Terms of Trade and Growth of Resource Economies: A Tale of Two Countries

Augustin Fosu ()

No 2011-09, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: The current paper demonstrates a dichotomy of the growth response to changes in the barter terms of trade (TOT), employing as case studies the following two African countries: Botswana and Nigeria. Using distributed-lag analysis, the paper finds that the effect of TOT on output is positive and negative for the two countries, respectively. I interpret these results as supportive of the ‘resource curse’ hypothesis for Nigeria but not for Botswana. I further argue that the superior institutional quality (IQ) in Botswana, relative to Nigeria, is likely responsible for the contrasting results. However, Nigeria appears to be making progress on IQ, especially in the last decade. Continuing such progress would be necessary if the country was to reverse course.

Keywords: African resource economies; terms of trade; growth (search for similar items in EconPapers)
JEL-codes: O13 O43 O55 O57 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-afr and nep-int
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Terms of Trade and Growth of Resource Economies: A Tale of Two Countries (2011)
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