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Re-examining the Link Between Economic Growth and Income Inequality in Sub-Saharan African Countries: Do Natural Resource Endowments Matter?

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  • Oumarou, Mohamadou
  • Sali, Oumarou
  • Hamadou, Alioum

Abstract

Do natural resource endowments influence the relationship between economic growth and income inequality in Sub-Saharan African (SSA) countries? This is the main question of this article. To this end, we use polynomial non-linear modeling and non-parametric and semi-parametric modeling applied to a panel of 43 SSA countries between 2000 and 2020. The data used come from World Development Indicators (WDI) and the University of Texas Inequality Project. In order to enrich the empirical literature on the subject, four indices measure income inequality in the econometric tests. All other things being equal, the results show that the growth-inequality link is non-linear, with a positive trend that changes convexity with the level of growth. Rents from non-renewable natural resources (oil, gas and other minerals) accentuate the negative effect of growth on inequality, while income from renewable resources (water and forests) has the effect of reducing inequality. Furthermore, these results show that rents from a single product (a single natural resource) have no impact on inequality. On the other hand, income from the export of several natural resources accentuates the effect of growth on inequality. Consequently, SSA countries need to put in place a general policy to reduce inequalities and a strategy to reduce their dependence on the exploitation of natural resources. This can be achieved through the structural transformation of economies and the development of global value chains.

Suggested Citation

  • Oumarou, Mohamadou & Sali, Oumarou & Hamadou, Alioum, 2024. "Re-examining the Link Between Economic Growth and Income Inequality in Sub-Saharan African Countries: Do Natural Resource Endowments Matter?," OSF Preprints 5sczh, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:5sczh
    DOI: 10.31219/osf.io/5sczh
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