Resource Abundance and Material Wellbeing in Africa — an investigation of the Resource Curse

University essay from Lunds universitet/Ekonomisk-historiska institutionen

Abstract: Natural resources and their impact on growth has received significant academic attention through the theory of the resource curse. Most literature has studied the relationship between natural resource abundance and economic growth. However, the resource curse argues that development, in general, is negatively affected by resource abundance and that it can be avoided through quality institutions and governance. This thesis contributes to the literature on the resource curse by evaluating the relationship between resource abundance and material wellbeing in Africa. The empirical analysis was conducted through a panel data analysis, which finds support for the resource curse theory in Africa in various aspects: (i) there is a negative relationship between material wellbeing and resource abundance, (ii) it finds that the resource curse is mitigated where governance and institutions are of higher quality, (iii) there is a negative relationship between resource abundance and taxation. These findings show that the resource curse is not only evident in terms of the impact of resource abundance on economic growth, but also on other indicators of development, such as material wellbeing.

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