Skip to main content
SpringerLink
Log in

Further investigation of the total natural resource rents and economic growth nexus in resource-abundant sub-Saharan African countries

  • Original Paper
  • Published:
Mineral Economics Aims and scope Submit manuscript

Abstract

This paper analyses the effect of natural resource wealth on sustainable economic development in the top 8 resource-abundant sub-Saharan African countries according to the World Bank Wealth of Nations 2018 over the period 1981–2017. The study incorporates public debt as an explanatory variable in our analysis, which is an extension of previous natural resource-growth estimations, to throw more light on how natural resource abundance and debt overhang simultaneously affect economic growth in resource-abundant sub-Saharan African (SSA) countries. The NARDL bounds testing approach and asymmetric Granger causality tests are employed. Long-run asymmetric effect results show that an increase in natural resource rents significantly increases economic growth in Equatorial Guinea. However, an increase in natural resource rents in the Congo republic negatively affects economic growth, validating the resource curse hypothesis. No significant effect was found in other countries studied. In terms of asymmetric causality results, no bidirectional causality between natural resource rents and economic growth was noted. We, however, identified a weak unidirectional asymmetric causality relationship running from economic growth to resource rents in the Congo Republic and natural resource rents to economic growth in South Africa. The study, therefore, suggests the implementation of efficient public debt management policies and an improvement in the quality of institutions for effective management of public loans and resource revenues to stimulate economic development in these resource-rich countries.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7
Fig. 8
Fig. 9
Fig. 10
Fig. 11
Fig. 12
Fig. 13
Fig. 14
Fig. 15
Fig. 16
Fig. 17
Fig. 18

Similar content being viewed by others

References

  • Acemoglu D, Robinson JA (2012) Why nations fail: the origins of power, prosperity, and poverty: Currency

  • Ackah-Baidoo A (2012) Enclave development and ‘offshore corporate social responsibility’: implications for oil-rich sub-Saharan Africa. Resour Policy 37(2):152–159

    Article  Google Scholar 

  • Ahmed S, Mortaza M (2005) Inflation and economic growth in Bangladesh: 1981 2005, WP 0604. Policy Analysis Unit, Bangladesh Bank. https://www.bangladeshbank.org.bd/research/pau.html. Accessed 10 Jan 2021

  • Aljarallah R (2021) An analysis of the impact of rents from non-renewable natural resources and changes in human capital on institutional quality: a case study of Kuwait. Int J Energy Econ Policy 11(5):224

    Article  Google Scholar 

  • Ampofo GKM, Cheng J, Asante DA, Bosah P (2020) Total natural resource rents, trade openness and economic growth in the top mineral-rich countries: new evidence from nonlinear and asymmetric analysis. Resour Policy 68:101710

    Article  Google Scholar 

  • Arin KP, Braunfels E (2018) The resource curse revisited: a Bayesian model averaging approach. Energy Econ 70:170–178

    Article  Google Scholar 

  • Atil A, Nawaz K, Lahiani A, Roubaud D (2020) Are natural resources a blessing or a curse for financial development in Pakistan? The importance of oil prices, economic growth and economic globalization. Resour Policy 67:101683

    Article  Google Scholar 

  • Auty R, Warhurst A (1993) Sustainable development in mineral exporting economies. Resour Policy 19(1):14–29

    Article  Google Scholar 

  • Auty RM, Auty RM (1990) Resource-based industrialization: Sowing the oil in eight developing countries. Clarendon Press Oxford, United Kingdom

  • Badeeb RA, Lean HH (2017) Financial development, oil dependence and economic growth: Evidence from the Republic of Yemen. Stud Econ Financ 34(2):281–298. https://doi.org/10.1108/SEF-07-2014-0137

  • Badinger H, Nindl E (2014) Globalisation and corruption, revisited. World Econ 37(10):1424–1440

    Article  Google Scholar 

  • Baker D, De Long JB, Krugman PR (2005) Asset returns and economic growth. Brook Pap Econ Act 2005(1):289–330

    Article  Google Scholar 

  • Banerjee A, Dolado J, Mestre R (1998) Error-correction mechanism tests for cointegration in a single-equation framework. J Time Ser Anal 19(3):267–283

    Article  Google Scholar 

  • Barro RJ, Martin S-IX (2004) Economic growth. J Macroecon 18:552

    Google Scholar 

  • Bekiros SD, Diks CG (2008) The nonlinear dynamic relationship of exchange rates: parametric and nonparametric causality testing. J Macroecon 30(4):1641–1650

    Article  Google Scholar 

  • Bhattacharyya S, Hodler R (2010) Natural resources, democracy and corruption. Eur Econ Rev 54(4):608–621

    Article  Google Scholar 

  • Boserup E (1990) Economic and demographic relationships in development. Johns Hopkins University Press, USA

  • Broock WA, Scheinkman JA, Dechert WD, LeBaron B (1996) A test for independence based on the correlation dimension. Economet Rev 15(3):197–235

    Article  Google Scholar 

  • Brown I (2011) The paradox of plenty: the political and developmental implications of natural resources in sub-Saharan Africa. Available at https://media.africaportal.org/documents/Backgrounder_No._10.pdf. Accessed 4 Feb 2021

  • Butkiewicz JL, Yanikkaya H (2010) Minerals, institutions, openness, and growth: an empirical analysis. Land Econ 86(2):313–328

    Article  Google Scholar 

  • Carbonnier G, Brugger F (2013) The development nexus of global energy. The Handbook of Global Energy Policy, p 64–78

  • Carmignani F, Chowdhury AR (2010) Why are natural resources a curse in Africa, but not elsewhere?: School of Economics, University of Queensland. Available at https://www.uq.edu.au/economics/abstract/406.pdf. Accessed 18 Jan 2021

  • Cincotta RP, Engelman R (1997) Economics and rapid change: The influence of population growth. No. REP-7799. CIMMYT

  • Corrigan CC (2014) Breaking the resource curse: transparency in the natural resource sector and the extractive industries transparency initiative. Resour Policy 40:17–30

    Article  Google Scholar 

  • Dauvin M, Guerreiro D (2017) The paradox of plenty: a meta-analysis. World Dev 94:212–231

    Article  Google Scholar 

  • Dickey DA, Fuller WA (1979) Distribution of the estimators for autoregressive time series with a unit root. J Am Stat Assoc 74(366a):427–431

    Article  Google Scholar 

  • Diks C, Panchenko V (2006) A new statistic and practical guidelines for nonparametric Granger causality testing. J Econ Dyn Control 30(9–10):1647–1669

    Article  Google Scholar 

  • Dineo SS (2019) An economic examination of non-profit accountability to client-communities in South Africa. Stellenbosch University, Stellenbosch

    Google Scholar 

  • Doğan İ, Bilgili F (2014) The non-linear impact of high and growing government external debt on economic growth: a Markov Regime-switching approach. Econ Model 39:213–220

    Article  Google Scholar 

  • Eggoh JC, Khan M (2014) On the nonlinear relationship between inflation and economic growth. Res Econ 68(2):133–143

    Article  Google Scholar 

  • Entele BR (2021) Impact of institutions and ICT services in avoiding resource curse: lessons from the successful economies. Heliyon 7(2):e05961

    Article  Google Scholar 

  • Erdoğan S, Yıldırım DÇ, Gedikli A (2020) Natural resource abundance, financial development and economic growth: an investigation on Next-11 countries. Resour Policy 65:101559

    Article  Google Scholar 

  • Fagbemi F, Kotey RA (2022) Interconnections between governance shortcomings and resource curse in a resource-dependent economy. PSU Research Review. https://doi.org/10.1108/PRR-09-2021-0052

  • Fowowe B (2016) Do oil prices drive agricultural commodity prices? Evidence from South Africa. Energy 104:149–157

    Article  Google Scholar 

  • Frankel JA (2010) The natural resource curse: A survey. HKS Faculty Research Working Paper Series, RWP10-005, John F. Kennedy School of Government, Havard University

  • Gelb AH (1988) Oil windfalls: Blessing or curse?: A World Bank Research Publication. Oxford university press

  • Gonzalez A, Teräsvirta T, Van Dijk D, Yang Y (2017) Panel smooth transition regression models. Working Paper 2017:3. University of Statistics, Uppsala University. Available at: https://www.statistics.uu.se

  • Gylfason T, Zoega G (2006) Natural resources and economic growth: The role of investment. World Econ 29(8):1091–1115

    Article  Google Scholar 

  • Harris AS, Sigman R, Meyer-Sahling J-H, Mikkelsen KS, Schuster C (2020) Oiling the bureaucracy? political spending, bureaucrats and the resource curse. World Dev 127:104745

    Article  Google Scholar 

  • Hayat A, Tahir M (2019) Natural resources volatility and economic growth: evidence from the resource-rich region

  • Hayat A, Tahir M (2021) Natural resources volatility and economic growth: evidence from the resource-rich region. J Risk Financ Manag 14(2):84

