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Economic growth, natural resource rents, and business openness nexus in

regions and income levels of Africa: evidence from recent panel estimators

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DOI: 10.1007/s13563-022-00362-y

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Mineral Economics
https://doi.org/10.1007/s13563-022-00362-y

ORIGINAL PAPER

Economic growth, natural resource rents, and business openness

nexus in regions and income levels of Africa: evidence from recent
panel estimators
Jean Pierre Namahoro1 · Wu Qiaosheng1 · Su Hui1

Received: 23 September 2022 / Accepted: 12 December 2022

© The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2023

Abstract
The effect of a difference in regions and economic levels, coupled with variations in natural resource rents, total import and
export, and economic growth, has been ignored in studies that investigated the link between natural resource rents, trade
openness, and economic growth across African countries. To overcome these deficiencies, this study aims to examine the
impact of total natural resource rents and trade openness in terms of total import and export on economic growth across
regions and the economic levels of African countries. Recent econometric models (CS-DL), variance decomposition, and
impulse response were employed for the panel of 48 African countries from 1980 to 2018. Findings revealed total natural
resource rent has a long-term significant negative effect on economic growth across regions and economic levels. Trade
openness in terms of total export has a significant positive effect on growth at the panel of 48 countries, while the effect of
both total import and export is mixed across regions and economic levels. A bi-directional causations relationship between
natural resource rents, trade openness, and growth in the panel of involved countries, some subpanels. It was noted that
trade openness counted higher variations of GDP than resource rents within 10 years. Empirical results of this study awaken
up regional and government policymakers to reflect on negative effects and neutral links noticed between variables across
economic levels and regions for reasonably sustainable developments across Africa.

Keywords Natural resource rents · Economic growth · Trade openness · Africa · CS-DL

Introduction Li et al. 2013). This phenomenon was defined as a natural

Natural resource-rich countries apparently avail the faster
and more sustainable development than countries with the
tiniest natural resources. However, the paradox has been
noted in some countries gifted with minerals resources,
which are classified in low- and lower and middle-income
countries, and suffering from extreme poverty, health and
wealth risks, and other living conditions deficiencies (Auty
and Furlonge 2019; Bolch et al. 2022; Havranek et al. 2016;
* Jean Pierre Namahoro
jpnama@cug.edu.cn
Wu Qiaosheng
qshwu@cug.edu.cn
Su Hui
huisu@cug.edu.cn
1
School of Management and Economics, China University
of Geosciences (Wuhan), Wuhan 430074, China
resource curse to natural resource-rich countries, whereas
countries with abundant natural resource prosperity, how-
ever, tend to raise in economy slower than resource-poor
countries (Auty 2002; Sachs and Warner 2001; Van der
Ploeg 2011). Apart from the world’s top rich countries, some
natural resource–rich countries experience the resource
blessing phenomena. For instance, Botswana raised from
middle-income to upper-middle-income countries, due to
resource policy implementation to advance its mining sec-
tors, prioritize edification, and differentiate the economic
activity (Bank 2018). Exporting total domestic natural
resources extracted from low-and lower-middle-income
countries to high-income countries is probably one of the
prior cause-led inadequate economic growth and resource
curse in natural resource-rich countries. This intensively
supports high-income countries due to a reasonable manu-
facturing capacity and sustainable development from indus-
trialization (Institute n.d.; Li et al. 2017; Nkulu et al. 2018)

