Resource dependence and life expectancy in sub-Saharan Africa: Does financial sector stability break the curse?

Bruno Emmanuel Ongo Nkoa, Fabrice Ewolo Bitoto and Séraphin Brice Bikoula Minkoe

Resources Policy, 2024, vol. 97, issue C

Abstract: Natural resource wealth can contribute to human and economic development if the revenues from natural resource sectors are effectively invested by the government. In particular, countries with abundant natural resources have the potential to experience significant development and improvements in their quality of life. This study first examines the impact of natural resource rents on life expectancy in sub-Saharan Africa. We then investigate the moderating role of the financial sector in this relationship. Using mainly the Generalized Moments Method in a panel of 44 Sub-Saharan African countries over the period 1990–2021, the results obtained in this paper reveal a negative effect of natural resource rents on life expectancy, supporting the resource curse-health hypothesis. However, the stability of the financial system moderates this relationship and makes it positive, at specific thresholds. These results are consistent with Hirschman's conjecture that production leakage is low in landlocked countries, but that there are stronger links with public revenues than with other sectors of activity. The ‘wealth channel’ lubricated by the financial sector that this study identifies calls for greater caution when adopting non-rentier policies in countries exploiting their natural wealth, specifically countries with low human capital. We suggest that a portion of resources should be allocated to financing human capital in order to increase life expectancy.

Keywords: Natural resources; Life expectancy; Financial stability; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: G21 G22 O55 P28 Q32 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:97:y:2024:i:c:s030142072400610x

DOI: 10.1016/j.resourpol.2024.105243

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