  • Havranek T, Horvath R, Zeynalov A (2016) Natural resources and economic growth: A meta-analysis. World Development 88:134–151

  • Headey DD, Hodge A (2009) The effect of population growth on economic growth: a meta-regression analysis of the macroeconomic literature. Popul Dev Rev 35(2):221–248

    Article  Google Scholar 

  • Idemudia U (2012) The resource curse and the decentralization of oil revenue: the case of Nigeria. J Clean Prod 35:183–193

    Article  Google Scholar 

  • Iimi A (2007) Escaping from the resource curse: evidence from Botswana and the rest of the world. IMF Staff Pap 54(4):663–699

    Article  Google Scholar 

  • Ismail K (2010) The structural manifestation of the Dutch disease: the case of oil exporting countries: Int Monetary Fund  2010(103). https://doi.org/10.5089/9781455200627.001

  • Janda K, Quarshie G (2017) Modelling natural resources, oil and economic growth in Africa. MPRA Paper Number 76749

  • Jude C, Levieuge G (2017) Growth effect of foreign direct investment in developing economies: the role of institutional quality. World Econ 40(4):715–742

    Article  Google Scholar 

  • Karl TL (1997) The paradox of plenty: oil booms and petro-states. Studies in International Political Economy. Volume 26 University of California Press in the series. https://doi.org/10.1525/9780520918696

  • Karras, G (2003) Trade openness and economic growth can we estimate the precise effect? Appl Econometrics and Int Dev 3(1). Available at https://ssrn.com/abstract=1225622

  • Kasekende E, Abuka C, Sarr M (2016) Extractive industries and corruption: investigating the effectiveness of EITI as a scrutiny mechanism. Resour Policy 48:117–128

    Article  Google Scholar 

  • Kasidi F, Mwakanemela K (2013) Impact of inflation on economic growth: A case study of Tanzania. Asian J Empirical Res 3(4):363–380

  • Keho Y (2017) The impact of trade openness on economic growth: the case of Cote d’Ivoire. Cogent Econ Finance 5(1):1332820

    Article  Google Scholar 

  • Khobai H, Kolisi N, Moyo C (2018) The relationship between trade openness and economic growth: the case of Ghana and Nigeria. Int J Econ Financ Issues 8(1):77

    Google Scholar 

  • Klein N (2010) The linkage between the oil and non-oil sesctors: a panel VAR approach. Int Monetary Fund Working Paper 2010(118)

  • Koffi S (2019) Nonlinear impact of public debt on economic growth: Evidence from Sub-Saharan African countries (No. hal-02293757). Available at: https://hal.archives-ouvertes.fr/hal-02293757/document

  • Kolstad I, Søreide T (2009) Corruption in natural resource management: implications for policy makers. Resour Policy 34(4):214–226

    Article  Google Scholar 

  • Kolstad I, Wiig A (2008) Political economy models of the resource curse: implications for policy and research. CMI Working Paper Number 2008:6. Avaialable at: https://www.cmi.no/publications

  • Kronenberg T (2004) The curse of natural resources in the transition economies. Econ Transit 12(3):399–426

    Article  Google Scholar 

  • Li Y, Naqvi B, Caglar E, Chu C-C (2020) N-11 countries: are the new victims of resource-curse? Resour Policy 67:101697

    Article  Google Scholar 

  • López-Villavicencio A, Mignon V (2011) On the impact of inflation on output growth: does the level of inflation matter? J Macroecon 33(3):455–464

    Article  Google Scholar 

  • Mahmood T, Linden M (2017) Structural change and economic growth in Schengen region. Int J Econ Financial Issues 7(1):303–311

  • Mallik G, Chowdhury A (2001) Inflation and economic growth: evidence from four south Asian countries. Asia Pac Dev J 8(1):123–135

    Google Scholar 

  • Mamo FT (2012) Economic growth and inflation a panel data analysis. Master Programme Thesis Presented to Department of Social Sciences|Economics, Södertörns University. Retrieved from https://www.diva-portal.org/smash/get/diva2:576024/FULLTEXT01.pdf. Accessed 20 Jan 2021

  • Manamperi N (2014) The short and long-run dynamics between inflation and economic growth in BRICS. Appl Econ Lett 21(2):140–145

    Article  Google Scholar 

  • McFerson HM (2009) Governance and hyper-corruption in resource-rich African countries. Third World Q 30(8):1529–1547

