Corruption and Economic Growth in Africa: The Impact on Development

This paper empirically investigates the relationship between health expenditures, health outcomes and economic growth in Africa using data from 48 African countries over the period 2000-2015 in a panel data regression framework. In line with wider literature on economic growth as well as health economics, the paper first finds that maternal, infant and child mortality rates are all negatively and significantly associated with economic growth in Africa. In addition, life expectancy at birth is positively associated with economic growth. A 9.4-year increase in life expectancy leads to 1 per cent increase in real GDP per capita. Second, the paper finds that health expenditures have direct and indirect effects on economic growth that are positive and economically meaningful. In particular, a 10 per cent increase in health expenditures leads to an increase in annual average real GDP per capita by 0.24 per cent. Third, education emerges as a strong determinant of both economic growth and health outcomes in Africa, particularly when female education is considered. The main policy implication of this paper is that governments should aim at spending more and efficiently on the overall health system to progress over health outcomes and benefit from the positive externalities leading to economic growth. In addition, it is crucial that governments partner with private sector for resource mobilization and effective service delivery.

The objective of this paper is to analyze the role of institutional quality in the relationship between military spending and economic growth in sub-Saharan Africa. For this purpose, a dynamic panel model was specified and estimated by the generalized method of moments (GMM) in system. Using World Bank data (WDI) over the period 2002–2021, the model results showed that military spending has a positive and significant influence on economic growth in Africa. In addition, the estimation results reveal that institutional quality reinforces the positive influence of military spending on economic growth in Africa. Also, the estimation results of the interaction model by region show that the interaction between military spending and institutional quality is significantly positive on economic growth in the Economic Community of West African States (ECOWAS) and the Southern African Development Community (SADC). The study therefore suggests the implementation of austerity policies in order to improve institutional quality, a guarantee of better orientation of military expenditure towards productive sources.

This chapter chronicles neoliberalism and economic growth in Africa. It assesses pre-neoliberalism growth initiatives championed by Africans and African institutions. The chapter reviews the thrust of neoliberalism in Africa, focusing on its tenets and history. It then examines recent African economic growth performance. The chapter also focuses on the effects of neoliberalism on economic growth in Africa. The poor state of African economies gave rise to the policy of neoliberalism initiated by the Bretton Woods Institutions (BWIs) as a potential solution to addressing the challenges faced by many African countries at the time. Despite the usual challenge of attribution, it seems likely that greater institutional democracy that has accompanied neoliberalism in the region has helped to reduce the capricious nature of the executive branch of government that may have spawned the policy syndromes to begin with.

Introduction More than a decade ago, the World Bank argued that “underlying the litany of Africa’s development problems is a crisis of governance.” Poor quality institutions, weak rule of law, an absence of accountability, tight controls over information, and high levels of corruption still characterize many African states today. Aid levels have been reduced in many parts of Africa during the past decade. Yet in many of the countries with poor governance records, aid continues to contribute a very high percentage of government budgets. This article explores the institutional impact of these high levels of aid and the way that large amounts of aid are delivered. There are many reasons why governance is poor in much of sub-Saharan Africa. Colonialism did little to develop strong, indigenously rooted institutions that could tackle the development demands of modern states. Economic crisis and unsustainable debt, civil wars, and political instability have all taken their toll over the past 2 decades and more. It is difficult to separate the impact of these problems from the possible impact of foreign aid, which is often high in countries that suffer from precisely these problems. Theory provides conflicting guidance here. On the one hand, aid can release governments from binding revenue constraints, enabling them to strengthen domestic institutions and pay higher salaries to civil servants. Aid can provide training and technical assistance to build legal systems and accounting offices. In many countries, aid personnel (sometimes expatriate) manage important government programs, and the infusion of resources and technical assistance can give an important boost to the efficiency and effectiveness of governance, if only in a partial sense. Yet despite these likely benefits, it is also possible that, continued over

This paper provides an overview of the effect of research and development (R&D) expenditure and government effectiveness on economic growth. By focusing on R&D expenditure as a measure of innovation, government effectiveness as a measure of governance and GDP as a measure of economic growth, we examined the effect of R&D and government effectiveness on GDP in selected African countries. Four countries were chosen due to the availability of their data from 2000 to 2016. Linear regression and correlated panels corrected standard errors (PCSEs) regression models were used to analyze the data. The result showed that both R&D and governance are important factors in predicting economic growth in Africa. Therefore, only innovation through increasing R&D expenditure and good governance can sufficiently drive sustainable economic growth and development in Africa. Thus, African countries need to strengthen and build their research and development capacity while ensuring the effectiveness of their government to achieve sustainable economic growth.

