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Does dependence on natural resource rents reduce the quality of institutions in Africa?

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  • Piman Alain-Raphaël BAYILI

    (Department of Economics, Norbert Zongo University, Koudougou, Burkina Faso)

  • Windkouni Haoua Eugénie MAIGA

    (Department of Economics, Norbert Zongo University, Koudougou, Burkina Faso)

Abstract

This study analyzes the effect of dependence on natural resources on the quality of institutions in Africa. Three composite indices (economic, institutional, and political governance) and the World Bank's six governance indicators are used. Based on a sample of 26 African countries whose contribution of natural resources to GDP is at least 8% over the period 2000-2020, we estimate a panel data model using the two-stage least squares method (IV-2SLS). The results show that total rents from natural resources negatively affect the overall institutional quality index, the economic, institutional, and political governance indices, and the six governance indicators. These results remain robust when alternative measures of institutional quality are used, such as the Polity2 democracy score, respect for property rights, and the index of economic freedom. The results suggest the need for improved governance of natural resources. In particular, to set up online platforms to report corruption cases and ensure stronger guarantees for property rights and transparency in the management of rents derived from natural resources.

Suggested Citation

  • Piman Alain-Raphaël BAYILI & Windkouni Haoua Eugénie MAIGA, 2025. "Does dependence on natural resource rents reduce the quality of institutions in Africa?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 61, pages 71-95.
    • Handle: RePEc:tou:journl:v:61:y:2025:p:71-95
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    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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