    Article  Google Scholar 

  • Mehlum H, Moene K, Torvik R (2006a) Cursed by resources or institutions? World Econ 29(8):1117–1131

    Article  Google Scholar 

  • Mehlum H, Moene K, Torvik R (2006b) Institutions and the resource curse. Econ J 116(508):1–20

    Article  Google Scholar 

  • Mlambo C (2022) Politics and the natural resource curse: evidence from selected African states. Cogent Soc Sci 8(1):2035911

    Google Scholar 

  • Moshiri S, Hayati S (2017) Natural resources, institutions quality, and economic growth; a cross-country analysis. Iran Econ Rev 21(3):661–693

    Google Scholar 

  • Muzaffar AT, Junankar PN (2014) Inflation–growth relationship in selected Asian developing countries: evidence from panel data. J Asia Pac Econ 19(4):604–628

    Article  Google Scholar 

  • Narayan PK, Narayan S (2010) Carbon dioxide emissions and economic growth: panel data evidence from developing countries. Energy Policy 38(1):661–666

    Article  Google Scholar 

  • Naseer A, Su C-W, Mirza N, Li J-P (2020) Double jeopardy of resources and investment curse in South Asia: is technology the only way out? Resour Policy 68:101702

    Article  Google Scholar 

  • Ndikumana L, Abderrahim K (2010) Revenue mobilization in African countries: does natural resource endowment matter? Afr Dev Rev 22(3):351–365

    Article  Google Scholar 

  • Ndjokou IMMM, Tsopmo PC (2017) Non-linearity between inflation and economic growth: what lessons for the BEAC Zone? Rev Econ Dev 25(2):41–62

    Google Scholar 

  • OECD (2011) The Economic Significance of Natural Resources: Key points for reformers in Eastern Europe Caucasus and Central Asia. Available at https://www.oecd.org/env/outreach/2011_AB_Economic%20significance%20of%20NR%20in%20EECCA_ENG.pdf. Accessed 7 Jan 2021

  • Öge K (2016) Which transparency matters? Compliance with anti-corruption efforts in extractive industries. Resour Policy 49:41–50

    Article  Google Scholar 

  • Olayungbo D (2019a) Effects of global oil price on exchange rate, trade balance, and reserves in Nigeria: a frequency domain causality approach. J Risk Financ Manag 12(1):43

    Article  Google Scholar 

  • Olayungbo D (2019) Effects of oil export revenue on economic growth in Nigeria: a time varying analysis of resource curse. Resour Policy 64:101469

    Article  Google Scholar 

  • Papyrakis E, Gerlagh R (2006) Resource windfalls, investment, and long-term income. Resour Policy 31(2):117–128

    Article  Google Scholar 

  • Perron P (1988) Trends and random walks in macroeconomic time series: further evidence from a new approach. J Econ Dyn Control 12(2–3):297–332

    Article  Google Scholar 

  • Pesaran MH, Shin Y, Smith RJ (2001) Bounds testing approaches to the analysis of level relationships. J Appl Economet 16(3):289–326

    Article  Google Scholar 

  • Pesaran MH, Shin Y, Smith RP (1999) Pooled mean group estimation of dynamic heterogeneous panels. J Am Stat Assoc 94(446):621–634

    Article  Google Scholar 

  • Pesaran MH, Smith R (1995) Estimating long-run relationships from dynamic heterogeneous panels. J Econ 68(1):79–113

    Article  Google Scholar 

  • Peterson EWF (2017) The role of population in economic growth. SAGE Open 7(4):2158244017736094

    Article  Google Scholar 

  • Pollin R, Zhu A (2006) Inflation and economic growth: a cross-country nonlinear analysis. J Post Keynesian Econ 28(4):593–614

    Article  Google Scholar 

  • Rao RR, Jani R (2009) Spurring economic growth through education: the Malaysian approach. Educ Res Rev 4(4):135–140

    Google Scholar 

  • Ridena S, Nurarifin N, Hermawan W, Komarulzaman A (2021) Testing the existence of natural resource curse in Indonesia: the role of financial development. Jurnal Ekonomi Studi Pembangunan 22(2):213–227

    Article  Google Scholar 

  • Saaed AA (2007) Inflation and Economic Growth in Kuwait: 1985-2005 - Evidence from co-integration and error correction model. Appl Econometrics Int Dev 7(1). Available at https://www.ssrn.com/abstract=1249289

  • Sachs J (2008) Common wealth: economics for a crowded planet. The Penguin Press, New York, 2008:386

