Authors: Misheck Mutize; Kutlwano Motlhabane
Addresses: Graduate School of Business, University of Cape Town, Cape Town, South Africa ' Graduate School of Business, University of Cape Town, Cape Town, South Africa
Abstract: This paper examines the 'mineral resource curse' hypothesis in Africa, which asserts that countries with abundant mineral wealth tend to have a poor population, with low standards of living, slow economic growth and high inequality. Using the panel data fixed effect estimation model on mineral wealth and poverty data from 1970 to 2016, the study finds a U-shaped relationship between mineral wealth and poverty. The study also finds that the rising consumer price inflation in resources rich countries significantly further worsens average income inequality within resource-rich African countries. It is thus implied that average income inequality in African countries is most likely to worsen due to the inequality generated by the mineral wealth. This study thus recommends African countries to adopt policies that support the distribution of income over time in countries undergoing a mineral boom.
Keywords: mineral resources; poverty; inequality; inflation; Africa.
African Journal of Economic and Sustainable Development, 2021 Vol.8 No.4, pp.303 - 318
Received: 14 Oct 2020
Accepted: 06 May 2021
Published online: 27 Oct 2021 *