Does crude oil price, financial development, and trade openness reflect on African oil-rich countries' economic growth?

Abstract

This study investigates empirically the long-and short-run impact of crude oil price and financial globalization on economic growth and financial development in selected oil-rich African countries. The data usage covers 1980 to 2021 by applying the autoregressive distributed lag (ARDL) modeling to determine the short-and the long-run estimates, and the ARDL-ECM Granger causality to discover the causalities direction. The empirical results reveal that crude oil price and financial globalization have no significant effect on restructuring the economic sustainability patterns in either the long or the short run. There are various causality directions found for those countries involved in this study within the short-and long-run periods. This study recommends that the Republic of Congo and Nigeria should always maximize oil revenue during periods of oil price boom to offset the economic severity during periods of oil price reduction. Further, Algeria and Nigeria’s policymakers should avoid protectionism against financial globalization, economic growth, and trade to mobilize the resources required to be at the fulcrum of future economic restructuring. The empirical findings will be useful for policymakers to design a suitable growth model for African countries that highly depend on crude oil resources as an engine of economic growth.