Natural Resources, Productive Capabilities and Economic Performance across Sub-Saharan Countries: Economic Complexity and Product Space Perspectives

Abstract

In the wake of two decades referred to as ‘growth tragedy’, sub-Saharan countries entered a phase of remarkable growth acceleration starting from the mid-1990s. Despite this, sustaining rapid growth proved elusive for many, with only a handful of resource-poor nations maintaining a consistent rapid growth trajectory by the end of 2019. This study delves into the mixed outcomes suggested by empirical research on resource curse theory, critically analysing the literature on the impact of natural resources on growth. Standard empirical growth models used in this literature often overlook the heterogenous nature of economies, particularly the complexity of knowledge and capabilities embedded in countries’ productive structures. This PhD study aims to unravel the hidden growth potential and dynamics of both resource-rich and resource-poor sub-Saharan countries. Building on the capability theory of growth as a foundation, we adopt an evolutionary perspective to economics and use an extended growth regression framework that acknowledges the potential role of natural resources and country’s productive structure in growth modelling. This framework allows for a comprehensive examination of the presence or not of resource curse and other potential capability-based traps to development. Additionally, we rely on non-parametric methods, leveraging complex network theory and machine-learning techniques underpinning the economic complexity and relatedness approaches. Our findings reveal that the main obstacle to sustained growth in sub- Saharan economies is not their dependence on natural resources, but rather the limited incentives to accumulate and develop productive capabilities – “a quiescence trap”. Furthermore, resource-rich countries often possess narrow and less complex endowment of capabilities, which constrains their growth potential and leads to erratic growth patterns. These countries also face challenges in transforming their productive structures and diversifying into high value-added sectors associated with strong productivity dynamism. Our study underscores complex capabilities as a crucial element for sustaining growth in sub-Saharan Africa. It advocates a policy shift from an excessive focus on maintaining ‘sound macro fundamentals’ to prioritizing the nurturing of productive capabilities at the firm, industry, and country levels through targeted industrial and innovation policies.