Natural resources and economic growth in WAEMU: the role of export diversification

This study analyzes the conditional effects of natural resource dependence on export diversification and economic growth. Unlike most previous studies, which only considers the effect of diversification on a single factor, this study combines the interactive effect between natural resources and export diversification in one model. To achieve, we estimate an Autoregressive Distributed Lag (ARDL) model for WAEMU countries, in which the average level of dependency on natural resources was 7.89% from 1996 to 2018. Our results reveal that natural resources negatively affect economic growth. Considering the interaction between natural resources and export diversification, the findings show that export diversification is an appropriate lever to take advantage of natural resources. These results suggest that countries need to address the root of structural vulnerability by reducing export concentration to turn the natural resource curse into a blessing.