Managing Resource Wealth: A Study of Fiscal Linkages in Sub-Saharan Africa

Resource-rich countries often face the paradox of poor economic performance despite abundant natural resource wealth, a phenomenon known as the natural resource curse. This phenomenon has huge implications for the prospect of economic development in Sub-Saharan Africa – a region with massive natural resources. This thesis examines the extent to which resource-rich African countries may “undo” the natural resource curse through fiscal linkages. Fiscal linkages refer to the connections between a country’s natural resource wealth and its fiscal stance, which could play a crucial role in shaping a country’s ability to leverage resource revenues for sustainable economic development. This is an important consideration because there are conditions under which resource-rich countries may not get a fair share of their natural resource exports. The study captures fiscal linkages using the elasticity of government revenue and expenditure with respect to natural resource exports and examines their effects on economic growth as well as economic diversification. These relationships are examined using panel data from 2000 to 2021 from a sample of resource-rich African countries that are compared with resource-rich countries from the Global South and resource-poor African countries. The thesis addresses whether resource-dependent African countries face unique challenges in achieving long-term economic stability and development.