Natural Resource Revenues and Public Investment in Resource-rich Economies in Sub-Saharan Africa

Karimu, AminUmeå universitet,Centrum för miljö- och naturresursekonomi (CERE),Centre for Environmental and Resource Economics, Umeå University, Umeå, Sweden; University of Ghana Business School, Ghana (author)

Funder: United Nations University World Institute for Development Economics Research (UNU-WIDER)
The general policy prescription for resource-rich countries is that, for sustainable consumption, a greater percentage of the windfall from resource rents should be channeled into accumulating foreign assets such as a sovereign public fund as done in Norway and other developed but resource-rich countries. This might not be a correct policy prescription for resource-rich sub-Saharan African (SSA) countries, where public capital is very low to support the needed economic growth. In such countries, rents from resources serve as an opportunity to scale-up the needed public capital. Using a panel data for the period 1990–2013, we find in line with the scaling-up hypothesis that resource rents significantly increases public investment in SSA and that this tends to depend on the quality of political institutions. Moreover, we also find evidence of a positive effect of public investment on economic growth, which also depends on the level of resource rents.

Adu, GeorgeThe Nordic Africa Institute, Uppsala University, Uppsala, Sweden; Department of Economics, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana,Nordic Africa Institute,Kwame Nkrumah University of Science and Technology (KNUST)(Swepub:slu)47625 (author)
Marbuah, GeorgeSwedish University of Agricultural Sciences,Sveriges lantbruksuniversitet,Institutionen för ekonomi,Department of Economics(Swepub:slu)92422 (author)
Tei Mensah, JusticeSwedish University of Agricultural Sciences,Sveriges lantbruksuniversitet,Institutionen för ekonomi,Department of Economics(Swepub:slu)92468 (author)
Amuakwa-Mensah, FranklinSwedish University of Agricultural Sciences,Sveriges lantbruksuniversitet,Institutionen för ekonomi,Department of Economics(Swepub:slu)97495 (author)
Umeå universitetCentrum för miljö- och naturresursekonomi (CERE) (creator_code:org_t)
Sveriges lantbruksuniversitet

In:Review of Development Economics: John Wiley & Sons21:4, s. 107-1301363-66691467-9361

By the author/editor: Karimu, Amin; Adu, George; Marbuah, George; Tei Mensah, Just ...; Amuakwa-Mensah, ...

About the subject

By the university: Luleå University of Technology; Umeå University; Swedish University of Agricultural Sciences

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