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Africa Is Rich, Africans Are Poor! A Blessing or Curse: An Application of Cointegration Techniques

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Abstract

The purpose of the current survey is to examine the presence of the resource curse mechanism for a panel of 22 African countries during the time span 1990–2013. For this purpose, our survey uses the Pedroni panel cointegration test to detect the existence of a long-run relationship, fully modified ordinary least square, dynamic ordinary least square, and the vector error correction model techniques to check the causality direction. Our empirical evidence reveals the fact of a negative long-run relationship between resource intensity index and the economic performance which means that the existence of curse mechanism implies that the resource abundance exerts a negative influence on the economic performance. Hence, this curse is defined by the economic theory as the “resource curse hypothesis” (RCH). Thus, the RCH is well validated in our framework. We suggested that adequate and sufficient investments affecting the human aspect were devoted; hence, generating coherent externalities related to the productivity and ecological aspects and thus sustainability. Good quality of institutions depicts as one crucial efficient condition for a better environment and wealth, combining with human development investments.

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Notes

  1. Is obtained based on the definition related to Paul (2003), which is a simple linear summation of the four series of rents (e.g., forest, natural gas, oils, coal, and mineral rents), and multiplied it with GDP (all rents are expressed as share of GDP) and then divided it with population.

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  1. Faculty of Economics and Management, University of Sfax, Sfax, Tunisia

    Sofien Tiba & Mohamed Frikha

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  1. Sofien Tiba
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Research Highlights

• We examine the presence of the resource curse mechanism.

• We use the Pedroni panel cointegration test to detect the existence of long-run relationship, fully modified ordinary least square, dynamic ordinary least square, and the VECM techniques to check the causality direction.

• The results reveal the fact of a negative long-run relationship between resource intensity index and the economic performance which means that the existence of curse mechanism implying that the resource abundance exerts a negative influence on the economic performance.

• Our results validated the resource curse hypothesis in our framework.

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Tiba, S., Frikha, M. Africa Is Rich, Africans Are Poor! A Blessing or Curse: An Application of Cointegration Techniques. J Knowl Econ 11, 114–139 (2020). https://doi.org/10.1007/s13132-018-0538-9

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