Investigating the link between exhaustion of natural resources and economic complexity in sub-Saharan Africa

Abstract

In the context of sub-Saharan Africa (SSA), characterized by abundant natural resources and persistent challenges in economic growth, this paper explores the effect of economic complexity (EC) on natural resource depletion (NRD) from 1997 to 2017. To this end, the study employs data mainly from the World Development Indicators on 36 SSA countries. Using both the pooled ordinary least squares and the two-step system generalized method of moments estimation techniques, the results indicate that EC significantly contributes to reducing the exhaustion of natural resources in SSA during the study period. The findings equally suggest that government expenditure on education, as well as gross domestic product per capita, exert a reducing effect on NRD, while energy use, foreign direct investment, and urbanization are vectors of resource exhaustion in the region. The results remain consistent when an alternative measure of EC is applied as well as when different estimation strategies are used. This offers scope for a reminder for proper management policies to be edited and applied regarding these mostly nonrenewable resources.