Escaping the Dutch Disease: The Role of Public Investment in Niger

Abstract

This paper describes the use of a recursive dynamic computable general equilibrium model to the analysis of two investment strategies of natural resources revenue in Niger. Potential impact of education and infrastructure investment on some selected macroeconomic and welfare variables are simulated. The results show that the economy performs better with a low risk of Dutch Disease when the windfall is invested either in education or in infrastructure. Superior results are obtained when the windfall is simultaneously invested in education and infrastructure, which implies a complementary effect between the two investment strategies.