13
Vol.:(0123456789)

and leads to high global demand for natural resources (Insti-
tute 2021).
In the last 30 years, the nexus of natural resourc rents and
economic growth attracted much attention from researchers
and policymakers in country-specific and sampled countries.
While studying this topic, resource abundance1 and resource
dependence2 are two main measures that have been inten-
sively considered (Apergis and Payne 2014; Bhattacharyya
and Hodler 2014; Boschini et al. 2013; Brunnschweiler
2008; Dietz et al. 2007). In this sense, several studies scru-
tinized the impact of natural resource rents on economic
growth and argued that the most mineral resource-rich
countries could not reach sustainable development (Auty
and Warhurst 1993; Auty 1990; Auty and Furlonge 2019;
Karl 1997). Others studies revealed that natural resources
have a significant contribution to economic growth under the
condition that appointing political economy and an adequate
level of institution quality should be well established in the
country (Amiri et al. 2019; Boschini et al. 2007). The stud-
ies conducted in the world’s top resource-rich countries and
top-rich countries revealed that the increase in total natural
resources leads to a reduction in economic growth in most
rich countries, while other studies argued that total natu-
ral resources positively contribute to increasing economic
growth (Ampofo et al. 2020; Ben-Salha et al. 2018; Jaunky
2013, 2012; Soulier et al. 2018). Ahmed et al. (2016) argued
that exploiting natural resources negatively affected eco-
nomic growth, and a two-way directional causal relationship
has been noted between two variables in Iran. Bhattacharyya
and Hodler (2014) predicted that resource revenues nega-
tively affect financial development in countries with poor
political institutions, compared to the countries with better
political institutions.
Trade openness as an aggregate of import and export
and economic growth nexus, on the other hand, has been
investigated across several countries. For instance, Sachs
and Warner (1995) studied the importance of non-restricted
trade on economic increment across 122 countries. In their
study, results revealed that countries that practice open
economies gain more income convergence compared to
countries that practice restricted economies. Findings, fur-
thermore, suggested that the variation in income genera-
tion between restricted and opened economies is due to the
reimbursements of business openness in the flexibility of
technology and investment. Moreover, the study considered
1
Resource dependence estimated by rents from natural resources
over economic growth (Bhattacharyya and Hodler 2014) or the share
of total exported natural resource in GDP (Boschini et al. 2013)/ the
share of natural resources in total exports (Dietz et al. 2007).
2
Resource abundance is captured by the annual per capita rent of
resource production (Apergis and Payne 2014; Brunnschweiler 2008).
13
J. P. Namahoro et al.
two-panel data sets (one of 56 countries in 1951–1998, and
another of 105 countries in the period of 1960–1997) that
revealed that the effect of business openness on economic
growth is permanently positive, statistically significant, and
economically sizable (Karras 2003). Few studies revealed
that business openness does not subsidize economic growth
in Asia and other regions (Adhikary 2011; Trejos and Bar-
boza 2015). Considering the fact that the majority of Afri-
can countries practice trade openness, however, the impact
of trade openness in terms of total import and export on
economic growth was rarely discussed across the African
continent. For instance, few studies argued that using trade
openness as a combination of total import and export may
lead to misleading information (Awokuse 2008; Esfahani
1991; Riezman et al. 1995).
In the case of Africa, Sachs and Warner (1997) showed
that the entire continent experiences slow economic growth
due to the restricted trade openness to international markets
coupled with poor economic policies and several landlocked
countries. Ampofo et al. (2022) used NARDL and showed
that natural resource rents reasonably promote economic
growth in Equatorial Guinea. However, it is well-known
that Africa is rich-in-natural resources across regions but
severely experiences the natural resource curse and highly
depends on resource rent. And yet, no study has consid-
ered the fact that natural resources vary across the Afri-
can regions. Various studies used several methods, such
as pooled mean group (PMG), autoregressive distributed
lags (ARDL), two-way fixed and random effect models, and
others to examine the trade openness and economic growth
linkage in African countries. Most of them noticed that
non-restricted trade positively supports economic growth
in 42 Sub-Saharan countries (Zahonogo 2016), seven coun-
tries (SADC) (Dava 2012), Cote d’ Ivoire (Keho 2017), and
Ghana and Nigeria (Khobai et al. 2018; Olufemi 2004).
Other studies noted that trade openness negatively affects
economic growth in South Africa and Kenya (Musila and
Yiheyis 2015; Polat et al. 2015). Most of those studies
aggregated trade openness by combining total import and
export of country-specific or sampled countries, while each
variable differently impacted economic growth.
Various gaps have been identified from existing studies,
such as contradicted results, and natural resource abun-
dances and resource dependence differ across the regions.
Again, trade openness in terms of import and export differs
across countries due to reasonable inequality in economic
levels and trade restrictions. However, to overcome these
deficiencies, this study involved 48 countries of Africa clas-
sified into 5 regions and 4 economic groups and examine the
impact of natural resource and trade openness on economic
growth. Classifying these countries into subgroups allows
this study to highly contribute to the sustainable develop-
ment of African content across regions.
Economic growth, natural resource rents, and business openness nexus in regions and income…
The novel contribution of this study is as follows: First,
this study is the first to investigate the impact of total natural
resource rents, and trade openness in terms of total import
and export on economic growth in the panel of 48 coun-
tries from Africa divided into five regions (north, west, east,
central, and south) and four economic levels (low-, lower
and middle-, upper-middle-, and high-income countries)
of Africa. Second, this study is the first that determines to
which extent total natural resource rents, total import, and
export exert on economic growth in involved countries. The
new empirical findings across regions and economic levels
can assist regional policymakers and government officials to
understand and monitor the effect of natural resource rents
and trade openness in the line with sustainable development.
The quality of this study was supported by using cross-sec-
tionally augmented distributed lags (CS-DL), which is the
most recent panel estimator. This estimator is the potential to
examine the relationships between variables in the presence
of cross-sectional dependence, heterogeneity, and collinear-
ity compared to standard panel data estimators.
In summary, this study contributes to understanding to
which extent total resource rents and trade openness in terms
of total import and export exert on economic growth and
determines the influence of these variables on economic
growth across economic groups and regionals of Africa. The
most recent estimator, which is CS-DL, variance decomposi-
tion, and impulse response analysis have been employed for
the dataset of the period of 1980–2018. The novel findings
and policy implications of this study will awaken regional
policymakers and governments to establish new policies in
favor of the sustainable development of Africa.
The rest of the article is presented as follows: review of
related literature is in the “Review of related studies” sec-
tion, methods and data are presented in the “Methods” sec-
tion, the results are presented in the “Results and discussion”
section, and the conclusions are presented in the “Conclu-
sion and policy implications” section.
Review of related studies
During the last few decades, theoretical support coupled
with empirical studies concentrating on the effect of natu-
ral resources and trade openness on economic growth has
advanced. Various literature focused on the side effects of
natural resources, conducted in upper-middle- and high-
income groups, particularly from natural resource-rich
countries and world’s top rich countries, although some
top-resource rich countries are classified in low- and lower-
middle-income groups (see Badeeb et al. 2017; Bank 2018;
Boschini et al. 2007; Harvey et al. 2010; Karras 2003; Lutz
1999; Parsons 1954; Rostow 1990; Sachs 2007; Viner 1952).
On the other hand, studies conducted on the link between
trade openness and economic growth focused on sampled
countries or country-specific, regardless of economic lev-
els and regions of the involved country in the study, (see
Awokuse 2008; Esfahani 1991; Hye and Lau 2015; Riezman
et al. 1995; Ulaşan 2015). Therefore, this section summa-
rizes the existing studies related to this topic within the theo-
retical background, natural resources-trade openness-growth
nexus, and existing methods that have been frequently used
in Africa and other regions.
In the case of the theoretical background of how natural
resource use promotes a nation economic growth, the World
Trade Organization (WTO) released a report, which defined
natural resources as “stocks of materials that exist in the
natural environment that are both scarce and economically
useful in production or consumption, either in their raw state
or after a minimal amount of processing” (Bacchetta et al.
2010). On the other hand, the former meaning of natural
resource-use highlights the existence of economic profits
from natural resources, and the related studies emphasized
two opposite effects of natural resources on a country
progress in development, which are blessing or curse. In
this sense, countries gifted with valuable natural resources
are quicker to be developed than nations without valuable
resources; this, therefore, supports the blessing hypothesis
(Bank 2018; Parsons 1954; Rostow 1990; Sachs 2007;
Viner 1952). Other studies oppose the blessings hypothesis
and state that abundant natural resource is a curse for the
economic development of a country, due to the volatility
of resource price at the international markets. Furthermore,
several studies argued that the resource curse is linked with
unstable institutions, unsustainability, war, and cyclical
Dutch diseases, leading to undesirable side effects on
economic growth, and most countries are classified into low-
and lower-middle-income countries (Badeeb et al. 2017;
Boschini et al. 2007; Harvey et al. 2010; Lutz 1999). The
lead causes of this resource curse, however, are defined as
natural resources-conflicts in some African countries, which
lead to poverty persistence, and a high number of countries
are classified as low- and lower-middle-income countries
(Caramento and Messages 2020; Department 2017; Katz-
Lavigne 2019; Linnecke 2016). On the other hand, several
studies debated on the natural resource abundance and
resource dependence as two main measures of natural
resource revealed that natural resource production and
export contain a high share of a country income (Apergis and
Payne 2014; Bhattacharyya and Hodler 2014; Boschini et al.
2013; Brunnschweiler 2008; Dietz et al. 2007). In the case
of the trade openness-growth link, export-led growth and
import-led growth have been examined; results revealed that
ignoring one input (either export or import) or combining
them may lead to misleading information (Awokuse
2008; Esfahani 1991; Riezman et al. 1995). A lower trade
barrier in terms of export and import negatively affects
13

