Effects of Oil Price and Macroeconomic Shocks on Education Levels in African Oil-Exporting Countries

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Document Type : Research Paper

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School of Economics, College of Business and Economics, University of Johannesburg, Johannesburg, 2092, South Africa.

10.22059/ier.2025.380206.1008067

Abstract

This paper empirically analyses the impacts of oil price and macroeconomic shocks on education in seven African Oil-Exporting Countries (AOECs) with annual data from the year 2000 up to 2022. The estimation of the Bayesian Structural Vector Autoregressive is applied with GARCH for the oil price shock variable and with principal component analysis for the macroeconomic shock variables, incorporating exogenously the role of institutional quality and income inequality. The results indicate that, although the school enrollment is somewhat stable, the education expenditure is sensitive to external shocks and changes in the oil price. The decomposition of forecast error variance shows evidence that oil shocks are only prevailing in the short run, and the macroeconomic factor becomes more influential in the long term. The policy recommendations go towards diversification of revenues, sovereign wealth funds, flexible fiscal policies, institutional reforms, and social safety nets that stabilize education funding for human capital development.

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Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 05 March 2025

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