Chapter No.
1:Introduction
In this chapter, there is a brief description regarding the
Chad economy, its economic, cultural and environmental background which is
majorly affected due to its crude oil existence. This is an approach toevaluate
the effective way of money-making modes of this underdeveloped country in the
current era, where many economic strategies are made by the developed and
developing countries in order to upgrade their performance level (Wegenast,
Khanna, & Schneider, 2018). This introductory chapterexplores the problem
statement of this research work which majorly based on discussing how the
impact of the oil export revenue has negativeseffects on the consumer wellbeing
and the economic growth of Chad.
It's true that it is an underdeveloped country and majority of
its development is based on its agricultural and crude oil extraction sectors.
But due to lack of resources and weak technology usage, it becomes quite
difficult in front of its management to enhance its export of crude oil to
other countries (Somé, Pasali, &Kaboine, 2019; Wegenast et al.,
2018). This chapter narrates the objectives, goals, and hypotheses of this
research work on the basis of which whole the building of research is
generated.
It is an attractive approach to highlight and discuss the
hypothesis of this study which is totally based on the relationship between the
oil export revenue as an independent variable and economic growth and
consumers' wellbeing as dependent variables. In addition to this, the structure
of the whole research work is also discussed in this chapter that gives the
short summary based description of the upcoming chapters of this research
work.All the related research questions are also explainedto enhance the
authenticity of this research work
1.1 Background
Chad is a landlocked country in the North-Central Africa,
whose border is linked with Libya to the north, Cameroon to the South-west,
Niger to the west, the Central African Republic to the South, Nigeria to the
southwest and Sudan to the east (Chandrasekhar, 2017a, 2017b). This country has
a low economic condition and the majority of its region is based on desert in
the north side and fertile Sudanian Savanna zone in the south and Sahelian belt
into the center (Ifa&Guetat, 2018; Nattrass, 2018; Syverson, 2017). When
its economic situation is critically studied then it comes to the knowledge
that in the Human Development Index of the United Nation, Chad is among the
seventh poorest country all over the globe because 80% of its population is
living below the poverty live (Atkinson, 2019).
The reason is that there is no infrastructural or industrial
development occurred within this state, and also the civil war from 1979 to
1982 had scared away this land from the foreign investor. In the year 2000, the
foreign direct investment again began that boosted its economy (Kpolovie,
Ewansiha, &Esara, 2017). Due to the unequal distribution of power and the
global political economy, Chad is neglected for many years, and nobody promoted
and encouraged the extraction of its colonial resources like cotton and crude
oil, in the global economic system. Due to failure to give them support in
their local agricultural production, the majority of the Chadians are living in
uncertainty and hunger (Sandýkcý, Peterson, Ekici, &
Simkins, 2016).
But if the foreign investment is made on its oil production
and extraction sector, then there is a chance that the economic situation of
this state become upgraded. In the current situation, the landlocked Chad pays
dearly for the important commodities and oil accounts which is approximately 60
percent of their export revenue that badly impact on their economic stability
and consumer wellbeing situation (Poverty & Initiative, 2018). In the
non-oil based export commodities, they mostly export cotton, livestock, cattle,
and gum Arabic in the bulk form. All-around 85% of its economy is based on
agriculture like herding of livestock. Due to the traditional sources of
trading, their economy is suffering and results in drought, political turmoil,
geographical remoteness and lack of proper infrastructure.
In the 2020 index, the economic freedom score of Chad is 50.2
which made it in the 161st position. Its overall score is upgraded
by 0.3 points with the improvement in its fiscal health sector (Poverty &
Initiative, 2018; Timberlake, 2019). This landlocked situation has a bad impact
on the growth rate of its economy. According to the World Bank Report, it is
considered as 20th poorest country, so there is a need to make some
active actions and reforms in order to improve the property rights, business
freedom, integrity of government and the judicial effectiveness
(Menegaki&Tugcu, 2016; Odusanya&Akinlo, 2016). In the current era, the
latest technology adoption on the crude oil extraction is shown as an effective
way to enhance their export level which will make a positive impact on its
economic growth and the wellbeing of consumers within a state.
When the economic situation of Chad is critically considered
in this highly diverse technology era, then it comes to the knowledge that
there is a great fluctuation in its per capita incomes within this state. Like
its value reached to its peak position in the year 2013 with 928.6 % and its
least position was occurred in 2018 when its value was decreased to 813.3 % in
the overall country's income (Castañeda et al., 2018). Its related year
per capita incomes are shown in the following figure;
Figure 1: Chad GDP per Capita from 2010 to 2018
According to the above mentioned graphical representation of
the local per capita income of Chad, it becomes clear that there is a great
fluctuation in its individual income because of their lower employment
opportunities and export rates in the international market (Ifa&Guetat,
2018; Nattrass, 2018). That's the reason that its natives are living under the
standard rate of livings. Its economy is also majorly relayed on the export
rate of oil and other no-oil based agricultural goods, as discussed above
(Alloisio et al., 2017; D.-G.
Gadom&Kountchou, 2016). But, its dependence on the
oil-related export continuously increases in the last few decades. Its related
output figures are shown in the following diagram;
Figure 2: Chad Dependence on Oil Export
According to the above-mentioned figure, it becomes clear that
the graph of their dependences on the oil commodity is continuously moving
towards its peak position, and there will be more chance in front of this state
to upgrade its operational activities in the oil extraction procedure (Malgwi,
2017). According to the above figure, in the year 2015, their oil export was
decreased that directly impact on their economy and consumer wellbeing in the
local state. Otherwise, they export oil at a large amount in the international
market (Alemu & Lee, 2018). This study is an approach to explore the
positive impact of such a higher oil export rate in this country's growth.
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