Revisiting the Economic Growth and Natural Resource Nexus (Paradox of Plenty): In Search of the Right Governance Channels.

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Description

This paper tests the hypothesis that resource-rich countries in Africa are vulnerable to slower economic growth due to weak institutions and governance. These countries are said to suffer from the "natural resource curse", which refers to the inverse relationship between natural resource dependence and economic growth. Given the conflicting findings on the existence or otherwise of the so-called natural resource curse, the paper conducts an empirical analysis of the relationship between natural resource dependence and economic growth in some selected oil-rich Sub-Saharan countries in order to shed light on four key questions: 1) can we prove the existence of oil-curse in the selected countries if we address the issues of endogeneity in measures of oil dependence and economic growth carefully? 2) Is the impact of resource dependence on economic growth moderated by the quality of governance in the selected countries? 3) Which dimension of governance exerts the most substantial effect on growth? 4) If the contemporaneous level of economic growth is determined by its past levels and we incorporate an element of dynamism into the model to capture this effect, will the resource curse theory be validated?
Period30 Jun 20181 Jul 2018
Degree of RecognitionNational

Keywords

  • Natural Resource Curse
  • Strong Institutions
  • Sub-Saharan African Countries
  • Worldwide Governance Indicators