economic growth, as argued by Ulaşan (2015), and trade
openness as an aggregate of import and export negatively
impacts economic growth (Hye and Lau 2015).
In the case of natural resources, trade openness, and
growth nexus, there is growing literature in country-spe-
cific and sampled countries across the globe. One study
conducted at the global level has examined the impact of
trade openness on economic growth by considering two-
panel datasets: one of 56 countries from 1951 to 1998,
and another of 105 countries from 1960 to 1997 across the
globe. The findings revealed that the impact of trade open-
ness positively and significantly impacted economic growth,
which is permanent and economically sizable (Karras 2003).
Another study globally conducted a comparative study on
poor countries with better political institutions and predicted
the impact of resource revenues on financial development
over 133 countries for a period of 1970–2005, predictions
revealed that resource revenues negatively affect financial
development in countries with poor political institutions,
compared to the countries with better political institutions
(Bhattacharyya and Hodler 2014). The impact of total natu-
ral resource rents on economic growth has been examined
in eight world’s top-mineral-rich countries from 1970 to
2013; results indicated that natural resource rent positively
impacted economic growth in long-term, noted feedback
hypothesis between two variables in the panel of consid-
ered countries (Ben-Salha et al. 2018). A similar study was
conducted in ten world’s top natural resource–rich countries
from 1980 to 2017; findings reveal the nonlinear asymmetric
relationships between total resource rents, business open-
ness, and economic growth in country-specific involved in
the study (Ampofo et al. 2020).
In the case of Africa, despite very few studies examining
the link between total natural resource rents and economic
growth in sampled world’s top natural resource–rich nations
and top rich countries were considered some African coun-
tries (Ampofo et al. 2020; Ben-Salha et al. 2018), there is
neither a study conducted in country-specific nor a sampled
African countries. Although the impact of import and export
as aggregate on economic growth was rarely discussed sepa-
rately in Africa, on the other hand, the link between trade
openness as an aggregate of import and export and economic
growth has intensively been examined across sampled Afri-
can countries and country-specific. For instance, Zahonogo
(2016) explored the link between trade openness and growth
in Sub-Saharan countries from 1980 to 2012; results showed
that business openness has a beneficial nonlinear effect on
economic growth. The impact of trade liberalization in terms
of export and import on economic growth has been exam-
ined in seven African countries (SADC), findings revealed
the significant positive of international trade on growth in
the panel of considered countries, and similar results were
obtained in country-specific (Dava 2012). International free
13
J. P. Namahoro et al.
trade and economic growth have also been investigated in
Ghana and Nigeria; findings illustrated that non-restricted
trade has a significant positive and insignificant negative in
Ghana and Nigeria, respectively. Non-restricted trade has
a positive influence on GDP across 38 African countries,
argued by Yeboah et al. (2012). Other studies conducted
on this topic in country-specific, for instance, Keho (2017),
argued that trade openness positively affects economic
growth in the long and short run in Ivory Coste. The study
conducted in Nigeria showed the unidirectional causal con-
nection, which runs from business openness to economic
growth (Olufemi 2004). In South Africa, Polat et al. (2015)
examined the link between international business and eco-
nomic growth from 1970 to 2011; results showed that busi-
ness openness harms economic growth. Musila and Yiheyis
(2015) explored the effect of international trade on eco-
nomic growth in Kenya, findings indicated that trade sup-
ports growth. Therefore, investigating the impact of natu-
ral resource rents and non-restricted trade in terms of total
import and export on economic growth transversely regions
and economic levels of Africa can add a valuable contribu-
tion to the literature.
The existing related studies have used various first-gen-
eration estimators to show how total natural resources and
trade openness in terms of total import and export affect eco-
nomic growth. However, these estimators assume cross-sec-
tional dependence, ignore heterogeneity, and collinearities
that may exist among variables, and this leads to inconsistent
results or misleading information (Breitung 2005). Very few
studies have used estimators from the second generation,
such as mean group, dynamic fixed effect, and pooled mean
group. Therefore, this study uses the new estimator, panel
cross-sectionally augmented distributed lags (CS-DL) antici-
pated by Chudik et al. (2016). This estimator estimates the
long-run relationship between variables in large dynamic
heterogeneous panel data models with cross-sectionally
dependent errors. It is compared with more standard panel
data estimators (first and some of the second generations)
that are based on autoregressive distributed lag (ARDL)
specifications.
Methods
This part summarizes the data used and methods which
have been grouped into the testing framework and estima-
tion framework and associated findings. We noted that it
is important to conduct statistical tests within the testing
framework including cross-sectional dependence, panel unit
root, and Westerlund cointegration tests for variables. The
assessment framework is composed of a panel estimator,
causation test, variance decomposition analysis, and impulse
response.
Economic growth, natural resource rents, and business openness nexus in regions and income…

Model formulation ∑T
𝜀 𝜀
t−1 ij ji
𝜌ij = 𝜌ji = ∑ 1 ∑ (5)
T T
This study objected to explore the effect of natural resource ( t−1 𝜀2ij ) 2 ( t−1 𝜀2jt )1∕2
rents and business openness in terms of total import and
export on economic growth across regions and economic where 𝜀ij and𝜀ji are residuals.
groups of Africa. To efficiently reach the purpose of the
investigation, the current input of growth (labor and capital) is CIPS unit root test
used as a control in the exogenous growth model of economic
growth against its determinants, while interrelation between PESARAN (2007) proposed a second-generation CIPS unit
regressors is considered invariant. The variables have trans- root for the panel dataset. By considering the average level
formed into a natural log, and for the country i at the time t , of lags and differences for each unit, this test allows the
GDPit is obtained from below mathematical expression: cross-sectional dependence. This panel unit test is in the
form of cross-sectionally augmented Dickey-Fuller and can
lnGDPit = 𝛼0i + 𝛼1i lnTEit + 𝛼2i lnTI it +𝛼 3i lnTRRit
be estimated in the following:
(1)
+ 𝛼4 lnLabit + 𝛼5 lnKit + uit ∑p ∑p
Δyit = 𝛿i + 𝛽i yi,t−1 + 𝛾i yt−1 + 𝜋 Δyt−j + 𝜏 Δyi,t−j + 𝜀it
j=0 ij j=1 ij
where i = 1, 2, ...N indicates the nation, t = 1, 2, ...T time,
(6)
GDPit is the economic growth, TEit is total import, TI it is
total import, and TRRit is total resource rents, Labit and Kit yt−1 and Δyt−j are the cross-sectional averaged lags and
are labor and capital, respectively. 𝛼0i is the hidden country difference and their regression coefficients 𝛾 and 𝜋 , respec-
fixed effect, 𝛼1 − 𝛼5 are the long-term steadiness coefficients, tively. 𝛿 , 𝛽 , and 𝜏 are the intercept, trends, and lead coef-
and uit is the residual. ficient, respectively (see Pesaran 2007). Therefore, CIPS
unit root value is computed based on the cross-sectionally
Cross‑sectional dependence tests augmented Dickey-Fuller (CADF) statistics as follow:
∑n
CIPS = n−1 CADF i (7)
GOLDIN (1966) recommended that cross-sectional depend- i=1
ence is the most crucial problem to be addressed in the panel For n is the dataset size.
dataset. Ignoring this issue in the estimation process tends
to bias estimates and influence decisions. To respond to this
Panel cointegration test
issue, Pesaran (2004) established tests, such as cross-sec-
tional dependence (CD) and Lagrange multiplier (LM), and
WESTERLUND (2005) has proposed the potential error cor-
Breusch and Pagan (1980) built the LM test for distinguish-
rection cointegration test for the panel dataset. Due to the pos-
ing cross-sectional dependence. The tests built by Pasaran
sible counted cross-sectional dependence among variables, this
potentially handle cross-sectional dependence within a big
approach uses an error correction feature and verify coupled
panel dataset of dimensions n and for fixed and changeable
diverse hypothesis of no cointegrations in a unit of panels and
time T . The test statistic for changeable time and large size
all unit of panels. The test statistic is estimated as follows:
can be calculated from the below model:
�
( �
)
1∕2 ∑n−1 ∑n Δzit = 𝛼i di + 𝜗i zi(t−1) + 𝜋i yi(t−1)
1
(T 𝜌2 − 1) → n(0, 1) (2)
/
LM = [ n(n−1) ] (8)
i=1 j=i+1 ij ij ∑m ∑m
+ 𝜙ij Δzi(t−1) + 𝜑ij Δyi(t−1) + 𝜔it
j=1 j=0
While for fixed time T and large size (n), the test statistic
is expressed as follows: where 𝜗i and di are the adjustment term and deterministic
vector components, which can be constant or linear time
1∕2 ∑n−1 ∑n
CD = [ 2 n(n−1) ] T 𝜌2 (3) trends. zit = (xit , yit ) is the cointegrated vector variables with
/
→ n(0, 1)
i=1 j=i+1 ij ij
k + 1 dimension. While xit and yit are the explanatory vari-
On the other hand, the Breusch-pagan LM (BLM) test is ables and response variables, respectively, and extra param-
effective for small dimensions and T and calculated as: eters explain the disturbance in the regressed variable. Thus,
∑n−1 ∑n Westerlund ECT statistics can be estimated under the esti-
BLM =
i=1
T 𝜌2
j=i+1 ij ij
→ 𝜒 2 [ n(n−1)∕ 2 ] (4) mate of 𝜗i , as follows:
( � ) −1
𝜌2ij is the correlation coefficient attained from the errors of ∑n
G𝜏 = n −1
𝜗i [SE 𝜗i ] (9)
Eq. (4), which can be obtained in the following equation: i=1

