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An analysis of the resource curse hypothesis and poverty in Africa

Author

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  • Misheck Mutize
  • Kutlwano Motlhabane

Abstract

This paper examines the 'mineral resource curse' hypothesis in Africa, which asserts that countries with abundant mineral wealth tend to have a poor population, with low standards of living, slow economic growth and high inequality. Using the panel data fixed effect estimation model on mineral wealth and poverty data from 1970 to 2016, the study finds a U-shaped relationship between mineral wealth and poverty. The study also finds that the rising consumer price inflation in resources rich countries significantly further worsens average income inequality within resource-rich African countries. It is thus implied that average income inequality in African countries is most likely to worsen due to the inequality generated by the mineral wealth. This study thus recommends African countries to adopt policies that support the distribution of income over time in countries undergoing a mineral boom.

Suggested Citation

  • Misheck Mutize & Kutlwano Motlhabane, 2021. "An analysis of the resource curse hypothesis and poverty in Africa," African Journal of Economic and Sustainable Development, Inderscience Enterprises Ltd, vol. 8(4), pages 303-318.
    • Handle: RePEc:ids:ajesde:v:8:y:2021:i:4:p:303-318
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