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Economic Change and Restructuring

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05-08-2021

Resource curse for human development?

Authors: Youssouf Kiendrebeogo, Farrukh Iqbal

Published in: Economic Change and Restructuring | Issue 2/2022

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Abstract

Progress in child mortality reduction and education attainment varies widely among oil-rich countries. We investigate the sources of this variation for 14 oil-rich countries and find five main factors: public spending on health and education, economic growth, caloric sufficiency, initial levels of child mortality and education attainment, and population density. We find that conditional convergence explains much of the cross-country variation in the rate of decline in child mortality and the rate of increase in school enrollment. As for policy factors, the level of caloric sufficiency makes a difference, whereas the contribution of public spending is not as important.

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The absolute log changes of both child mortality and school enrollment between 1980 and 2014 are positive for all sample countries. The average absolute log change over this sample period is 1.21 for child mortality and 0.62 for school enrollment.

The sample size is 79 for child mortality and 78 for school enrollment. The sample size is restricted by data availability on either the dependent variable or any of the independent variables. To check whether our results are not influenced by the sample composition, we present in Tables 17 (child mortality) and 18 (school enrollment) of the appendix differences in baseline variables of interest between sample and non-sample countries. The results show that for both health and education regressions, the difference between sample and non-sample countries is small and statistically insignificant except for control of corruption.

When we use average GDP per capita instead we also find that countries with higher levels of income per capita tend to experience faster reductions in child mortality and faster increases in school enrollment.

Alternatively, using urbanization instead of population density provides very similar results, but the coefficient on Health spending per capita is no longer statistically significant at conventional levels.

The OECD countries that are excluded from the full sample are the following: Australia, Belgium, Canada, Denmark, France, Germany, Italy, Mexico, UK, USA.

As an alternative to the TSLS estimator, we also present the results from a panel specification using the System GMM estimator in Table 13 in the appendix.

When we use the Gulf Cooperation Council (GCC) countries instead, we get a stronger effect. The coefficient increases from 0.370 [s.e = 0.123] to 0.554 [s.e. = 0.221]. But this stronger effect is unlikely to be related to oil resources, given that the coefficient on the oil-rich dummy is statistically insignificant.

We also interact the oil resource dummy with other regressors in both the health and education equations. The results show that the coefficients on these interactions are not statistically significant (Table 14).

This country-level growth accounting exercise follows the approach used in Barro (1996).

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Title: Resource curse for human development?
Authors: Youssouf Kiendrebeogo
Farrukh Iqbal
Publication date: 05-08-2021
Publisher: Springer US
Published in: Economic Change and Restructuring / Issue 2/2022
Print ISSN: 1573-9414
Electronic ISSN: 1574-0277
DOI: https://doi.org/10.1007/s10644-021-09342-8

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