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Research Report

When the Dutch Disease met the French Connection:: Oil, Macroeconomics and Forests in Gabon

Sven Wunder
Copyright Date: Jan. 1, 2003
Pages: 75
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Table of Contents

  1. (pp. 1-4)

    Gabon is not a common representative of Sub-Saharan Africa. The country has been called the ‘African Emirates’—the ultimate rentier state depending heavily on a single wealth-generating export commodity: oil. Where most of Sub-Saharan Africa over the last two decades has suffered from low and stagnating incomes, chronic balance of payment problems and foreign exchange shortages, high per capita oil revenues have been the key to make Gabon a rich country. At more than US$6000, per capita income was in 1998 more than four times that of neighbouring Cameroon. Petroleum exports have totally dominated and transformed Gabon’s economy over the...

  2. (pp. 5-13)

    Of Gabon’s land area of 267 665 km², tropical forests currently cover more than 80%. Forests can be divided into three categories: the broad group of coastal basin forest, the more homogeneous forests of central Gabon, and the northeastern forests that share characteristics with semi-deciduous forests (Drouineau and Nasi 1999). Gabon’s small population density with respect to its forest cover is notorious: no other country in Africa retains a forest cover in the range of 13–20 ha for each inhabitant.⁴ In other words, Gabon remains an extremely forest-rich country.

    How has forest cover changed over time? Savannahs covered most...

  3. (pp. 14-19)

    Over the last three decades, the rise in oil exports and the corresponding high inflow of foreign exchange per capita have created an economy specialised in oil exports and in the spending of oil rents. Figure 1 shows long-term trends for three key macroeconomic indicators: oil exports, capital inflows and the real exchange rate—a measure of relative prices.

    The value of oil exports remained limited in the 1960s and early 1970s but rose dramatically from 1974 onwards, as a combined effect of the oil price boom on the world market and of rising Gabonese oil production. Inflow peaked in...

  4. (pp. 20-27)

    Prior to the oil boom, Gabon’s agricultural base was already weak, due mainly to a combination of labour scarcity and extremely rich extractive resources. From ivory to slaves, from okoumé to manganese, uranium and oil cycles, the economic prospects of establishing a cash crop plantation economy could never compete with the here-and-now payoff from the extractive commodity that currently predominated. However, oil rents brought foreign exchange inflows that were much greater than in any previous extractive cycle. Adverse relative price effects further squeezed the agricultural sector. But the impact was different in each of the four subsectors of subsistence farming,...

  5. (pp. 28-35)

    Land use is not only affected by relative prices, but also by other policies that encourage or discourage it. In relation to agriculture and forestry, an additional question is thus whether oil wealth brought more resources to public regulatory and development agencies and, if so, what policies they implemented that had relevance for land use. In other words, did increased financing for agricultural and forestry agencies also increase their capacity to change the course of events on the ground, e.g. through technical support to expanding land uses, subsidised credits to small-scale farmers, or through better control of forestry practices that...

  6. (pp. 36-43)

    In the previous sections, it has been argued that Gabon’s transformation to a high-rent oil economy was accompanied by a loss of competitiveness and by a series of policy interventions, both of which favoured the conservation of forests. However, a third type of impact may occur through the rise in incomes, causing structural changes in income distribution, in aggregate demand, and in the spatial distribution of the population. These changes could potentially work for or against forests. For instance, in Latin America there has been a tendency for a richer and more urbanised population to consume more meat and dairy...

  7. (pp. 44-47)

    Following independence in 1960, Gabon was gradually transformed from a timber-exporting into a mineral-extracting economy, a structural change that, as a side effect, also created conditions extremely favourable to the preservation of forest cover. The oil boom was the driving force in the creation of a rentier state. During the price hike of the 1970s, GDP per capita rose sevenfold. In the mid-1980s prices dropped, but the simultaneous rise in oil production meant that since 1973 Gabon has remained a considerably richer country than before. Gabon’s oil wealth has been unequally distributed, but absolute poverty has still been reduced dramatically....

  8. (pp. 48-57)

    This final section is dedicated to Gabon’s development prospects in approaching the post-oil era. Its five subsections will sequentially provide tentative answers to five big questions:

    1. How rapidly are oil revenues likely to decline?

    2. To what extent can other rent sources take over the role of oil?

    3. To what extent can value-added production sectors compensate for the oil decline?

    4. What will happen to forests under the most likely of these development scenarios?

    5. How should environmentally conscious development policies respond to the challenges?

    Because of Gabon’s maturity as an oil country, it is statistically highly improbable that sizeable new fields should...