Evidence of Dutch Disease and Cross-sectional Dependence in Rent-Seeking Sub-Saharan African Countries (Published)
This study assessed the evidence of Dutch disease and cross-sectional dependence in resource-led growth sub-Saharan African countries economies. In an atempt to achieve this, a consistent econometric model developed by Cavalcanti, Mohaddes, and Raissi (2010) was adopted which showed that there is a long run relationship between real income, natural resource rents and export revenue from natural resource in resource-led economy in sub-Saharan African Countries. The study used Secondary data. Annual data from 1981 to 2016. The study account for cross-country dependencies (both in the properties of the data and the long-run estimation) that arise potentially from resource price shocks and other unobserved common factors, and allow countries to respond differently to these shocks. four cross-sectional dependence tests namely, Breusch and Pagan LM test (CD1), Pesaran CD test (CD2), Frees’ test (CD3) and Friedman’s test (CD4) where tested. The study adopted the methodology developed by Pesaran (2006) for estimation which is consistent under both cross-sectional dependence and cross-country heterogeneity. Using natural resource rent as a proxy for rent-seeking economy, the results indicated that natural resource contributed positively to real income of sub-Saharan African Countries, and cross-country dependencies is much evident among these countries.
Keywords: Dutch Disease, cross-sectional dependence, rent-seeking and natural resource