Dutch Disease Nexus and Industrial Diversification: Evidence from Angola

Abstract

The main objective of this study was to analyze the evolution of the main indicators of the Angolan economy between 2019 and 2023, which, in light of the literature on Dutch disease, can explain the situation of the level of industrial diversification in the period in question. Thus, a two-stage analysis was carried out: the first referred to the search for convergence between the behavior patterns of the curves of the volume of oil exports and the curve of exchange rate variation in the medium and long term; the second referred to the analysis of the trajectories of the curves of oil exports and the volume of production related to the manufacturing industry in the period between 2019-2023. Thus, the main results demonstrate, on the one hand, that both the volume of oil exports and the variation of the exchange rate had a convergent trajectory, both in the medium and long term and, on the other hand, that in the medium term (2019-2023), the volume of exports of the oil industry had an evolution dynamic inferring from that observed in the volume of the manufacturing industry. Finally, the conclusions drawn for the period analyzed support the premise that a preferential focus on exports originating from the extractive industry, combined with the observance of exchange rates that tend to appreciate, did not lead to direct deindustrialization to the detriment of the emergence of other industrial sectors besides oil, namely manufacturing.