Infrastructure threshold and economic growth in Africa: do income level and geography matter?

Though infrastructure investment has been shown to enable growth in many countries, it appears not to be the case for many African countries and consequently is failing to help bridge the economic growth shortfall of the continent. Why is that, and how could it be reversed? We address this matter by using a Panel Threshold Regression of real economic growth on major infrastructure types, of 42 African countries, from 2000 to 2015. We find that electricity, water, transport and, to a lesser extent, information and communication technology investments have identifiable thresholds for these countries, with upper- and lower-middle-income countries being nearer to these thresholds than low-income countries. Furthermore, we find infrastructure quality to have more economic impact than infrastructure access for resource-endowed countries that use high intensity production form than for less-resource-endowed ones that deploy low intensity production form. And both infrastructure access and quality have more economic impacts for landlocked countries than for coastal countries. Overall, our findings suggest several lessons on how African countries can deploy infrastructure funds much more productively, going forward.