Impact of natural resource rents on well-being in sub-Saharan Africa: The role of human capital

Abstract

This study contributes to the resource curse literature in diverse means. First, using a non-monetary welfare measure, the study investigates the validity of the resource curse hypothesis in sub-Saharan Africa (SSA). Secondly, the paper examines the impact of natural resource rents on human welfare through the human capital channel and finally investigates the minimum human capital score to avert the resource curse in SSA. The empirical analysis conducted using the system Generalized Method of Moment (GMM) econometric approach on a panel of 32 SSA countries spanning the period 2004–2019, demonstrates that resource rents have a dumping effect on human progress. However, investing in human capital may avert the negative repercussions emanating from the natural resource-welfare link. Further, the study revealed the minimum threshold level for human capital score and tertiary school enrollment rate as 2.40 units and 23.21 %, respectively, necessary to avert the prosperity curse. To increase human prosperity, policymakers are recommended to increase investment in education in order to increase tertiary school enrollment above the estimated threshold and institute policies that will increase the average years the productive unit spent in schooling.