13
 J. P. Namahoro et al.

� −1 Causality has to be tested between yandx ; α is the static

(10)
∑n
G𝛼 = n −1
i=1
T𝜗i [𝜗i (1)] impact, while 𝛿 and 𝛽 are the autoregressive and regression
parameters, respectively, which differ within panels. k indicates
G =𝜏 and G𝛼 are group mean statistics for testing insig- evidence of the optimal lag and matching for all cross-sectional
nificant cointegration in units of panels. The denial of units of the panel. The hull hypothesis relies on the regression
this proposition infers the significant cointegration in the parameter, and links with the specific Wald statistics within the
cross-sectional panel. On the other hand, the groups’ mean cross-sectional units, computed from the following equation:
statistics for testing the cross-sectional cointegration in
� � � �
all units of panels is calculated in the following equation: Wi,T = 𝜃̂i R [𝜃̂i2 R(Zi Zi )−1 R ]−1 R𝜃̂i (15)

P𝜏 = 𝜗̂i [SE(𝜗̂i )]
−1
(11) For further detail on parameters, see Dumitrescu and
Hurlin (2012).

P𝛼 = T 𝜗̂i (12) Impulse response and variance decomposition

The refusal of the null proposition suggests insignificant
analysis
cointegration for the full panel.
Impulse response and variance decomposition analysis is a
famous approach for determining the shock effect to regres-
Cross‑sectionally augmented distributed lags
sors on a regressed variable in a prospective time horizon.
(CS‑DL)
Due to the dynamic scheme of the estimator, the shock effect
can be applied on the variable itself or conducted to the
The CS-DL econometric approach built by Chudik et al.
other variables. Lanne and Nyberg (2016) suggested that the
(2016) has been utilized to estimate relations among vari-
impulse response estimate was observed in a steady cohort
ables. This approach estimates the relations between vari-
matrix of the vector autoregressive model; therefore, this
ables in exchangeable non-homogeneous panel estimators
model is written as follows:
with cross-sectional dependent residuals. By comparing
CS-DL with more ordinary panel estimators (first and sec- ∑P
yt = Φi yt−i + 𝜀t (16)
ond generations) that rely on autoregressive distributed j=0
lag (ARDL) stipulations, CS-DL is sensible dynamics and
where Φi is the modest impulse response function can be
serial correlation. Thus, the CS-DL model can be expressed
assessed by transforming Eq. (12) to an infinite vector, and
in the following:
it can be assessed as follows:
∑PT �
yit = 𝛼i + 𝛽i yit−1 + 𝛿0i xit + 𝛿1i xit−1 + 𝜎il zit−l + uit
�
l=0
Ik,i=0
(13)
Φi = ∑i (17)
� j=1 t−j Aj , i = 1, 2, ..
Φ
i = 1, 2, … ., N , and zt = N , where
−1 ∑N
i=1 zit = (yt , xt , f t )
𝛽0 and 𝛿0 attained through arithmetic means of least squares where Ik is the uniqueness element of the cohort matrix, Aj
estimators of 𝛽i and 𝛿0i rely on Pesaran, (2006), and ft is is the matrix coefficient of the transformed vector autore-
the unseen mutual factor with varied feature, 𝛼i and uit are gressive to vector form of infinity, P is the optimum lag,
intercept and residual. CS-DL produces robust results as and 𝜀t is the residual. The l-step ahead predicted-residual is
explained by Ditzen (2021; see also Ditzen 2018). calculated as follows:
] ∑h−1
(18)
[
Dumitrescu‑Hurlin causality test yit+l − E yit+l = 𝜀i(t+l−1) Φi
i=0

where yit+l is variables at time t + l and E yit+l is the l-step

[ ]
DUMITRESCU and Hurlin (2012) causality test has been
ahead predicted vector in time-horizon t . The variation of
utilized to evaluate the directional causation between
variables was orthogonalized by utilizing matrix p (vector
selected variables. To effectively investigate causal links,
product of K × K ) to find the effect of the variable on the
three hypotheses were formulated: bi-directional causal
predicted-residual variance. Hence, the input of a variable
relations, one-way/unidirectional, and neutral causal rela-
n to the l-step ahead predicted-residual variance of variable
tion between variables. Thus, the causation link is tested in
m can be calculated in the following model:
the following model:
∑hI ∑hI � 2
∑K ∑k 2
𝜃nm = (im PΦin ) (19)
yi,t = 𝛼i + 𝛿k y
k=1 i i,t−k
+ 𝛽kx
k=1 i i,t−k
+ 𝜀it (14) i=0 i=0

13
Economic growth, natural resource rents, and business openness nexus in regions and income…

Table 1  Results of cross-sectional dependence tests

Region Breusch LM Pesaran CD
LnGDP lnTRR​ lnTI lnTE LnGDP lnTRR​ lnTI lnTE

Northern 198.264* 191.612* 365.750* 351.506* 8.634* 10.531* 18.430* 18.355*

Western 1035.132* 959.688* 2388.954* 2015.710* 6.996* 16.489* 47.423* 37.412*
Eastern 741.109* 300.350* 658.881* 565.470* 14.221* 12.497* 24.590* 20.656*
Central 323.093* 108.539* 337.166* 385.636* 1.027 4.885* 16.701* 13.575*
Southern 1284.856* 381.650* 1335.830* 1216.252* 19.421* 4.485* 36.135* 33.816*
Low-income 2529.487* 1420.699* 2594.433* 2122.277* 11.032* 27.153* 47.607* 32.564*
Lower-middle 3827.237* 1716.117* 5073.297* 4891.348* 38.265* 18.472* 70.239* 68.221*
Upper-middle 227.243* 61.695* 314.723* 341.207* 1.366 2.555*** 16.884* 18.105*
High-income 37.449* 17.568* 35.688* 32.585* 6.119* -4.191* 5.973* 5.708*
Africa level (Panel) 19,796.850* 8631.007* 23,718.090* 21,892.700* 52.741* 42.088* 147.426* 128.293*

