Natural resources and economic growth: Does political regime matter for Tunisia?

Abstract

The discussion on the effect of natural resources on economic growth remains a contentious issue of scientific research. An emerging issue to this discussion is the role of political regime in determining the nature of the growth and natural resource nexus. Consequently, this study examines the effect of natural resources on the economic growth of Tunisia and how the country's political regime moderates this relationship using annual time series data over the 1970–2017 period. Regression analysis established that in the long‐run natural resources generally have positive effects on the country's economic growth, while political regime has mixed effects on economic growth. The interaction between political regime and resources indicates democracy enhances the positive gains from natural resources on economic growth although in the short run, the outcome is mixed. The effects of specific natural resource (oil, mineral, and forest rents) on sectoral growth are positive. Political regime interacts with oil, mineral, and forest rents to propel growth in the agricultural sector. The study concludes that democratic regime is crucial for the effective utilization of resources for long‐run economic growth in the country. Beyond natural resource abundance examined in this study, there is a further need to analyze the extent to which the economy relies on these natural resources and its effect on the economy in future studies. This would elucidate the “natural resource blessings” estimated in this study. The role of other measures of institutional quality on the subject matter can be explored in Tunisia and other countries in future studies.

Does trade openness improve the quality of domestic institutions? Evidence from Africa

“…Similarly, for natural resources exports where the impact is found negative and consistent across all the models. This result affirms the idea of natural resource curse taking place in Africa through the channel worsening of institutional quality (see, for instance, Acemoglu & Robinson, 2006;Sala-i-Martin & Subramanian, 2012;Mulwa & Mariara, 2016;Kwakwa et al, 2021;Mlambo & Borz, 2022). What came out as a rather interesting result is the case of FDI inflows which indicate that their impact on institutional quality is positive on one side, however, when measured by different variables, this might not be the same in all cases.…”

Environmental degradation effect on agricultural development: an aggregate and a sectoral evidence of carbon dioxide emissions from Ghana

“…This follows Aboagye et al (2020). As used by Kwakwa et al (2021), capital was measured by gross capital formation, and labour was measured by total population. Following Adom et al (2018), urbanisation was measured by total urban population, and financial development was measured as domestic credit to private sector (%GDP).…”

Mineral resources and economic growth: evidence from the coal sector in Mozambique

“…In the long run, they found that resource rents deteriorate productivity, human capital, and institutional quality. Using an ARDL approach, Kwakwa et al (2021) found natural resource rents to significantly and positively affect GDP growth. Using the same model, Satti et al (2014) found evidence of the resource curse hypothesis, since natural resource abundance hinders economic growth.…”

“…With this interaction, a negative effect on economic growth is expected. Kwakwa et al (2021) and Alpha and Ding (2016), found the interaction of corruption and natural resources export ends up in a decline in economic growth. Pineda and Rodríguez (2010), and Lashitew and Werker (2020) found evidence of changes in HDI as positively and significantly correlated with natural resource abundance.…”

“…Resource abundance shifts the reliance of the government from tax incomes to resource rents (Veisi, 2017). Also, natural resources are the main source of revenue in resource-rich countries (Kwakwa et al, 2021). Quixina and Almeida (2014) found that mining revenues Granger causes economic growth.…”