1. Natural Resource Revenues and Public Investment in Resource-rich Economies in Sub-Saharan Africa.
- Author
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Karimu, Amin, Adu, George, Marbuah, George, Mensah, Justice Tei, and Amuakwa‐Mensah, Franklin
- Subjects
CONSUMPTION (Economics) ,NATURAL resources ,FOREIGN assets ,PUBLIC investments ,ECONOMIC development ,ECONOMIC policy - Abstract
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. [ABSTRACT FROM AUTHOR]
- Published
- 2017
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