Toward economic resilience in Sub‐Saharan Africa: The role of institutional quality and human capital development

A viable economy's hallmark is its ability to generate positive growth rates and its capacity to sustain such growth, especially during a crisis. Economic crises have the potential to induce uncertainty, reverse pre‐crisis economic gains and force preexisting challenges to reemerge, necessitating actions on building economic resilience. Given the fragility of most countries in Sub‐Saharan Africa (SSA), the current paper evaluates the role of institutional quality (INSQ) and human capital development in boosting economic resilience in SSA. The sampled countries were classified into fragile and resilient countries. Annual data spanning 2000–2021 was obtained and analyzed using the Bias‐Corrected Method of Moments (BCMM) estimation method, which can adequately account for cross‐sectional dependence, endogeneity, and heterogeneity in the sample. The results revealed that human capital development improves the resilience of fragile and non‐fragile economies, and INSQ has a higher positive impact in fragile countries than in non‐fragile countries. The results of the bundled INSQ support the positive effect of economic governance, institutional governance, and political governance on the resilience of fragile and non‐fragile countries. Therefore, group‐specific economic resilient policies need to be designed to strengthen economic resilience in the SSA region, and buffers that will ensure a healthy response to economic crises need to be strengthened. In addition, sound institutions and massive investment in human capital development should be pursued to boost economic resilience in the SSA region.