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The effects on economic growth of natural resources in Sub-Saharan Africa: Does the quality of institutions matters?

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  • Itchoko Motande Mondjeli Mwa Ndjokou

    (CEREG, University of Yaoundé II)

  • Pierre Christian Tsopmo

    (CEREG, University of Yaoundé II)

Abstract

The aim of the paper is to revisit the relation between quality of institutions, natural resources and economic growth in SSA's countries. The main contribution of the paper is the endogenous determination of the threshold for quality of institutions beyond and above which natural resources affect growth differently. The methodology focuses on the estimation of a Panel Smooth Transition Regression (PSTR) model inspired by González et al. (2005). The sample includes 18 countries within the period 1985- 2013 on annual frequency. From the empirical analysis, we derive the following conclusions. (i) The direct effect of natural resources on economic growth is negative, consolidating the natural resources curse's thesis in SSA's countries. (ii) The relation between natural resources and economic growth is based on quality of institutions. The growth effect of natural resources is negative for low quality of institutions and positive for a high quality of institutions. For robustness analysis, we conduct sensitive analysis and derive the GMM dynamic panel model. This further analysis confirms the result derived from the main specification of the PSTR model.

Suggested Citation

  • Itchoko Motande Mondjeli Mwa Ndjokou & Pierre Christian Tsopmo, 2017. "The effects on economic growth of natural resources in Sub-Saharan Africa: Does the quality of institutions matters?," Economics Bulletin, AccessEcon, vol. 37(1), pages 248-263.
    • Handle: RePEc:ebl:ecbull:eb-16-00550
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    More about this item

    Keywords

    Natural resources; institutions; PSTR model;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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