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Sub-Saharan Africa’s Tragedy: Resource Curse, Democracy and Income Inequality

Author

Listed:
  • Alex O. Acheampong

    (Bond University
    Bond University)

  • Janet Dzator

    (University of Newcastle
    University of Newcastle)

  • Matthew Abunyewah

    (Charles Darwin University
    University of Newcastle)

  • Michael Odei Erdiaw-Kwasie

    (Charles Darwin University
    Charles Darwin University)

  • Eric Evans Osei Opoku

    (University of Nottingham Ningbo China)

Abstract

This study utilized instrumental variable techniques and the Driscoll-Kraay estimator to examine the effect of democracy and natural resources on income inequality using a comprehensive panel dataset from 43 sub-Saharan Africa (SSA). The findings from our empirical analysis indicated that natural resources and democracy indices such as electoral, liberal, participatory, deliberative, and egalitarian drive income inequality in SSA. Regional comparative analysis also showed that the democracy indices increase income inequality in West, Central, and Southern Africa while having a neutral effect on income inequality in Eastern Africa. Natural resources were revealed to reduce income inequality in West and Southern African countries while increasing income inequality in Eastern Africa. In the case of Central Africa, natural resources play an insignificant role in income inequality. The interactive effect analysis indicates that the democracy indices interact with natural resources to increase income inequality in SSA. Finally, the democracy indices interacted with natural resources to drive income inequality in Eastern and Southern African countries while exerting an insignificant effect on income inequality in West and Central African countries. The policy implications of the findings are discussed.

Suggested Citation

  • Alex O. Acheampong & Janet Dzator & Matthew Abunyewah & Michael Odei Erdiaw-Kwasie & Eric Evans Osei Opoku, 2023. "Sub-Saharan Africa’s Tragedy: Resource Curse, Democracy and Income Inequality," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 168(1), pages 471-509, August.
    • Handle: RePEc:spr:soinre:v:168:y:2023:i:1:d:10.1007_s11205-023-03137-2
    DOI: 10.1007/s11205-023-03137-2
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    More about this item

    Keywords

    Resource curse; Income inequality; Democracy; Sub-Saharan Africa; Natural resources;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts

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