Resource Endowment and Economic Growth in Selected African Countries

  • Sunday Folorunso Ayadi University of Lagos


AbstractNatural resources endowment is expected to boost wealth and purchasing power in resource endowed economies. It is expected that resource availability should be able to drive investment and consequently boost growth in these economies. However, experiences with some resource - rich economies suggest that resource endowment may not be a blessing and can actually be categorized as a curse. To this end therefore, this study investigates the relationship between resource endowment and economicgrowth using nine resource-rich African countries as a case study. The study used the fixed effect model with cross section as well as time dummy variables. The study did not establish the significant positive impact of resource extraction on economic growth in these economies and therefore concludes that resource curse is indeed true in countries under the study. This paper recommends that as resources’ booms are occurring, governments of resource rich economies can channel the surplus funds intothe development of other sectors of the economy to enhance their competitiveness and capacity and boost their productivity so that when resources rents becomes low, other sector can cushion the effect. This is a form of diversification for a resource rich economy among others.


Ahrend, R. (2003) Speed of Reform, Initial Conditions, Political Orientation or What? Explaning Russian Regions’ Economic Performance, DELTA
Working Paper 2002 – 10.

Alexeev, M. and Conrad, R. (2010) The Natural Resource Curse and Economic Transition. Economic Systems.

Arezki, R., Rota-Graziosi, G. and Senbet, L.W. (2013) Natural-resource-rich
Countries Risk Capital Flight as Multinational Corporations Seek to Avoid
Taxes. Finance and Development, September 2013, 50(3).

Baghebo, M. and Atima, O.T. (2013) The Impact of Petroleum on Economic
Growth in Nigeria. Global Business and Economic Research, 2(5).
Brahmbhatt, M., Canuto, O. and Vostroknutova, J. (2010) Dealing With Dutch Disease. Poverty Reduction and Economic Management (PREM) Network, The World Bank. Number 16, June.

Brunschweiler, C.N. (2009) Oil and Growth in Transition Countries. Working
Paper 09/108, Center of Economic Research at Swiss Federal Institute of
Technology, Zurich.

Chambers, D. and Guo, J. (2009) Natural Resources and Economic Growth:
Some Theory and Evidence. Annals of Economics and Finance, 10-2: 367389.

Collier, P. and Hoffler, A. (2002) Greed and Grievances in African Civil Wars.
Quarterly Journal of Economics.

Corden, W.M. and Neary, P.J. (1982) Booming Sector and Deindustrialization in a Small Open Economy. Economic Journal, 93: 825–848.

De Melo, M., Denizer, C., Gelb, A. and Tenev, S. (1997) Circumstance and
Choice: The Role of Initial Conditions and Policies in Transition
Economies. World Bank Policy Research Working Paper, 1866.

Elliot, M.V., Hartarska, V. and Bailey, C. (2007) Natural Resources
Endowment and Economic Growth in the Southeastern United States.
Selected Paper Prepared for Presentation at the American Agricultural
Economics Association Annual Meeting, Portland, July 29 – August 1.

Fiodendji, K. (2016) Quality of Institutions, Natural Resources and Foreign
Direct Investment (FDI) in Sub-Saharan Africa: Dynamic Approach.
Journal of Economics and Development Studies, 93(2): 28-55.

Frankel, J. (2012) The Natural Resource Curse: Survey of Diagnoses and Some Prescriptions. In Arezki, R., Pattillo, C., Quintyn, M. and Zhu, M. (Eds.), Commodity Price Volatility and Inclusive Growth in Low-Income
Countries. Washington, IMF.

Ismail, K. (2010) The Structural Manifestation of the ‘Dutch Disease’: The
Case of Oil Exporting Countries. Working Paper 10, 103, IMF,
Washington, DC.

Louise-Marie, P. (2010) Natural Resources and Economic Development in
Transition Economies (preliminary version).

Sala-i-Martin, X. and Subramanian, A. (2003) Addressing The Natural
Resource Curse: An Illustration from Nigeria, IMF Working Paper

Sachs, J.D. and Warner, A.M. (1995) Natural Resource Abundance and
Economic Growth. Development Discussion Paper 517a, Harvard Institute
for International Development.

Sachs, J.D. and Warner, A.M. (1997) Natural Resource Abundance and
Economic Growth. NBER #5398, October.

Sachs, J.D. and Warner, A.M. (2001) Natural Resource Abundance and
Economic Development. European Economic Review, 45: 827-838.