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Institutional quality and economic growth in Sub-Saharan Africa: a panel data approach

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  • Mohammed Seid Hussen

Abstract

Purpose - The main purpose of this study is to examine the impact of different dimensions of institutional quality indices on the economic growth of Sub-Saharan African (SSA) countries. Design/methodology/approach - The study uses a panel data set of 31 SSA countries from 1991 to 2015 and employs a two-step system-GMM (Generalized Method of Moments) estimation technique. Findings - The study's empirical results indicate that investment-promoting and democratic and regulatory institutions have a significant positive effect on economic growth; however, once these institutions are taken into account, conflict-preventing institutions do not have a significant impact on growth. Practical implications - The study's findings suggest that countries in the region should continue their institutional reforms to enhance the region's economic growth. Specifically, institutions promoting investment, democracy and regulatory quality are crucial. Originality/value - Unlike previous studies that use either composite measures of institutions or a single intuitional indicator in isolation, the present study has employed principal component analysis (PCA) to extract fewer institutional indicators from multivariate institutional indices. Thus, this paper provides important insights into the distinct role of different clusters of institutions in economic growth.

Suggested Citation

  • Mohammed Seid Hussen, 2023. "Institutional quality and economic growth in Sub-Saharan Africa: a panel data approach," Journal of Economics and Development, Emerald Group Publishing Limited, vol. 25(4), pages 332-348, August.
    • Handle: RePEc:eme:jedpps:jed-11-2022-0231
    DOI: 10.1108/JED-11-2022-0231
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    Citations

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    Cited by:

    1. de Almeida, Sivanildo José & Esperidião, Fernanda & de Moura, Fábio Rodrigues, 2024. "The impact of institutions on economic growth: Evidence for advanced economies and Latin America and the Caribbean using a panel VAR approach," International Economics, Elsevier, vol. 178(C).
    2. Obed I. Ojonta & Jonathan E. Ogbuabor, 2024. "Effects of tourism and institutional quality on infrastructural development in Africa: new evidence from the system GMM technique," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 59(2), pages 101-117, April.

    More about this item

    Keywords

    Institutional quality; Economic growth; SSA; Panel data; PCA; System GMM; C33; O11; O43; O55;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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