Resource Rents and Dependence in Sub-Saharan African Countries Economies

Generally, natural resources among sub-Sahara African countries have been a subject of concern in Africa and across the world. As a means of capital accumulation in developing countries, natural resources have been considered as catalysts for economic growth. Almost all of the sub Saharan countries are developing countries, and natural resources are the main source of economic growth in these countries. This study assesses the evidence of resource curse in sub-Saharan African countries and the study uses secondary annual data. In order to realize the research purpose, resource dependence measured by the share of total export to GDP and resource rents were used, and identified its effect on real GDP. The paper focuses on answering these three questions: whether resource rents have retarded growth in SSA, which is the effect of dependence on natural resources and can resource curse exist in sub-Saharan African countries despite endowment in natural resources? The result showed that merchandized exports at current values, coefficient value of 0.14 and natural resource rents at current values, coefficient value of 0.08, are positively significant with real GDP. However, the lagged value of natural resource rents, coefficient value of ﹣0.06, is negatively significant with real GDP. It was found that there is no evidence of Dutch disease and rent seeking at current values, but it is evident at past values. It implies that there is no evidence of resource curse at the current period, however it was largely surfaced in the proceeding period. The non-inclusion of other SSA countries that are not endowed with natural resources made the study limited to few SSA countries. The study tends to support the notion that resource-rich SSA countries are better off in short-run than in long-run.