Post-secession Sudan and South Sudan: A Comparative Study of Economic Performance, Export Diversification, and Institutions

Abstract

Oil has played a determinant role in the economic development of Sudan and South Sudan before and after their separation. The introduction of oil into the Sudanese economy in 1999 has been associated with many challenges, especially those related to export diversification, and institutional quality. Oil dependency increased with the growth of oil share in total exports. Therefore, the secession of South Sudan in 2011 represents a great shock to both economies. This event creates a situation in which the new country experienced a sudden influx of oil revenues. At the same time, the parent country witnessed a sudden loss of 70% of its proven oil reserves. This makes the case of Sudan unique and provides a very rare opportunity for macroeconomists to address the impacts of this shock on both economies. This paper uses the recent secondary data of both counties to analyze and compare the impact of oil revenues transfer on Sudan and South Sudan’s economies in the post-secession period. The conclusion of this paper shows that oil loss has created incentives for better economic performance in Sudan. Reciprocally, South Sudan experiences a premature oil dependence that led to export concentration, institutional degradation, and macroeconomic instability.