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State Business Relations and Economic Growth in Sub-Saharan Africa

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  • Kunal Sen
  • Dirk Te Velde

Abstract

This paper contributes to the literature on the determinants of economic growth in sub-Saharan Africa by examining the effect of effective state-business relations on economic growth for a panel of 19 sub-Saharan African countries for the period 1970-2004. We propose a measure that we argue captures the various dimensions of effective state-business relations in sub-Saharan Africa. We then estimate standard growth regressions using dynamic panel data methods with this measure, along with the more conventionally used measures of institutional quality such as degree of executive constraints, the rule of law, the degree of corruption and the quality of the bureaucracy. Our results show that effective state-business relations contribute significantly to economic growth - countries which have shown improvements in state-business relations have witnessed higher economic growth, controlling for other determinants of economic growth and independent of other measures of institutional quality.

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  • Kunal Sen & Dirk Te Velde, 2009. "State Business Relations and Economic Growth in Sub-Saharan Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 45(8), pages 1267-1283.
    • Handle: RePEc:taf:jdevst:v:45:y:2009:i:8:p:1267-1283
    DOI: 10.1080/00220380902863307
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    References listed on IDEAS

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    1. Elsa V. Artadi & Xavier Sala-i-Martin, 2003. "The Economic Tragedy of the XXth Century: Growth in Africa," NBER Working Papers 9865, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Oznur Ozdamar & Eleftherios Giovanis & Sahizer Samuk, 2020. "State business relations and the dynamics of job flows in Egypt and Turkey," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(4), pages 519-558, December.
    2. Alberto Lemma & Dirk Willem te Velde, 2015. "State-business relations as drivers of economic performance," WIDER Working Paper Series wp-2015-098, World Institute for Development Economic Research (UNU-WIDER).
    3. Ernest Aryeetey & Nkechi Owoo, 2015. "Ghana's experiments with business-government co-ordination," WIDER Working Paper Series 099, World Institute for Development Economic Research (UNU-WIDER).
    4. G. Alivelu & K. Srinivasulu & M. Gopinath Reddy, 2010. "State Business Relations and Performance of Manufacturing Sector in Andhra Pradesh," Governance Working Papers 22773, East Asian Bureau of Economic Research.
    5. Burhan Can Karahasan & Firat Bilgel, 2018. "State-Business Relations and Financial Accessibility: Explaining Firm Performance in the MENA Region," Working Papers 1279, Economic Research Forum, revised 26 Dec 2018.
    6. Kathuria, Vinish & Natarajan, Rajesh Raj & Sen, Kunal, 2010. "Does the institution of State Business Relations matter for Firm Performance? – A study of Indian Manufacturing," MPRA Paper 23053, University Library of Munich, Germany.
    7. Vinish, Kathuria & Seethamma Natarajan, Rajesh Raj & Sen, Kunal, 2010. "Rain, Rain, Go Away? The Investment Climate, State Business Relations and Firm Performance in India," MPRA Paper 20316, University Library of Munich, Germany.
    8. Grumiller, Jan & Raza, Werner G., 2019. "Towards an institutional setup for industrial policy in late industrialization in the 21st century," Working Papers 61, Austrian Foundation for Development Research (ÖFSE).
    9. Hampwaye Godfrey & Jeppesen Soeren, 2014. "The role of state- business relations in the performance of Zambia’s food processing sub-sector," Bulletin of Geography. Socio-economic Series, Sciendo, vol. 26(26), pages 1-10, December.
    10. Illien, Patrick & Bieri, Sabin, 2024. "Political settlements analysis and the study of pro-poor development: Laos and Rwanda compared," World Development, Elsevier, vol. 181(C).
    11. Kathuria, Vinish & Seethamma Natarajan, Rajesh Raj & Sen, Kunal, 2010. "State business relations and manufacturing productivity growth in India," MPRA Paper 20314, University Library of Munich, Germany.
    12. Babarinde rene ADEROMOU & Mahmoudou Bocar SALL, 2019. "Minority investor protection and corporate governance practices," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 10(2), pages 102-117, December.
    13. Vinish Kathuria & Rajesh Raj S.N. & Kunal Sen, 2013. "Institution of State–Business Relation and Its Impact on Manufacturing Productivity Growth in India: A Post-reform Analysis," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 14(1), pages 83-108, March.
    14. Gwatidzo, Tendai & Ojah, Kalu, 2014. "Firms’ debt choice in Africa: Are institutional infrastructure and non-traditional determinants important?," International Review of Financial Analysis, Elsevier, vol. 31(C), pages 152-166.
    15. Mohamed Ismail Sabry, 2017. "Informal state–business connections, institutions, and economic growth," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(2), pages 233-258, August.
    16. Calì, Massimiliano & Sen, Kunal, 2011. "Do Effective State Business Relations Matter for Economic Growth? Evidence from Indian States," World Development, Elsevier, vol. 39(9), pages 1542-1557, September.
    17. Pritish Behuria, 2019. "African development and the marginalisation of domestic capitalists," Global Development Institute Working Paper Series esid-115-19, GDI, The University of Manchester.
    18. Ernest Aryeetey & Nkechi Owoo, 2015. "Ghana's experiments with business-government co-ordination," WIDER Working Paper Series wp-2015-099, World Institute for Development Economic Research (UNU-WIDER).
    19. Babarinde rene ADEROMOU & Mahmoudou Bocar SALL, 2019. "The Minority investor protection and corporate governance practices," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 10(2), pages 102-117, December.
    20. Burhan Can Karahasan & Fırat Bilgel, 2020. "State–Business Relations, Financial Access and Firm Performance: A Causal Mediation Analysis," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(7), pages 1033-1074, October.
    21. Sam Hickey, 2012. "Thinking about the politics of inclusive development: towards a relational approach," Global Development Institute Working Paper Series esid-001-12, GDI, The University of Manchester.
    22. Dirk Willem te Velde & Alberto Lemma, 2015. "State-business relations as drivers of economic performance," WIDER Working Paper Series 098, World Institute for Development Economic Research (UNU-WIDER).
    23. Atsushi Kato, 2009. "Product Market Competition and Productivity in the Indian Manufacturing Industry," Journal of Development Studies, Taylor & Francis Journals, vol. 45(10), pages 1579-1593.
    24. Amendolagine, Vito & Boly, Amadou & Coniglio, Nicola Daniele & Prota, Francesco & Seric, Adnan, 2013. "FDI and Local Linkages in Developing Countries: Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 50(C), pages 41-56.

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