This study examines the effects of trade policies on economic growth in Africa. The econometric methodology follows the cross-country studies by Barro (1991) and Kandiero and Chitiga (2003) with empirical application to a panel of 36 African countries observed over the period 1980 to 2009. Panel regressions are carried out using the fixed-effects models. The aim is to provide an empirical evidence for the driving force of Africa's economic growth. The results illustrate that openness in trade and investment is positively related to economic growth significantly. However, foreign aid, gross national savings and investment have negative relationships to both Gross Domestic Product (GDP) growth and GDP. Using South Africa as benchmark, the regional performance indicates that North Africa is the best one in generating positive GDP growth from Foreign Direct Investment (FDI), followed by Middle Africa whilst East Africa and West Africa compete for the third and fourth positions.

On the question of whether external finance stimulates GDP growth, the profession offers inconclusive as well as frequent contradictory outcomes. While waiting for a robust consensus, this paper addressed directly the mechanisms through which external finance should influence economic growth. Investment was identify as the most significant transmission mechanism, and as well considers effects via funding regime consumption expenditure and import. By employing the residual generated repressors’, we accomplish a measure of the overall influence of external finance on economic growth, accounting for the influence through investment. Based on the pooled panel outcomes, a sample of twenty-five Sub-Saharan Africa economies were examine over the period of 1970–1997; the result indicates that there is a significant and positive effect of overseas assistance on economic growth, ceteris paribus. Based on average, each 1 % point upsurge in the aid/GNP ratio contributes one-quarter of 1 % point to the growth rate. Therefore, the poor economic growth in Africa should not be attributed to external finance ineffectiveness.

This study examines financial inclusion, which is defined as the provision of affordable financial services to low-income individuals and vulnerable groups. This highlights its role in promoting economic growth in Africa, particularly through mobile monetary initiatives that reduce poverty. This study reviews theories and empirical studies on the relationship between financial inclusion, poverty alleviation, and economic growth, and often notes inconclusive results. Early theories suggest that access to financial services influences employment and production choices. This study aims to investigate the causality between financial inclusion, poverty, and economic growth in the sub-Saharan African context, emphasizing the need for further research.

Korean Abstract: BRICs 이후 새로운 성장유망시장으로 아프리카 경제권이 주목받고 있다. 미국, 중국, 일본 등 거대국가들은 이미 아프리카 경제권을 신흥시장으로 받아들이고 있다. 우리 나라 역시 교역시장의 다변화 및 새로운 수출동력 확보 차원에서 아프리카의 다중적 가치를 재인식하기 시작하였다. 그러나 53개국의 이질적인 시장으로 구성된 아프리카 지역 을 대상으로 경제협력 기반을 조성하고 효율적으로 시장진출하는 것은 쉽지 않다. 이에 정부 부처 및 전문가 그룹에서는 아프리카 접근전략으로 소위 ‘3 plus 2 거점국가’ 선정방식을 제시하고 있는데, 본 연구는 이러한 시각을 바탕으로 아프리카 거점국가 선정과 관련된 논의에 기여하고자 한다. 거점 후보 국가로는 아프리카 최대 경제규모인 남아공과 나이지리아를 선정하였다. 또한 아프리카 지역의 경제력이 일부 국가에 집중되어 있고 경제통합체별 시장 특성이 상이하다는 점을 고려하여 아프리카 지역과 경제통합체별 경제성장 결정요인이 상이한가를 함께 분석하였다. 실증분석 결과, 남아공 경제가 아프리카 지역 및 SADC(남아공의 경제통합체)에 미치는 파급효과가 나이지리아의 경우보다 훨씬 큰 것으로 분석되었다. 즉 남아공의 1인당 실질 GDP 성장률이 10% 증가할 때 아프리카 지역의 1인당 경제성장은 2.2~2.5%로, 나이지리아의 경우는 0.7~0.8%로 분석되었다. 이러한 실증분석 결과는 남아공을 최우선적 거점전략국가로 선정하는 것이 바람직하다는 점을 간접적으로 시사한다. 한편 아프리카 지역과 경제통합체별 경제성장 결정요인도 매우 상이하다는 것을 확인하였다. 아프리카 지역의 경제성장을 결정하는 변수는 인구증가율인 반면 SADC의 경제성장은 GDP 대비 무역규모인 것으로 분석되었다. 이러한 경제성장의 결정요인 차이는 주로 아프리카 국가의 산업구조에서 기인된다. 가령 석유가격에 크게 의존하는 산업구조를 갖는 대다수의 아프리카 국가와 달리 남아공은 선진국형 경제구조를 갖고 있어 역내무역규모가 경제성장을 주도했을 것이다. GDP 대비 투자 비중은 아프리카 지역과 SADC의 경제성장을 결정하는 중요한 공통 변수로 확인되었다. English Abstract: Major countries, such as the United States, Japan, and China have already recognized the potential of Africa’s markets. Korea has also taken notice of Africa's diverse export markets recently. However, Africa is comprised of 53 different countries and, as a result, entry into the region poses a formidable strategic challenge. Korean authorities and export groups have suggested a “3 plus 2 Country Strategy” in order to make inroads into the African region. This paper contributes to discussions of this strategy by comparing the effects of economic growth in South Africa and Nigeria on Sub-Saharan Africa. In addition, because economic power in Africa is concentrated in a small number of countries, whose market characteristics are different from those of integrated unions, the determinants of economic growth in Africa as a whole and unions may be different. This paper investigates whether or not this is, in fact, the case. The empirical results can be summarized as follows: First, the effects of South Africa's economic growth on Sub-Saharan Africa and the SADC (a representative union of South Africa) is much larger than the effects of Nigeria’s growth on Sub-Saharan Africa and the ECOWAS (a representative union of Nigeria). These empirical results imply that the preferred country to pursue economic cooperation with is South Africa. Second, we confirm that determinants of economic growth are different for Africa and the unions. The main determinant of growth in African countries may be the population ratio, but in the SADC, growth appears to be determined by ratio trade volumes of GDP. Finally, we also find that the ratio investments of GDP has a positive influence on the economic growth of both Africa and SADC.

