper consists of three parts part one will include brief literature review about the natural resource curse and the Dutch disease in particular. It will also identify the methodology and the framework that will be used to investigate the problem of the research. Part two will discuss the evolution of the Sudanese economy and its main features and economic performance. Part three provides an investigation of the main symptoms of the natural resource curse and its consequences after South Sudan independence. The paper will also include a brief conclusion and recommendations.