Do resource windfalls improve standard of living in sub-Saharan African countries?

Abstract

ABSTRACT We examine impact of resource windfall on standard of living. We introduce annual welfare measure that combines income, inequality, and health, covering 130 countries for 45 years. We investigate the effect of resource windfalls on welfare in three groups: (i) a sample of 130 countries, (ii) 28 sub-Saharan African (SSA) countries, and (iii) 9 fragile SSA countries. We find that the short-run and long-run effect of resource windfalls are welfare enhancing in the 130-country sample. However, the effect size is small in SSA countries, and is insignificant in fragile SSA countries, which emphasizes importance of governance in natural resource management.