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Research article - Peer-reviewed, 2017

Natural Resource Revenues and Public Investment in Resource-rich Economies in Sub-Saharan Africa

Karimu, Amin; Adu, George; Marbuah, George; Mensah, Justice Tei; Amuakwa-Mensah, Franklin


The general policy prescription for resource-rich countries is that, for sustainable consumption, a greater percentage of the windfall from resource rents should be channeled into accumulating foreign assets such as a sovereign public fund as done in Norway and other developed but resource-rich countries. This might not be a correct policy prescription for resource-rich sub-Saharan African (SSA) countries, where public capital is very low to support the needed economic growth. In such countries, rents from resources serve as an opportunity to scale-up the needed public capital. Using a panel data for the period 19902013, we find in line with the scaling-up hypothesis that resource rents significantly increases public investment in SSA and that this tends to depend on the quality of political institutions. Moreover, we also find evidence of a positive effect of public investment on economic growth, which also depends on the level of resource rents.

Published in

Review of Development Economics
2017, volume: 2017, number: 4, pages: 107-130

Authors' information

Karimu, Amin
Umeå University
Adu, George
Nordic Africa Institute
Adu, George
Kwame Nkrumah University of Science and Technology (KNUST)
Marbuah, George
Swedish University of Agricultural Sciences, Department of Economics
Mensah, Justice Tei (Tei Mensah, Justice)
Swedish University of Agricultural Sciences, Department of Economics
Amuakwa-Mensah, Franklin (Amuakwa-Mensah, Franklin)
Swedish University of Agricultural Sciences, Department of Economics

Sustainable Development Goals

SDG12 Responsible consumption and production

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