Does a Windfall Lead to a Downfall? A Study of Mineral Rents and Genuine Growth in Selected African Countries
Journal of Energy and Natural Resources
Volume 3, Issue 1, February 2014, Pages: 6-10
Received: Mar. 25, 2014; Accepted: Apr. 8, 2014; Published: Apr. 10, 2014
Views 3196      Downloads 143
Ishmael Ackah, Department of Economics, Portsmouth Business School, University of Portsmouth, Portsmouth, UK
Dankwa Kankam, Opoku, Andoh& Co, Chartered Accountants and Management Consultants, Accra, Ghana
Kwaku Appiah- Adu, Central Business School, Central University College, Accra, Ghana
Article Tools
Follow on us
The mining industry helps governments to increase revenues resulting in job creation, infrastructural development and enhancing the standard of living of the local communities. However, it is also a potential source of environmental pollution and rent-seeking. This study examines the relationship between mineral rents and genuine income in a multivariate panel data analysis in Botswana, Egypt, Ghana, Morocco, South Africa and Zambia at the aggregate and industrial levels. The findings suggest that mineral revenues have been a blessing to these countries at the aggregate level but affected industrial growth negatively. These findings support evidence in the literature that mineral resource abundance slows growth in industrial output. The study also reveals that growth in mineral rich countries is principally driven by investment in capital and energy consumption. It is therefore recommended that mineral revenues should be invested in capital and alternative energy sources to boost aggregate and industrial growth.
Mineral Rents, Genuine Income, Energy Consumption, Resource Curse
To cite this article
Ishmael Ackah, Dankwa Kankam, Kwaku Appiah- Adu, Does a Windfall Lead to a Downfall? A Study of Mineral Rents and Genuine Growth in Selected African Countries, Journal of Energy and Natural Resources. Vol. 3, No. 1, 2014, pp. 6-10. doi: 10.11648/j.jenr.20140301.12
Ackerberg, D., Benkard, C.L., Berry, S. and Pakes, A. (2007) Econometric tools for analyzing market outcomes In J. Heckman and E. Leamer (eds), Handbook of Econometrics (Vol. 6(1), pp. 4171–4276) Amsterdam: North-Holland
Aryee, B. N. A., Ntibery, B. K., Atorkui, E. (2002) Trends in small-scale mining of precious minerals in Ghana; a perspective on its environmental impacts. Journal of Clean production, vol. 11, pp 131-140.
Aryeetey, E., Devarajan, S., Kanbur, R., &Kasekende, L. (Eds.) (2012) The Oxford companion to the economics of Africa. Oxford University Press
Atyeh, M and Al-Rashed, W. (2013) Testing the existence of integration: Kuwait and Jordanian financial markets, International Journal of Economics, Financial and Management Sciences 2013; 1(2): 89-94
Auty, R. M., & Mikesell, R. F. (1998). Sustainable development in mineral economies. Oxford University Press.
Boschini, A. D., Pettersson, J., & Roine, J. (2007). Resource Curse or Not: A Question of Appropriability. The Scandinavian Journal of Economics, 109(3), 593-617.
Brunnschweiler, C. N., &Bulte, E. H. (2008). The resource curse revisited and revised: A tale of paradoxes and red herrings. Journal of Environmental Economics and Management, 55(3), 248-264.
Cavalcanti, Tiago V. de V., Kamiar Mohaddes, and Mehdi Raissi (2009), “Growth, Development and Natural Resources: New Evidence Using a Heterogeneous Panel Analysis,” Faculty of Economics, University of Cambridge (mimeo).
Collier, P., & Hoeffler, A. (2004). Greed and grievance in civil war. Oxford economic papers, 56(4), 563-595.
Corden, Max W. and J. Peter Neary (1982), “Booming Sector and De-Industrialization in a Small Open Economy,” The Economic Journal 92 (368), pp. 825–848.
Gylfason, Thorvaldur, Tryggvi T. Herbertson, and Gylfi Zoega (1999), “A Mixed Blessing: Natural Resources and Economic Growth,” Macroeconomic Dynamics 3, pp. 204–25.
Hartwick, J. M. (1977). Intergenerational equity and the investing of rents from exhaustible resources. The American economic review, 67(5), 972-974.
Harford, T. M. Klein, Aid and the Resource Curse, The World Bank Group, Private Sector Development Vice Presidency, Note #291, Washington, DC, 2005.
Iimi, Atsushi (2006), “Did Botswana Escape from the Resource Curse?” IMF Working Paper06/138, Washington, D.C.
Mehlum, H., Moene, K., &Torvik, R. (2006). Institutions and the Resource Curse*. The Economic Journal, 116(508), 1-20.
SHARAKY, A. M. Mineral Resources and Exploration in Africa. Egypt: Cairo University. 2010
Kuhndt M, Tessema F, and Martin H. (2008) Global Value Chain Governance for Resource Efficiency Building Sustainable Consumption and Production Bridges across the Global Sustainability Divides. Environmental Research, Engineering and Management, 2008. No. 3(45), P. 33-41.
Ross, M. L. (2012). The oil curse: how petroleum wealth shapes the development of nations. Princeton University Press.
Sachs, Jeffrey D. and Andrew M. Warner (1997), “Natural Resource Abundance and Economic Growth,” Center for International Development and Harvard Institute for International Development, Harvard University, Cambridge, Mass.
Sachs, Jeffrey D. and Andrew M. Warner (1999), “The Big Push, Natural Resource Booms and Growth,” Journal of Development Economics (59), pp 43–76.
Sachs, Jeffrey D. and Andrew M. Warner (2001), “Natural Resources and Economic Development. The curse of natural resources,” European Economic Review 45(2001), pp. 827–838.
Sala-i- Martin, Xavier and Arvind Subramanian (2003), “Addressing the Natural Resource Curse: An Illustration from Nigeria,” NBER Working Paper 9804, Cambridge, Mass.
Van der Ploeg, F. (2011). Natural resources: Curse or blessing? Journal of Economic Literature, 49(2), 366-420.
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
Tel: (001)347-983-5186