Impact of Natural Resource on Instability in Africa: A Bias-Corrected Least Squares Dummy Variable Approach

Abstract

This paper examines the influence of natural resources on instability over
the 2011–2022 period in 50 African countries using the bias-corrected
dummy variable (LSDVC) estimator. The analyses were initiated using
the Blundell and Bond estimator. The empirical findings show that
natural resources have a significant positive relationship with instability
in Africa. This result was consistent when natural resources was
decomposed into different indicators. Specifically, results shows that oil
rent and coal have positive and significant impact on instability.
Furthermore, the results further show that institutional quality will
significantly reduce the detrimental effect of natural resources on
instability. However, this finding is not significant oil rent. The results
indicate that sustaining a conflict-free economy necessitates low
unemployment and reduced population growth rates to mitigate the risk
of conflict. Consequently, governments seeking to mitigate instability
should focus on eradicating or diminishing unemployment and regulating
the population growth rate. Policymakers must emphasise equitable
resource utilisation and revenue distribution, since these strategies can
substantially mitigate instability.