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Natural Resources, Institutions, and Economic Development in Africa

Author

Listed:
  • Augustin Kwasi Fosu

    (Institute of Statistical, Social and Economic Research (ISSER) and Department of Economics, University of Ghana, Legon, Ghana; College of Business and Economics (CBE), University of Johannesburg, Johannesburg, South Africa; Faculty of Economic and Management Sciences (FEMS), University of Pretoria, Pretoria, South Africa; Centre for the Study of African Economies (CSAE), University of Oxford, Oxford, UK)

  • Dede Woade Gafa

    (African School of Economics (ASE), Abomey-Calavi, Benin; African Economic Research Consortium (AERC), Nairobi, Kenya)

Abstract

This paper, first, examines the association between resource rents, institutions and economic growth in Africa, as well as the performance of resource-rich and non-resource-rich countries on institutional quality and political governance. The findings suggest that resource rents failed to contribute to long-term growth on the continent. Additionally, higher resource rents are associated with relatively weak institutions. Second, using historical data, the study tests the validity of the resource-curse hypothesis in two resource-rich countries: Nigeria and Botswana. Although both countries have derived substantial revenues from their natural resource sectors, the distributed-lag results show that Nigeria may have experienced a natural-resource curse, while Botswana has not. Based on the extant literature, we argue that the present findings can be attributed to differences in the level of institutional quality between the two countries.

Suggested Citation

  • Augustin Kwasi Fosu & Dede Woade Gafa, 2023. "Natural Resources, Institutions, and Economic Development in Africa," Working Papers 202314, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:202314
    as

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