Commodity prices fluctuations : Sustainability issues - Application to West Africa

Abstract

The objective of this research is to re-evaluate the debates around the sustainability of development based on the exploitation of raw materials by analysing the recent dynamics of commodity prices in a long-term perspective. This research is based on the hypothesis that the entry of commodity prices into a high price regime would constitute an opportunity for emergence for a change in the sustainable development trajectory of West African economies. Indeed, in the early 2000s, West African countries resumed economic growth, averaging 6 % annually (OECD, 2013). This renewed growth is taking place in an external and internal context of the implementation of new regulatory methods in the primary sector. But above all, the renewal of West African growth has taken place in a context of rising commodity prices leading to booms in the terms of trade and mining rent. Analysis of the impact of the boom on sustainability based on the genuine savings indicator reveals that the West African zone (Burkina Faso, Ivory Coast, Ghana, Guinea, Liberia, Mali, Mauritania, Niger and Senegal) is not sustainable in the weak sense, even during the boom. Individually, only Ivory Coast, Mauritania and Senegal have been able to exploit booms in a sustainable way. The other countries (Burkina Faso, Ghana, Liberia, Mali and Niger) are not sustainable due to the lack of investment in productive capital. This calls into question the quality of institutions in terms of managing the income generated by the boom. The analysis of the impact of institutional quality on genuine savings shows that better institutional quality would ensure the sustainability of the economy in West Africa.