Re-examining the Natural Resource Curse in African Countries: Resource dependence or abundance?

Abstract

The naturalresource curse has been a dominant theme in the past 20 years in discussions about the economic performance of developing countries. While many studies have adopted the approach popularized by Sachs and Warner (1995) and found significant negative effects of natural resources on economic growth, referred to as the resource curse, there have been a number of recent studies that have questioned the conclusions concerning natural resources being a curse. These studies have largely faulted the resource curse conclusions based on variables measurement – whether resource dependence or resource abundance. This paper conducted a re-examination of the resource curse hypothesis for African countries. A simple cross-section growth regression using 2 measures of resource dependence and 4 measures of resource abundance was conducted. The estimations showed the negative effects of resource dependence on growth, while resource abundance had positive effects on growth. These conflicting results highlight the differing experiences of developing and advanced countries with regard to naturalresources. African countries that are resource rich should learn from advanced resourcerich countries and adopt suitable policies which will optimize the use of their natural resources and foster technological progress and advancement in other sectors of the economy.

Keywords: Resource curse, Resource dependence, Economic growth, Developing countries