LINKING RENT-SEEKING ACTIVITIES TO NATURAL RESOURCE CURSE PHENOMENON: THE CASE OF AFRICA

Year 2015, Volume: 24 Issue: 1, 351 - 368, 30.04.2015

Murat Pütün

Abstract

It has been shown that the growth scores of those countries with rich natural resource endowment have often turned out to be worse than those of countries with little or no natural resources. That is to say, “Resource curse” thesis emphasizes the presence of a paradox between natural resource surplus and economic growth. Furthermore, findings fundemantally support the proposition suggesting that “the higher the degree of dependence on natural resources becomes, the more unstable the economic outlook on growth will become.” Africa owns extraordinarily rich resources, such as oil, natural gas, precious metals, mineral deposits and so on. However, as resource curse thesis stipulates, the extensive resource endowment has not been reflected on dynamic growth process of the likewise countries. Most often than not, resource abundance has fostered incentives for rent-seeking activities no matter how these practices were ethically unacceptable. The competion for obtaining resource rent paves the way for further corruption, internal conflicts, armed struggles, societal rifts, military interventions and so on. The Dutch Disease concept is set to explain the reasons for the underlined negative correlation between resource abundance and rate of growth. Despite the intellectual appeal and sound macroeconomic basis it accommodates, the Dutch Disease account of resource curse has generally been dismissed as being inconclusive. Additionally, the case of Africa has its own characteristics with regard to its social and economic structure, and geographical design and climate. Africa cannot be confined to the limitations brought in by the Dutch Disease concept. The findings of this study highlight that the majority of the selected resource rich African countries, during the selected sample period (1980-2013) have grown slower than those selected resource scarce countries.

Keywords

Natural Resource Endowment, Natural Resource Curse, Resource Extraction Industries, Dutch Disease, African Economies, Rent Seeking Activities

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