*indicates significant level of 1%

***implies significant at 10%

For is is the ­sth column of Ik. Findings from CIPS unit root test

Data
The World Bank database (Report 2020) has mined to get
panel data from 1980 to 2018; on the total resource rents,3
trade openness in terms of total import and export, gross
domestic product (GDP) indicators, and control variables
(capital and labor) were employed. All variables measured
in constant 2010 US Dollars and have transformed into per
capita and natural logarithm to reach to strong analysis and
reduce heteroscedasticity bias. Therefore, variables were
noted as follows: GDP per capita used as economic growth
is GDPit , total import is TI it , total export is TEit , capital is
Kit , and labor is noted as labit . The appendix table 7 shows
descriptive statistics of all variables involved in this study.
Results and discussion
Findings from cross‑sectional dependence tests
Table 1 presents results from cross-sectional dependence
tests built by Pesaran (2004) and Breusch and Pagan (1980).
The findings from both cross-sectional dependence tests
show that no cross-sectional independence hypothesis is
declined at a 1% significance level across regions, economic
levels, and at the panel of African countries. This indicates
that cross-sectional dependence exists among selected vari-
ables. From this, the second-generation panel unit root test
proposed by Pesaran (2007) has been applied to check the
integration levels of used variables.
3
GDP has used to estimate the total resource rents (TRR) based on
its percentage in GDP count. This aggregate is equal to TRR (%GDP)
times GDP (in constant 2010 US dollars) divided by 100.
Table 2 illustrates findings from the CIPS unit root test
proposed by Pesaran (2007). These results show that the
null hypothesis of the unit root is rejected at the levels
for total natural resource rents across regions, economic
levels, and at the African levels. While the unit root
hypothesis is rejected at levels for GDP in the northern
region, low-, upper-middle-, and high-income. The unit
root hypothesis for total import and export is rejected at
either levels or first difference in regions and economic
levels. These imply that the optimum order of integration
of all selected variables is one.
Findings from panel cointegration test
Findings across regions, economic groups, and at the
African level from the panel cointegration test built by
Westerlund (2005) are presented in Table 3. Results
showed that the null hypothesis of no cointegration has
been rejected at 1%, 5%, and 10% significance levels
in all panels, which implies the presence of long-run
cointegration relationships among the selected vari-
ables, and long-run steady causal relationships between
total natural resource rents, business openness in terms
of total import and export, and economic growth within
regions, economic groups, and a panel of 48 countries in
the period of 1980–2018. The existence of subpanels and
panel cointegration causal relationship between variables
supported the main objective and allowed this study to
investigate the impact of total natural resource rents, and
non-restricted trade on economic growth across the Afri-
can countries divided into regions and economic levels.

13
 J. P. Namahoro et al.

Table 2  CIPS panel unit root Levels 1st difference

test results
Regions LnGDP lnTRR​ lnTI lnTE LnGDP lnTRR​ lnTI lnTE

Northern − 2.754* − 2.375** − 1.885 − 2.216 - - − 4.719* − 5.289*

Western − 2.268 − 2.272** − 2.606* − 2.558* − 5.036* - - -
Eastern − 2.235 − 2.827* − 2.043 − 2.173 − 4.643* - − 5.610* − 5.748*
Central − 1.769 − 2.863** − 2.336 − 2.355 − 4.327* - − 6.154* − 6.132*
Southern − 2.033 − 2.276** − 2.085 − 1.857 − 4.550* - − 5.173* − 5.393*
Low-income − 3.159* − 2.504* − 2.224 − 2.559 - - − 5.990* − 6.031*
Lower-middle − 2.293 − 2.206** − 2.626* − 2.594*** − 4.657* - - -
Upper-middle − 2.668* − 2.841* − 2.318*** − 2.787* - - - -
High-income − 3.159* − 2.504* − 2.224 − 2.559 - - − 4.823* − 4.276*
Africa level − 2.534 − 2.392* − 2.076*** − 2.050*** − 4.930* - - -

*, **, and *** are 1%, 5%, and 10% significant levels, respectively

Table 3  Findings from Westerlund panel cointegration test Table 4  Estimated results from CS-DL
Dependent: lnGDP Dependent lnGDP
Region Gτ Gα Pτ Pα Region lnTRR​ lnTI lnTE

Northern − 3.391* − 19.319* − 14.346* − 45.611* Northern − 1.015* − 0.047 − 0.015*

Western − 2.485* − 13.776* − 10.625* − 15.186* Western − 1.031* 0.102 − 0.005
Eastern − 2.844* − 15.197* − 11.162* − 21.915* Eastern − 1.032* 0.051 0.032
Central − 3.285* − 13.857* − 5.413* − 8.818* Central − 1.067* − 0.319 − 0.067
Southern − 2.553** − 10.296** − 9.429* − 11.312* Southern − 0.970* − 0.029 0.185
Low-income − 3.254* − 17.239* − 15.035* − 19.852* Low-income − 0.979* 0.055** 0.058**
Lower-middle − 2.575* − 10.799* − 13.102* − 11.209* Lower-middle − 0.995* 0.040 0.134**
Upper-middle − 2.986* − 18.168* − 8.062* − 18.065* Upper-middle − 1.006* − 0.433 0.542
High-income − 2.703*** − 10.108 − 4.199** − 11.737** High-income − 0.977* 0.107 0.094
Africa level − 2.904* − 14.160* − 22.587* − 16.852* Africa level (Panel) − 1.000* 0.024 0.121*
(Panel)
*, **, and *** present 1%, 5%, and 10% significant levels, respec-
*, **, and *** are 1%, 5%, 10% significant levels, respectively tively

Findings from cross‑sectionally augmented
distributed lags
Table 4 presents the short- and long-run impact of total natu-
ral resource rents and trade openness in terms of total import
and export on economic growth resulting from the CS-DL
estimator within regions and economic levels, and at the Afri-
can level. Findings revealed that CS-DL estimates are robust,
and supported by Ditzen (2018). The findings show that total
natural resource rents have a negative influence on economic
growth, which is statistically significant within regions and
economic levels and at the panel of considered countries.
In the case of the trade openness-growth link, total
import, and export present, the mixed effect (negatively and
positively) on economic growth within regions and eco-
nomic levels, due to import and export values, is different
across regions. Total import negatively and insignificantly
affects economic growth in North, Central, and Southern
regions, and Upper-middle-income countries, while the
import positively and insignificantly affects growth in West-
ern and Eastern regions and lower-middle-income countries,
and the impact is positive and significant in low-income
countries. More interestingly, the impact of total import on
growth is similar within regions and economic levels. On the
other hand, total export has insignificant negative effects on
growth in Western and Central regions, and significant in
northern regions. Total export has a positive and significant
impact on growth in low- and lower-middle-income coun-
tries, while the effect is insignificant in Eastern and Southern
regions, and Upper-middle- and high-income countries. In
the short run, the total export has a positive and significant
impact on growth in the northern region and low- and lower-
middle-income countries. This positive effect is insignificant
in eastern, central, and southern regions, and high-income
groups. Results from the Eastern region are similar to those
obtained in seven (SADC) countries which are located in the
eastern-southern regions (Dava 2012). At the panel of 48
countries, trade openness in terms of total import and export

