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Is natural resource curse thesis an empirical regularity for economic complexity in Africa?

Kazeem Ajide ()

Resources Policy, 2022, vol. 76, issue C

Abstract: Concerns about the natural resource curse thesis transcends a measure of economic growth to include other development outcomes of which economic complexity (a broader measure of economic development) forms a major integral part. Thus, the need to gauge the level of economic advancement of a country, have forced researchers, policymakers, and development pundits alike, to probe into the real determinants of economic complexity. Surprisingly, no account has been taken of the role of natural resource curse in the economic sophistication literature. In light of the observed gap, this inquiry probes into the causal connection between natural resource curse and economic complexity for a panel of thirty-two African economies for which data are available over the period covering 1995–2018. Employing a battery of estimators including pooled OLS, fixed effects, random effects and generalized method of moments (GMM), the following findings are established. First, the empirical regularity of natural resource curse thesis is unconditionally established on economic complexity across the model specifications both in aggregate and disaggregated terms. Second, the path dependent effects of economic complexity are equally registered across board. Third, the confounding roles of financial development and infrastructural facilities, specifically, the number of telephone subscriptions per 100 people, are difficult to ignore across the model specifications. Lastly, for the robustness checks, the institutional and human capital routes as well as the effects of economic-social shocks are further explored. Quite intriguingly, while the unconditional impacts of each of these channels are routinely certified on the one hand, the conditional effects of both mechanisms with respect to the key explanatory variables (natural resources rents) are statistically redundant on the other hand. On the basis of these outcomes, policy implications are drawn.

Keywords: Natural resources; Economic growth; Economic complexity; Panel data analysis; Africa (search for similar items in EconPapers)
JEL-codes: C59 O13 O40 O55 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.resourpol.2022.102755

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