Agricultural Transformation and the Vulnerability to the Resource Curse in Developing Countries: A Reference to Sub-Saharan African Countries

The voluminous studies on whether the resource curse materializes or not in developing countries have not reached a clear-cut conclusion on the effect of a country’s richness on its development outcomes. The present analysis considers the issue of resource curse through a different lens, that is, a country’s susceptibility to the materialization of the resource curse, qualified as the vulnerability to the resource curse. It investigates whether agricultural transformation helps reduce the vulnerability to the resource curse in developing countries, including in Sub-Saharan African (SSA) countries. To do so, the analysis develops an indicator of vulnerability to the resource curse, and utilizes a newly developed index of agricultural transformation (at the country-level) by Diao et al. (2024, 2025). The empirical exercise builds on an unbalanced panel dataset of 73 developing countries, of which 29 SSA countries, over the annual period from 2002 to 2020, and utilizes the error component two-stage least squares econometric technique. We obtain that agricultural transformation reduces the vulnerability to the resource curse in NonSSA countries, but leads to greater vulnerability to the resource curse in SSA countries. The latter finding indicates that for SSA countries, agricultural transformation has not reached the requisite level to reduce the VRC. The finding calls for exploring empirically measures and policies that underpin the successful transformation of the agricultural sector, notably in SSA countries. JEL Classification : E24; O1; O13; O57; Q18.