13
Economic growth, natural resource rents, and business openness nexus in regions and income…
has a positive contribution to economic growth. Our findings
from the panel of 48 countries revealed that both total import
and export contribute positively to economic growth, which
is coinciding with those obtained in 38-African countries
(Yeboah et al. 2012) and 42-Sub Sahara countries (Zaho-
nogo 2016), where trade openness was a combination of
import and export.
More explicitly, for the full panel (African level), findings
imply that a 1% surge in natural resource rents leads to a 1%
reduction in economic growth. In the region levels, a 1%
increase in natural resource rents leads to a 1.015%, 1.031%,
1.032%, 1.067%, and 0.970% decrease in economic growth
in the northern, western, eastern, central, and southern
regions, respectively. Across economic levels, a 1% increase
in total natural resource rents leads to a 0.979%, 0.995%,
1.006%, and 0.977% decrease in low-, lower-middle-, upper-
middle-, and high-income groups, respectively. A 5% rise in
total imports leads to a 0.055% rise in economic growth in
low-income countries. A 1% surge in total export leads to a
0.015% decrease in the northern region, and a 5% surge in
total export leads to a 0.058% and 0.134% increase in eco-
nomic growth across low- and low-middle-income groups,
respectively. Similarly, at the African level, a 1% rise in total
export leads to a 0.121% rise in economic growth.
Findings from causalities and hypotheses
The causality results obtained by utilizing Dumitrescu and
Hurlin (2012) test are presented in Table 5 across regions
and economic levels of Africa. In regions, unidirectional
causation runs from natural resource rents to economic
growth is observed in the eastern, central, and southern
regions, which implies the contribution from resource rents
to economic growth. This hypothesis is running from growth
to resource rent which is noted in the Western region. An
undirected causal link running from the total import to
growth was observed in eastern and southern regions, indi-
cating that import causes the economic growth. The causa-
tion relation, which is running from growth to total import
is noted in all regions. Similarly, this growth hypothesis runs
from trade openness in terms of total export to growth noted
in the northern, western, central, and southern regions. A
two-way directed relation was seen between trade openness
(in both total import and export) and economic growth in
the southern region, and it is observed also between import
and economic growth in the eastern region. This implies
the contribution from total import and export to growth and
vice-versa across these regions.
At economic levels, a bi-directional causal relation is
noted between natural resource rents and economic growth
in low-income countries, implying that resource rents cause
growth, and vice-versa. The causal connection running
from growth to resource rents is noted in the high-income
groups. A two-way directed causation was seen between
trade openness in terms of total import and export and eco-
nomic growth in the low-income group. This causal relation
is also illustrated in lower-middle-income group between
total import and economic growth, and between export and
economic growth in upper-middle-income group. These
imply that resource rents and trade openness have a contri-
bution to the growth and vice-versa across income groups.
A one-way-directed causation running from growth to total
import and export is observed in upper-middle- and lower-
middle-income groups, respectively. At the African level,
a bi-directional causation is observed between total natural
resource rents, non-restricted trade in terms of total import
and export, and economic growth. These results reveal that
resource rents and trade openness in terms of total import
and export have a positive contribution to economic growth
and vice-versa across African countries.
Findings from Impulsive response and variance
decomposition
This approach is used to approximate which amount natural
resource rents and trade openness in terms of total import
and export can exert on economic growth across regions,
economic groups, and at the panel of selected countries Afri-
can level. The findings are available in Table 6. At the level
of Africa, findings reveal that 98.425% of the changes in
GDP can be described by pioneering shocks in GDP itself
and control variables, total natural resource rents contribute
0.629%, and trade openness in terms of total import and
export contribute 0.058%, and 0.886%, respectively. Trade
openness in terms of total import will contribute to GDP less
than that of total export.
In regions, the 10-year prediction revealed that natural
resource rents will contribute to GDP less than trade open-
ness in terms of total import and export, whereas 0.080%,
0.189%, and 0.858% changes in GDP can be explicated by
the pioneering shocks in the resource rents, total import,
and export, respectively, in the northern region. These find-
ings are parallel to results estimated in the western region,
whereas 0.301%, 0.381%, and 0.309% changes in GDP
can be clarified by the pioneering shocks in the natural
resource rents, and total import and export, respectively.
While the remaining variations can be explained by GDP
itself and control variables (capital and labor). In the east-
ern region, natural resource rents seemed to have a high
input to GDP than trade openness in both total import and
export, whereas 1.503%, 0.088%, and 0.208% changes in
GDP can be described by pioneering shocks in the natural
resource rents, total import, and total export. In the central
region, 0.515%, 2.883%, and 3.302% changes in GDP can
be clarified by pioneering shocks in natural resource rents,
total import, and total export, respectively. In the southern
13
 J. P. Namahoro et al.

Table 5  Results of causalities Regional/income groups Variables W-Stat (conserva- Variables W-Stat
and hypotheses tive hypothesis) (growth
hypothesis)

Northern GDP → TRR​ 1.601 TRR → GDP 3.361

GDP → TI 5.680* TI → GDP 3.001
GDP → TE 3.740*** TE → GDP 3.198
Western GDP → TRR​ 4.109* TRR → GDP 2.701
GDP → TI 10.650* TI → GDP 2.026
GDP → TE 9.131* TE → GDP 2.653
Eastern GDP → TRR​ 3.082 TRR → GDP 3.569***
GDP → TI 6.309* TI → GDP 3.739**
GDP → TE 3.269 TE → GDP 3.469***
Central GDP → TRR​ 3.083 TRR → GDP 3.944**
GDP → TI 4.843* TI → GDP 3.334
GDP → TE 7.307* TE → GDP 2.552
Southern GDP → TRR​ 3.153 TRR → GDP 3.712**
GDP → TI 7.382* TI → GDP 5.856*
GDP → TE 5.270* TE → GDP 6.985*
Low-income GDP → TRR​ 3.597* TRR → GDP 3.609*
GDP → TI 6.448* TI → GDP 3.350**
GDP → TE 4.132* TE → GDP 3.537*
Lower-middle GDP → TRR​ 2.795 TRR → GDP 2.867
GDP → TI 6.846* TI → GDP 5.629*
GDP → TE 5.351* TE → GDP 5.758*
Upper-middle GDP → TRR​ 1.826 TRR → GDP 2.686
GDP → TI 4.622* TI → GDP 1.976
GDP → TE 5.667* TE → GDP 4.618*
High-income GDP → TRR​ 11.523* TRR → GDP 2.293
GDP → TI 2.605 TI → GDP 3.555
GDP → TE 2.861 TE → GDP 1.245
Africa level GDP → TRR​ 3.290* TRR → GDP 3.170*
(Regional panel) GDP → TI 6.205* TI → GDP 4.185*
GDP → TE 4.727* TE → GDP 4.603*

