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

• Published date: 01 December 2022
• Author: Paul Adjei Kwakwa,William Adzawla,Hamdiyah Alhassan,Abigail Achaamah
• Date: 01 December 2022
• DOI: http://doi.org/10.1002/pa.2707

RESEARCH ARTICLE

Natural resources and economic growth: Does political regime

matter for Tunisia?

Paul Adjei Kwakwa

1,2

| William Adzawla

3,4

| Hamdiyah Alhassan

3

|

Abigail Achaamah

5

1

School of Business and Economics,

Presbyterian University College Ghana,

Abetifi-Kwahu, Eastern Region, Ghana

2

School of Management Sciences and Law,

University of energy and natural resources,

Sunyani, Ghana

3

Department of Applied Economics, School of

Applied Economics and Management Sciences,

University for Development Studies, Tamale,

Ghana

4

University of Cheikh Anta Diop, West African

Science Service Centre on Climate Change and

Adapted Land Use (WASCAL), Climate Change

Economics, University of Cheikh Anta Diop,

Dakar, Senegal

5

Examinations and Students Records Office,

Presbyterian University College Ghana,

Abetifi-Kwahu, Ghana

Correspondence

Paul Adjei Kwakwa, School of Business and

Economics, Presbyterian University College

Ghana, Abetifi-Kwahu, Eastern Region, Ghana.

Email: pauladkwa@gmail.com

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 eco-

nomic growth of Tunisia and how the country's political regime moderates this rela-

tionship 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 utiliza-

tion 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”esti-

mated 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.

KEYWORDS

ARDL, economic growth, natural resources, political regime, sectoral growth, Tunisia

1|INTRODUCTION

The importance of economic growth to the socio-economic develop-

ment of all economies cannot be overemphasized. Hence,

policymakers, researchers, and governments have sought to identify

growth-enhancing factors for their countries. Increasing number of

empirical studies have analyzed and reported a number of factors that

influence economic growth. These factors include capital, labor, gov-

ernment expenditure, trade openness, and foreign aid (Ho &

Iyke, 2020). Others are energy consumption, research and

development (Adedoyin et al., 2020; Kose et al., 2020), political and

administrative systems, administrative systems and Socio-cultural fac-

tors (Boldeanu & Constantinescu, 2015) among others.

One factor whose possible effect on economic growth has

received counter-argument is natural resources. For many decades,

researchers have not reached a consensus on the impact of natural

resources on economic growth. Some argue that natural resources

positively affect economic growth because they can induce more

investment in economic infrastructure and more rapid human capital

development (Sachs & Warner, 1999; Zeynalov 2017; Sinha &

Received: 18 February 2020 Revised: 18 April 2021 Accepted: 31 May 2021

DOI: 10.1002/pa.2707

J Public Affairs. 2022;22(Suppl. 1):e2707. wileyonlinelibrary.com/journal/pa © 2021 John Wiley & Sons Ltd. 1of15

https://doi.org/10.1002/pa.2707