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Do African resource rents promote rent-seeking at the expense of entrepreneurship?

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  • Jonathan Munemo

    (Salisbury University)

Abstract

This paper examines the relationship between natural resource rents and new business formation (a critical measure of entrepreneurship) using a panel dataset of 28 African countries covering the period 2002–2014. The paper finds robust evidence that nations with high resource rents (i.e., resource rents exceeding 30% of GDP) significantly exhibit less entrepreneurial activity. This result is consistent with the hypothesis that high resource rents significantly promote rent-seeking behavior at the expense of entrepreneurship. Policies that reward productive entrepreneurship and reduce incentives for rent-seeking behavior are therefore important for reversing this negative relationship in African countries with high natural resource-derived income.

Suggested Citation

  • Jonathan Munemo, 2022. "Do African resource rents promote rent-seeking at the expense of entrepreneurship?," Small Business Economics, Springer, vol. 58(3), pages 1647-1660, March.
    • Handle: RePEc:kap:sbusec:v:58:y:2022:i:3:d:10.1007_s11187-021-00461-0
    DOI: 10.1007/s11187-021-00461-0
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