*, **, and *** present 1%, 5%, and 10% significant levels, respectively

region, 1.004%, 4.321%, and 0.174% changes in GDP can be
described by pioneering shocks in the total natural resource
rents, total import, and total export, respectively.
Figure 1 indicates that in the northern region, the changes
in GDP itself have declined in the first 2 years and steadily
inclined in the third year up to the 10th year. The changes
of GDP itself slightly decreased in the western, steadily
increased in the eastern, and rapidly increased in the central
and southern regions. These indicate the augmentation of
control variables, such as capital and labor having a higher
share in GDP than resource rents, import, and export. The
changes in total natural resource rents slightly increased in
the central region and steadily increased in other regions. The
contribution of trade openness in terms of total import and
export in GDP remains constant in the northern region, highly
increased in the 2nd and 3rd year and rapidly decreased up
to the 10th year in the western region, and slightly increased
in the eastern, central, and southern regions. This indicates
that the share of trade openness in GDP is higher than that of
total resource rents within regions.
In the case of economic groups, results from Table 6
reveal that apart from the influence of GDP itself and control
variables, 0.784%, 2.893%, and 1.152% changes in GDP can
be clarified by pioneering shocks in the total natural resource
rents, total import, and total export, respectively, at the low-
income group. In the lower-middle-income group, 0.014%,
3.540%, and 0.096% changes in GDP can be explicated by
pioneering shocks in the total resource rents, total imports,
and export. These findings are parallel to those estimated
in the upper-middle-income group, whereas the innova-
tive shocks in total resource rents, total import, and export
can explain 0.227%, 5.677%, and 0.493% changes in GDP,
respectively. In high-income countries, 2.975%, 9.729%, and
0.073% variations in GDP can be described by pioneering

13
Economic growth, natural resource rents, and business openness nexus in regions and income…

Table 6  Impulse response and Regions Response Period Impulse variable

variance decomposition results variable
GDP TRR​ TI TE

Northern GDP 10 98.871 0.080 0.189 0.858

TRR​ 10 5.015 93.546 0.571 0.866
TI 10 4.824 64.414 28.192 2.568
TE 10 7.124 64.523 18.622 9.728
Western GDP 10 99.012 0.301 0.381 0.309
TRR​ 10 1.062 97.537 1.367 0.032
TI 10 28.206 20.485 50.888 0.419
TE 10 33.483 25.808 27.235 13.472
Eastern GDP 10 98.200 1.503 0.088 0.208
TRR​ 10 1.396 97.472 0.5005 0.630
TI 10 8.107 1.751 89.868 0.273
TE 10 12.996 4.186 65.448 17.368
Central GDP 10 93.298 0.515 2.883 3.302
TRR​ 10 6.151 63.126 28.393 2.328
TI 10 4.701 30.025 64.411 0.861
TE 10 7.293 24.069 60.537 8.0991
Southern GDP 10 94.499 1.004 4.321 0.174
TRR​ 10 0.672 98.950 0.223 0.153
TI 10 3.239 1.649 87.307 7.804
TE 10 3.996 1.684 78.767 15.552
Low-income GDP 10 95.169 0.784 2.893 1.152
TRR​ 10 2.463 96.835 0.162 0.538
TI 10 4.261 6.439 87.852 1.445
TE 10 7.479 9.252 58.800 24.468
Lower-middle GDP 10 96.349 0.014 3.540 0.096
TRR​ 10 1.189 97.504 1.011 0.293
TI 10 5.468 0.434 91.868 2.228
TE 10 5.828 2.893 77.816 13.462
Upper-middle GDP 10 93.601 0.227 5.677 0.493
TRR​ 10 2.424 81.049 9.020 7.506
TI 10 11.254 8.100 80.023 0.621
TE 10 12.383 8.802 73.504 5.308
High-income GDP 10 87.221 2.975 9.729 0.073
TRR​ 10 17.295 69.368 2.503 10.831
TI 10 30.451 6.314 54.382 8.851
TE 10 2.732 11.970 33.534 51.762
Panel (African level) GDP 10 98.425 0.629 0.058 0.886
TRR​ 10 0.775 97.800 0.968 0.456
TI 10 3.869 4.220 91.310 0.599
TE 10 5.801 7.282 73.917 12.998

shocks in the total natural resource rents, total import, and
export, respectively, within the 10-year forecast horizon.
Figure 2 illustrates that the changes in GDP itself coupled
with control variables rapidly increased in the first 3 years
and steadily increases in the third year up to the 10th year
in lower-middle-income level. In low-, upper-middle-, and
high-income groups, the variation of GDP itself slightly will
be decreased. The variation of total natural resource rents in
GDP slightly increased in high-income and steadily increased
in other economic levels. The variation of trade openness in
terms of total import and export in GDP will slightly increase
in lower-middle-, upper-middle-, and high-economic levels
and steadily decrease in low-economic levels. At the level of
Africa, the variation of GDP itself will be slightly increased,

13
 J. P. Namahoro et al.

Fig. 1  Impulse response of GDP, TRR, TI, and TE to GDP across African regions for a forecast of 10 years (blue color) with 95% CI (red color)

Fig. 2  Impulse response from GDP, TRR, TI, and TE to GDP across economic levels for a forecast of 10 years (blue color) with 95% CI (red
color)

13
Economic growth, natural resource rents, and business openness nexus in regions and income…
trade openness in terms of total import and export will stead-
ily increase, while total natural resource rents will remain
constant within the 10-year forecast horizon.
Conclusion and policy implications
Current literature has studied the natural resource rents,
business openness, and economic growth nexus across
the sampled nations; however, the dissimilar in the
regions and economic groups have ignored esteem to
growth and its determinants in Africa. Again, patterns
and variations in total natural resource rents and business
openness in terms of total import and export to affect
economic growth as control policy or causation are not
discussed. The study reflecting several subgroups can
bring a valuable contribution to novel findings towards
sustainable development in the continent of Africa. In
this esteem, our study initiated to study the impact of
total natural resource rents and business openness in
terms of total import and export on economic growth
with regions and economic groups in the continent of
Africa using the CS-DL estimator. The causality test has
been applied to investigate the causation relationships
among variables. Furthermore, to estimate the extent to
which extent natural resource rents and trade openness
can exert economic growth within 10 years, impulse
response and variance decomposition analysis were uti-
lized over the panel dataset of 48 African countries clas-
sified in five regions and four economic groups from
1980 to 2018.
The initial findings of this study were obtained from
the testing variables. The used tests agreed to the presence
of cross-sectional dependence, unit roots, and cointegra-
tion links among variables within regions and economic
levels, and at the set of involved countries. CS-DL results
revealed the negative and significant impact of total natu-
ral resource rents on economic growth across regions,
economic levels, and at combined sampled nations. Trade
openness in terms of total import negatively and insig-
nificantly affects growth and total export has a signifi-
cant positive effect on the combined 48 countries, and the
impact of both total import and export is diverse within
regions and economic groups.
From the causality test, a bi-directional causal link
was noted between total natural resource rents, trade
openness in terms of total export and import, and eco-
nomic growth at the combined selected countries. In
regions, unidirectional causation relation runs from total
resource rents to growth was observed in eastern, central,
and southern regions, and a causal link which runs from
growth to resource rents was illustrated in the western
region. A vice-versa directional causal relationship was
observed between trade openness in terms of total import
and export and growth in eastern and southern regions.
A single directional causal link that runs from growth
to trade openness is observed in the northern, western,
and central regions. in economic groups, a vice-versa
directional causal relationship was observed total natu-
ral resource rents and growth in the low-income group,
and a unidirectional causal link that runs from growth to
resource rents was observed in high-income groups. A bi-
directional causal relationship was observed among trade
openness in terms of total import and export and growth
in low-, lower-middle-, and upper-middle-income groups.
Furthermore, we estimated to which extent the total
natural resource rents and business openness in terms of
total import and export can apply to economic growth over
10 years. Findings specified that although both trade open-
ness and total resource rents have very low changes in GDP
which can be explicated by their pioneering shocks, total
natural resource rents have a lower variation in GDP than
those from trade openness in terms of total import and
export in regions, economic groups, and at the full panel of
all countries. The overall results showed that the impact of
total natural resource rents and business openness in terms
of total import and export on economic growth in Africa
can be challenged by either overlooked structural economic
variations, even though total resource rent has a significant
negative effect on growth.
With regard to our results, policy implications are
addressed to African and specific government policymak-
ers as follows. Firstly, our verdicts recommend that the
total natural resource rents negatively affect economic
growth, while trade openness has a mixed impact (nega-
tive and positive) in terms of total import and export on
growth within the regions and economic levels, and at the
panel of 48 countries. Hence, suitable policies which allow
natural resource rents to be properly addressed to improve
economic growth can be executed in African countries.
Again, to boost economic growth, governments of African
countries are encouraged to follow exploration and extrac-
tion activities and improve production activities, which
may support trade openness. Secondly, for the case causal
relationship between variables, a neutral causal link has
been noted between resource rents and growth in some
regions and economic levels; therefore, enhancing financial
systems can be encouraged also as a potential mechanism
through which resource rents and trade openness may posi-
tively impact economic growth in all countries. Thirdly,
findings from impulse response and variance decomposi-
tion analysis show that total natural resource rents have
little contribution to economic growth; hence, motivat-
ing investors to extract and explore natural resources can
increase the share of resource rents in economic growth
across regions and economic levels.
13
 J. P. Namahoro et al.

