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Date of Award

2023

Document Type

Campus Access Master's Thesis

Degree Name

Master of Science in Applied Natural Resource Economics (MS)

Administrative Home Department

College of Business

Advisor 1

GARY CAMPBELL

Committee Member 1

EMANUEL OLIVEIRA

Committee Member 2

Brian Barkdoll

Abstract

Are economies that depend on land and natural resources doomed to have slow economic growth? This question has been important to development economists and decision-makers in economic policy circles since Adam Smith. Adopting the Romer’s growth model (2018), this study investigates the growth experiences of African economies and their relationship with natural resources and land from 1995 to 2021. This study explores said statistical relationships by employing an ordinary least square (OLS) econometric model with fixed effects and robust standard errors. The empirical results suggest that a one percent increase in total natural resources rents in African countries increases their GDP by 0.062 percentage points in the long-run. Additionally, this study finds that natural resources or mineral rents bring about a positive influence on the gross domestic product in the long-run, thus, increasing by 0.028 or 0.062 percent with a one percent point increase in mineral or natural resource rents, respectively. However, using the same Romer’s growth model to analyze the very long-run outcomes, this study finds that the potential depletion of natural resources along the balanced growth path could impose a drag on the steady-state growth rate of output per worker of 3.38 percent, based on the econometric results mentioned above along with the observed growth rates of labor force, knowledge, and natural resource rents in the African economies during the period from 1995 to 2021. Notwithstanding, Romer’s model also suggests that this negative drag due to limitations on natural resources may eventually be (at least partially) offset if in the very long-run the growth rate of technological progress ends up being higher than the depletion rate of natural resources, ceteris paribus.

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