Governance Quality in Natural Resources Rents for Structural Transformation in the Economic Community of Central African States (ECCAS)

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Abstract

This paper examines the relevance of governance quality in natural resource rents for structural transformation. The focus of the research is on 10 countries of the ECCAS (Economic Community of Central African States) using data from 1996 to 2023. The panel ARDL and the PMG estimator are employed to assess the problem statement within the remit of interactive regressions. The natural resource rents are measured by the benefits from the total natural resources. The Governance Quality Index from the Principal Components Analysis (PCA) is employed as a moderator. The oil resource rents are employed as another natural resource proxy, and the FMOLS and its equivalent competing CCR are also employed for robustness check purposes. The hypothesis that governance quality influences structural transformation is validated, while that of natural resource rents influencing structural transformation is not validated. Furthermore, the hypothesis that governance moderates natural resource rents to promote structural transformation is also not validated, and the hypothesis that the natural resources, in interaction with governance components, have a mitigated influence on structural transformation is validated. Clarification as to why some hypotheses are not validated is provided. Policy implications are discussed.

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