The Role of Natural Resource Rent on Economic Growth and Environmental Degradation in Sub-Saharan Africa

Abstract

This study investigates the impact of natural resource rents on economic growth and environmental degradation in 30 Sub-Saharan African countries from 1990 to 2022. Motivated by the paradox of resource-rich countries facing economic stagnation and environmental challenges, this research aims to understand these dynamics using a robust empirical approach. The study employs Panel Corrected Standard Error (PCSE) models and Dumitrescu & Hurlin causality tests to explore the interactions between natural resource rents, GDP, carbon emissions, and ecological footprints. Findings reveal that natural resource rents have an insignificant direct effect on GDP, and significant positive impacts on carbon emissions and ecological footprints and highlight the critical role of institutional quality in mitigating adverse effects. The study’s innovation lies in its comprehensive analysis of both economic and environmental dimensions, providing nuanced insights into the resource curse hypothesis. Policy recommendations emphasize sustainable resource management, economic diversification, and regional cooperation to foster balanced growth and environmental sustainability.

Jel Code: