Africa's resource curse: The key role of property rights

Abstract

The purpose of this paper is to examine whether property rights can change the curse of natural resources into a blessing in African countries. To examine the above question, this study uses the Fraser Institute's and V-dem's index of property rights. Using data from 47 African countries over the period 2000–2020, the system GMM estimates suggest that the negative growth effects of resource rents may turn positive in countries with greater property rights. Furthermore, the quality of the judicial system as a proxy measure of property rights indicates that independence, impartiality, accountability, and the absence of corruption in judicial decisions also mitigate the negative effect of resources on growth. In addition, entrepreneurship, labor productivity, industrialization, and unemployment reduction are the main transmission channels. Strengthening property rights in Africa is therefore an effective policy to reverse the curse related to natural resources.