Effects of Agricultural, Manufacturing, and Mineral Exports on the Economic Growth of Angola

Abstract

Angola's economic growth declined from 10.6% between 2003 and 2008 to 3.1% between 2009 and 2017 following plunges in petroleum prices (World Bank 2018). Mineral exports accounted for over 94% of Angola's total exports in 2017, and 99% of these were petroleum oil (UNCTAD 2016). The Angolan government aims at promoting economic diversification through private investment and exports promotion policies since 2003, to protect the economy from international market shock (Ministry of Economy and Planning 2018).

The objective of this research was to determine the effects of agricultural, manufacturing, and minerals exports on economic growth in Angola. Using exports and GDP time series data for Angola between 1980-2017, and an autoregressive distributed lag (ARDL) model, the study shows that mineral exports, manufacturing exports, and non-mineral exports (an aggregate of manufacturing and agricultural exports) positively influenced Angola's GDP growth in the long run. Mineral exports also positively affected GDP growth net of exports in the long run. In the short run, the lags of agricultural and mineral exports positively affected GDP growth, but the effects of manufacturing exports were negative. A vector error correction model (VECM) results also show evidence for export-led growth determined by mineral exports and non-mineral exports in the long run. However, GDP growth net of exports was negatively affected by manufacturing exports in the Long run.

Due to data limitations, the results of the statistical analysis are not robust, but overall the results of this study are supportive of Angola's export promotion policies. Expanding the share of non-mineral exports in Angola would require improving the human capital and infrastructure, and strengthening the institutional capacity to ensure sustainable development.