Diamonds are a country's best friends! An empirical study of economic growth and natural resources in Sub-Saharan Africa

Sammanfattning: This thesis analyses the impact of several natural resources on economic growth in the empirically rather poor Sub-Saharan Africa during the time period of 1990-2010. By performing panel regression analyses based on economic and political data from the countries in Sub-Saharan Africa, the conclusion that the production of diamonds promotes economic growth the most could be made. As an example, the extraordinary and for this region rather unusual development of Botswana will be discussed. This country managed to transform itself from one of the poorest countries in the world to an upper-middle income country with extremely high growth rates by combining diamond extractions with stable political policies. Theories of economic growth and natural resources, such as the Dutch Disease and the curse of natural resources, will be analysed. Furthermore, some guidance in future decision making in policy questions will be performed – if a Sub-Saharan African country in the future happens to find both oil and diamonds, this thesis concludes that the country should invest in the production of diamonds because of its statistically significant greater impact on economic growth and development.