Dynamic linkage between natural resources, economic complexity, and economic growth: Empirical evidence from Africa

It is much debated whether natural resources are a curse or a blessing in contemporary literature. However, the literature is unable to document conclusive remarks on it, specifically in African countries. Given that, this study is an attempt to disclose the link between natural resources, economic complexity, and economic growth. A sample of 24 African economies for the years 1995-2017 was analyzed with the implications of the system GMM (generalized method of moments) model. This research deals with natural resource rents and economic complexity as predictors of economic growth while controlling for corruption, gross capital formation, total labor force, foreign direct investment inflow, and trade openness. The empirical findings first document the negative impact of natural resource rents while the positive impact of economic complexity on economic growth. However, a positive link was observed when economic complexity interacts with natural resources and conjunctionally affects economic growth. The empirical analysis further supplements the dynamic impact of control variables on economic growth. This study strengthens the views of natural resource curse (in individual analysis) and natural resources blessing (interaction effect) hypotheses and calls for more focus by policy officials on economic complexity to harvest the advantages from available natural resources.