Equatorial Guinea

Equatorial Guinea has been the fastest-growing economy in the world for the past twenty-five years, boosting its relative economic standing by 2017% (percentage change in Cg). It was the fastest-growing economy in the ten years to 2000, when its Cg rose from 0.072 to 0.666 or by 817%. It was the discovery of off-shore oil wells that allowed this sudden growth in revenues based on oil and gas exports. Between 2000 and 2005, it was again the fastest-growing economy in the world, with Cg growth of 181.5%. World Bank data show net FDI inflows at

US$3.06 billion for these years. In the following four-year period (2005-2009), its relative economic growth fell 3.2%, even though net FDI inflows were still at US$2.56 billion (2008 was the only year with a net FDI outflow). Between 2009 and 2014, net FDI inflows increased to their highest level, US$10.57 billion.30 In spite of still rising net FDI inflows nearly four times the level for the previous four-year period, falling oil and gas prices in 2013 and 2014 undermined further economic progress. Indeed, between 2009 and 2014, Equatorial Guinea was one of the worst performers in the world and its relative economic position fell 20.7%.

According to UNCTAD data (which is close to World Bank data for this country) its FDI stock to GDP ratio was up from 81.3% in 2012 to 120.6% in 2014.31 The major foreign investors were from the United States, China, and France. The country does not provide national data through an International Investment Position, but in spite ofits relative de jure financial closedness, with a Chinn-Ito index score of 0.1639 for 2000-2014 (Ka_open normalized value of 16.38),32 the FDI stock to GDP ratio shows that it had attained a high level of de facto financial openness.

Equatorial Guinea’s growth rates were very high between 1990 and 2005 (both relative rates as measured by the Cg and absolute as measured by GDP per capita), but the country has experienced economic backsliding in relative terms over the last ten years and in absolute terms since 2009. According to UNDP data, however, thanks to earlier growth the country has managed to transition from the group of undeveloped countries into the group of countries with medium human development (measured by HDI). In the 2000-2014, the country pushed up its HDI from 0.526 to 0.587 and life expectancy at birth is up from 48.2 in 1990 to 57.6 in 2014, which is undeniably significant progress. The increase in GNI per capita from US$1,207 to US$21,05633 (by a factor of 17.4, measured in constant US$ from 2011 in PPP terms) shows that the major increase in revenues, after repatriation of their share by foreign investors to their countries of origin, has been distributed within a relatively narrow social layer.

Equatorial Guinea’s de facto financial openness to foreign investment in the energy sector played a key role in achieving such high rates ofeconomic growth from 1990 to 2005. The steep growth in its FDI stock to GDP ratio between 2009 and 2014 was, however, negatively correlated to actual growth rates. Equatorial Guinea based its attractiveness to FDI on its energy sector and rising oil and gas prices, and though the composition of FDI has shifted in recent years towards more intensive investment in infrastructural projects, the impact may not be felt in the short or even medium term.

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