Exploring the nexus among natural resource rents, human capital and industrial development in the SSA region

Abstract

This paper investigates whether the natural resource rent has a role to play in the human capital-industrial development nexus. The study specifically examines how human capital development in sub-Saharan Africa can spur industrial development and probing how natural resource rent serves as a propeller in this process for a sample of 17 sub-Saharan African countries over the period of 1995–2015. We deploy the use of fixed effect model to examine this nexus. The findings from our estimated model reveal that the different measures of human capital investment does not propel industrial development as health expenditure has a direct drag effect. This gives insight into the challenges facing the industrial sector in the region. Similarly, the correlation further lend support to these findings in terms of direction/association. On natural resource rent as financing option, the coefficients are largely negative but their magnitudes are significantly small. More so, the results also show that the indirect impact of natural resource rents through human capital measures was negative when interacted with education measure while positive for health interaction term. Thus, this study clearly shows the challenges bedeviling SSA region industrial development and suggests that in an attempt to boost industrial sector development, it is important for the governments in SSA region to explore efficiently, the fund from the sale of natural resources by allocating sufficient fund and design monitoring framework for human capital development vis-a-vis industrial development.