  • Sachs JD, Warner AM (1995) Natural resource abundance and economic growth. NBER Working Paper 5698. Available at https://www.nber.org/system/files/working_papers/w5698/w5698.pdf

  • Saeed KA (2021) Revisiting the natural resource curse: a cross-country growth study. Cogent Econ Finan 9(1):2000555

    Article  Google Scholar 

  • Sakyi D (2011) Trade openness, foreign aid and economic growth in post-liberalisation Ghana: an application of ARDL bounds test. J Econ Int Finan 3(3):146–156

    Google Scholar 

  • Shin Y, Yu B, Greenwood-Nimmo M (2014) Modelling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework. In Festschrift in honor of Peter Schmidt,Springer, New York, NY,  pp 281–314

  • Simon J (1990) Population matters: People, resources, environment and integration. Transaction Publishers, New Brunswick

  • Singh T (2011) International trade and economic growth nexus in Australia: a robust evidence from time-series estimators. World Econ 34(8):1348–1394

    Article  Google Scholar 

  • Smith B (2015) The resource curse exorcised: evidence from a panel of countries. J Dev Econ 116:57–73

    Article  Google Scholar 

  • Sovacool BK, Andrews N (2015) Does transparency matter? Evaluating the governance impacts of the Extractive Industries Transparency Initiative (EITI) in Azerbaijan and Liberia. Resour Policy 45:183–192

    Article  Google Scholar 

  • Stevens DL Jr, Olsen AR (2004) Spatially balanced sampling of natural resources. J Am Stat Assoc 99(465):262–278

    Article  Google Scholar 

  • Teles VK, Mussolini CC (2014) Public debt and the limits of fiscal policy to increase economic growth. Eur Econ Rev 66:1–15

    Article  Google Scholar 

  • Tiba S (2019) Modeling the nexus between resources abundance and economic growth: an overview from the PSTR model. Resour Policy 64:101503

    Article  Google Scholar 

  • Tiba S, Frikha M (2018) Africa is rich, Africans are poor! A blessing or curse: an application of cointegration techniques. J Knowledge Economy 11(1):114–139

  • Torres N, Afonso O, Soares I (2013) Natural resources, wage growth and institutions–a panel approach. World Econ 36(5):661–687

    Article  Google Scholar 

  • Tsani S (2013) Natural resources, governance and institutional quality: the role of resource funds. Resour Policy 38(2):181–195

    Article  Google Scholar 

  • Wantchekon L (2004) The paradox of “Warlord” democracy: A theoretical investigation. Am Pol Sci Rev 98(1):17–33. http://www.jstor.org/stable/4145294

  • Wu Y, Zhu Q, Zhu B (2018) Decoupling analysis of world economic growth and CO2 emissions: a study comparing developed and developing countries. J Clean Prod 190:94–103

    Article  Google Scholar 

  • Xie X, Li K, Liu Z, Ai H (2021) Curse or blessing: how does natural resource dependence affect city-level economic development in China? Aust J Agric Resour Econ 65(2):413–448

    Article  Google Scholar 

  • Yıldırım S, Gedikli A, Erdoğan S, Yıldırım DÇ (2020) Natural resources rents-financial development nexus: Evidence from sixteen developing countries. Resour Policy 68:101705

  • Zahonogo P (2017) Financial development and poverty in developing countries: evidence from Sub-Saharan Africa. Int J Econ Financ 9(1):211–220

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Economics and Management Sciences, China University of Geosciences, Wuhan, China

    Gideon Minua Kwaku Ampofo & Williams Shaw

  2. Department of Environment and Resource studies, Faculty of Integrated Development Studies (FIDS), SD Dombo-UBIDS, Wa, Ghana

    Prosper Basommi Laari

  3. University of Environment and Sustainable Development, Somanya, Ghana

    Emmanuel Opoku Ware

Authors
  1. Gideon Minua Kwaku Ampofo
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Prosper Basommi Laari
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Emmanuel Opoku Ware
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Williams Shaw
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Gideon Minua Kwaku Ampofo.

Ethics declarations

Human and animal rights

The research does not involve human participants and/or animals.

Conflict of interest

The authors declare no competing interests.

Additional information

Publisher's note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Ampofo, G.M.K., Laari, P.B., Ware, E.O. et al. Further investigation of the total natural resource rents and economic growth nexus in resource-abundant sub-Saharan African countries. Miner Econ 36, 97–121 (2023). https://doi.org/10.1007/s13563-022-00316-4

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s13563-022-00316-4

Keywords

JEL Classification

Search

Navigation