Do African resource rents promote rent-seeking at the expense of entrepreneurship?

Jonathan Munemo ()
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Jonathan Munemo: Salisbury University

Small Business Economics, 2022, vol. 58, issue 3, No 22, 1647-1660

Abstract: Abstract This paper examines the relationship between natural resource rents and new business formation (a critical measure of entrepreneurship) using a panel dataset of 28 African countries covering the period 2002–2014. The paper finds robust evidence that nations with high resource rents (i.e., resource rents exceeding 30% of GDP) significantly exhibit less entrepreneurial activity. This result is consistent with the hypothesis that high resource rents significantly promote rent-seeking behavior at the expense of entrepreneurship. Policies that reward productive entrepreneurship and reduce incentives for rent-seeking behavior are therefore important for reversing this negative relationship in African countries with high natural resource-derived income.

Keywords: Natural resource rents; Entrepreneurship; Rent-seeking; C14; C23; D73; L26; L51 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:58:y:2022:i:3:d:10.1007_s11187-021-00461-0

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DOI: 10.1007/s11187-021-00461-0

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