Does dependence on natural resource rents reduce the quality of institutions in Africa?

Piman Alain-Raphaël Bayili () and Windkouni Haoua Eugénie Maiga ()
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Piman Alain-Raphaël Bayili: Department of Economics, Norbert Zongo University, Koudougou, Burkina Faso
Windkouni Haoua Eugénie Maiga: Department of Economics, Norbert Zongo University, Koudougou, Burkina Faso

Region et Developpement, 2025, vol. 61, 71-95

Abstract: This study analyzes the effect of dependence on natural resources on the quality of institutions in Africa. Three composite indices (economic, institutional, and political governance) and the World Bank's six governance indicators are used. Based on a sample of 26 African countries whose contribution of natural resources to GDP is at least 8% over the period 2000-2020, we estimate a panel data model using the two-stage least squares method (IV-2SLS). The results show that total rents from natural resources negatively affect the overall institutional quality index, the economic, institutional, and political governance indices, and the six governance indicators. These results remain robust when alternative measures of institutional quality are used, such as the Polity2 democracy score, respect for property rights, and the index of economic freedom. The results suggest the need for improved governance of natural resources. In particular, to set up online platforms to report corruption cases and ensure stronger guarantees for property rights and transparency in the management of rents derived from natural resources.

Keywords: Natural resource rents; Institutional quality; IV-2SLS method; Africa (search for similar items in EconPapers)
JEL-codes: O13 O55 P48 Q34 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:tou:journl:v:61:y:2025:p:71-95

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