IDEAS home Printed from https://ideas.repec.org/a/eee/jrpoli/v101y2025ics0301420724008225.html
   My bibliography  Save this article

Finding explanations for weak economic complexity in resource-rich African countries: Exploring the role of natural resource endowment and institutional quality

Author

Listed:
  • Olaniyi, Clement Olalekan
  • Odhiambo, Nicholas Mbaya

Abstract

Unlike earlier studies, this study explores the role of institutional quality in modifying the impact of natural resource wealth on economic complexity in resource-rich African countries. It also investigates the thresholds of institutional quality in the relationship between natural resource wealth and economic complexity from 1995 to 2021. This study employs fully modified least squares, robust standard error Driscoll-Kraay regression, dynamic common correlated effects, the method of moments quantile regression, and the dynamic panel threshold approach to achieve these objectives. The findings from all estimators indicate that both natural resource wealth and institutional quality independently contribute to improving the economic complexity of resource-rich African countries. However, the interaction between natural resource wealth and institutional quality impedes economic complexity. This finding suggests that institutional quality creates inadequacies that promote negative behaviour, such as racketeering, political interference, corruption, and opportunism, in natural resource wealth management. This phenomenon hampers and undermines the efficient allocation of resource incomes to economic complexity in resource-rich African countries. The study identifies an institutional quality threshold of 5.59 on a scale of 10, above which natural resource wealth strongly stimulates economic complexity. However, most resource-rich African countries fall below this threshold. Therefore, the study concludes that institutions weaken the positive effects of natural resource wealth on economic complexity in resource-rich African countries.

Suggested Citation

  • Olaniyi, Clement Olalekan & Odhiambo, Nicholas Mbaya, 2025. "Finding explanations for weak economic complexity in resource-rich African countries: Exploring the role of natural resource endowment and institutional quality," Resources Policy, Elsevier, vol. 101(C).
  • Handle: RePEc:eee:jrpoli:v:101:y:2025:i:c:s0301420724008225
    DOI: 10.1016/j.resourpol.2024.105455
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301420724008225
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.resourpol.2024.105455?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Natural resource; Institutional quality; Economic complexity; Penal threshold; Africa;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jrpoli:v:101:y:2025:i:c:s0301420724008225. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30467 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.