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Heterogeneous role of resource dependence on industrialization in developing countries

Author

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  • Paul Awoa Awoa

    (University of Yaounde II)

  • Henri Atangana Ondoa

    (University of Yaounde II)

Abstract

This paper empirically investigates the role of natural resources on industrialization in a sample of 128 developing countries from 1990 to 2019. Results reveal three main facts. First, resource dependence (rents-to-GDP) impedes total and manufacturing value-added and employment, except for the construction industry. Second, resource dependence increases (lowers) total industrial value-added below (above) a threshold of 70% of GDP, whereas this threshold is 48% for manufacturing sector. Third, productive and redistributive institutions lessen these adverse effects. This study revealed that resource dependence confirms the crowding-out effects of natural resource, raising concerns about a long-term curse. Nonetheless, strong institutions may effectively foster economic growth and structural change by offering a framework of resource wealth management. Results of this study suggest that, with proper management system, it is possible to use rents from natural resources to finance industrialization in developing countries.

Suggested Citation

  • Paul Awoa Awoa & Henri Atangana Ondoa, 2024. "Heterogeneous role of resource dependence on industrialization in developing countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 66(4), pages 753-781, December.
    • Handle: RePEc:pal:compes:v:66:y:2024:i:4:d:10.1057_s41294-023-00231-9
    DOI: 10.1057/s41294-023-00231-9
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