Appendix

Table 7  Descriptive statistics of variables

Region Variable Mean Median Maximum Minimum Std. Dev Skewness Kurtosis Observations

Northern lnGDP 3.467283 3.421793 4.081519 3.042492 0.265746 0.672299 2.429748 234
lnTRR​ 2.211298 2.271979 3.8831 0 0.857178 − 0.53702 3.382175 234
lnTI 2.710384 2.798449 3.827281 0 0.670303 − 2.63508 11.79907 234
lnTE 2.667332 2.726672 4.018219 0 0.698232 − 2.10113 9.687676 234
Western lnGDP 2.894586 2.849847 3.572872 2.436149 0.223166 0.743491 3.212536 585
lnTRR​ 1.636881 1.680026 2.727143 0 0.497869 − 1.37698 6.14718 585
lnTI 2.151673 2.230267 3.391175 0 0.59836 − 1.7945 8.115155 585
lnTE 1.978463 2.083863 3.250627 0 0.587828 − 1.44864 6.512852 585
Eastern lnGDP 2.895986 2.883446 4.158877 2.215734 0.454877 1.093763 3.872054 351
lnTRR​ 1.313191 1.524467 2.580618 − 2.32306 0.814174 − 2.51395 10.10344 351
lnTI 1.981648 1.995769 4.206938 0 0.944259 − 0.29405 3.894082 351
lnTE 1.699038 1.777977 4.149171 0 0.901419 0.24135 4.056101 351
Central lnGDP 3.17321 3.030216 4.312451 2.440997 0.546682 0.592769 2.002855 273
lnTRR​ 2.33484 2.058718 3.992126 0 0.788735 − 0.00293 3.089846 273
lnTI 2.167822 2.273828 4.007954 0 1.061713 − 0.81326 3.057667 273
lnTE 2.155193 2.248295 4.311126 0 1.1355 − 0.46952 2.642755 273
Southern lnGDP 3.278275 3.349353 4.02437 2.216073 0.444843 − 0.3989 2.117437 429
lnTRR​ 1.757746 1.851066 3.311479 − 0.95467 0.831493 − 1.09407 4.132589 429
lnTI 2.351407 2.756781 3.785691 0 1.143907 − 1.18724 3.152108 429
lnTE 2.289044 2.716938 3.698793 0 1.147046 − 1.05399 2.863395 429
Low-income lnGDP 2.69562 2.707764 3.278775 2.215734 0.185517 − 0.14777 3.421582 702
lnTRR​ 1.568056 1.644254 2.580618 -2.32306 0.63304 − 3.52975 18.91706 702
lnTI 1.859397 1.957697 2.780969 0 0.623655 − 1.95272 6.565807 702
lnTE 1.63811 1.737116 2.599231 0 0.603182 − 1.3619 4.773208 702
Lower-middle lnGDP 3.190973 3.153272 3.683824 2.67809 0.234317 0.159996 2.367724 819
lnTRR​ 1.931717 1.8965 3.311479 0 0.595953 − 0.07455 3.283941 819
lnTI 2.345612 2.497333 3.402803 0 0.8114 − 1.85209 6.159833 819
lnTE 2.250888 2.382332 3.470949 0 0.804037 − 1.61378 5.528447 819
Upper-middle lnGDP 3.769111 3.824135 4.312451 2.695666 0.328126 − 1.66073 6.018878 234
lnTRR​ 2.485599 2.446863 3.992126 0 0.985489 − 0.78473 3.432428 234
lnTI 2.747687 3.164955 4.007954 0 1.185713 − 1.74811 4.44123 234
lnTE 2.814382 3.213957 4.311126 0 1.224561 − 1.67802 4.332498 234
High-income lnGDP 3.829902 3.875023 4.158877 3.366308 0.201798 − 0.60375 2.620445 78
lnTRR​ 0.306596 0.03802 1.294921 − 0.95467 0.628353 0.156679 1.774029 78
lnTI 3.533448 3.481679 4.206938 2.708929 0.396659 − 0.1175 2.312115 78
lnTE 3.343132 3.376617 4.149171 2.374981 0.515541 − 0.13921 1.899986 78
Panel of all regions lnGDP 3.095039 3.019533 4.312451 2.215734 0.444588 0.521062 2.50075 1872
lnTRR​ 1.777475 1.77404 3.992126 − 2.32306 0.810582 − 0.79062 6.266546 1872
lnTI 2.240965 2.340076 4.206938 0 0.912569 − 1.03987 4.135466 1872
lnTE 2.112333 2.180869 4.311126 0 0.93928 − 0.63175 3.361423 1872

GDP, gross domestic product; TRR​, total natural resource rents; TI, total import; and TE, total expor

13
Economic growth, natural resource rents, and business openness nexus in regions and income…
Supplementary Information The online version contains supplemen-
tary material available at https://​doi.​org/​10.​1007/​s13563-​022-​00362-y.
Author contribution Jean Pierre Namahoro writes the draft and final
version of manuscript, data analysis, and interpretation, Wu Qiaosheng
revised and funding acquisition, Su Hui performed the manuscript revi-
sion and data acquisition.
Funding This study was supported by the National Social Science
Foundation of China (grant number: 19ZDA112) and the National
Natural Science Foundation of China (grant number: 71991482).
Data availability The dataset used is available from the World Bank
database (Report 2020).
Declarations
Ethics approval and consent to participate No applicable.
Consent for publication All authors agree for publication.
Competing interests The authors declare no competing interests.
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