Natural resource dependence and economic growth in SSA: are there threshold effects?. Issue 1 (31st December 2022)

• Record Type: Journal Article
• Authors: Dramani, John Bosco; Abdul Rahman, Yahuza; Sulemana, Mahawiya; Owusu-Takyi, Paul
• Is Part Of: Development studies research. Volume 9:Issue 1(2022)
• Page Start: 230
• Page End: 245
• Publication Date: 2022-12-31
• Subjects: Natural resource rent -- economic growth -- threshold effect -- sub-Sahara Africa; Economic development -- Periodicals; Economic development -- Research -- Periodicals; Economic development -- Social aspects -- Research -- Periodicals; Developing countries -- Economic conditions -- Periodicals; 338.9
• DOI: 10.1080/21665095.2022.2112728
• Languages: English
• ISSNs: 2166-5095

Abstract

ABSTRACT: The debate on the natural resource curse hypothesis has attracted the attention of policy makers and policy analysts for the past few decades. However, the empirical findings on such a hypothesis have proven inconclusive. Our study investigates the threshold effects of natural resource dependence on economic growth in sub-Sahara Africa (SSA) using both aggregate and disaggregate data from 1990 to 2019 by employing a threshold effect model. The results indicate a double threshold effect of natural resource rent on economic growth. In particular, below 6% of GDP, aggregate natural resource rent exerts a significant negative effect on economic growth. However, as the rents increase above 6% to about 15% of GDP its negative effect on economic growth significantly reduces. In addition, beyond 15% of GDP natural resource rent exhibit a substantial significant positive impact on economic growth. Further, the disaggregated data reveal that forest rents exhibit a strong weighty adverse effect on economic growth at all levels of thresholds. The study recommends that governments within the sub-region need to put in policies to ensure that natural resources generate at least 15% of GDP annually to promote growth.