Power outages and economic growth in Africa

Major countries, such as the United States, Japan, and China have already recognized the potential of Africa's markets. Korea has also taken notice of Africa's diverse export markets recently. However, Africa is comprised of 53 different countries and, as a result, entry into the region poses a formidable strategic challenge. Korean authorities and export groups have suggested a 3 plus 2 Country Strategy in order to make inroads into the African region. This paper contributes to discussions of this strategy by comparing the effects of economic growth in South Africa and Nigeria on Sub-Saharan Africa. In addition, because economic power in Africa is concentrated in a small number of countries, whose market characteristics are different from those of integrated unions, the determinants of economic growth in Africa as a whole and unions may be different. This paper investigates whether or not this is, in fact, the case. The empirical results can be summarized as follows: First, the effects of South Africa's economic growth on Sub-Saharan Africa and the SADC (a representative union of South Africa) are much larger than the effects of Nigeria's growth on Sub-Saharan Africa and the ECOWAS (a representative union of Nigeria). These empirical results imply that the preferred country to pursue economic cooperation with is South Africa. Second, we confirm that determinants of economic growth are different for Africa and the unions. The main determinant of growth in African countries may be the population ratio, but in the SADC, growth appears to be determined by ratio trade volumes of GDP. Finally, we also find that the ratio investments of GDP have a positive influence on the economic growth of both Africa and SADC.

Stabilization seeks to achieve internal and external equilibrium that is, to control the demand side of the economy, with the purpose of reducing size of government, inflation and quickly achieving a sustainable balance of payment position. In this paper, I investigated the impacts of HIPC initiative and debt relief on economic growth and economic stability in Africa. I also identify the determinants of economic performance using the World Bank data for the period 1990–2015 with 5-year panels. The results show that this initiative causes economic instability in Africa. The results also indicate that the long run effect of debt relief on economic growth is positive but in the short run debt relief has no significant effect on GDP per capita growth. However, in both the short run and the long run, debt relief reduces external balance on goods and services deficit and has no effect on inflation. The main determinants of economic performance in Africa are control of corruption, political stability, regulatory quality and education. In this perspective, governments of African countries should promote good governance, educate their population and revise trade agreements to provide insurance for economic growth and economic stability.

The study had two main objectives. Firstly, to investigate the impact of ICT on economic growth. Secondly, to explore whether energy consumption and human capital development are channels through which ICT influences economic growth in Africa. Whilst literature is unanimous when it comes to the positive impact of ICT on economic growth, not much has been investigated on the impact of the complementarity between (1) ICT and energy consumption and (2) ICT and human capital development on economic growth, especially in the African context. The current study used fixed effects, random effects, pooled OLS and the dynamic GMM with annual panel data ranging from 2001 to 2015. Whilst fixed and random effects show a significant positive relationship running from ICT towards economic growth, pooled OLS and the dynamic GMM produced results which show that ICT had a non-significant positive influence on economic growth in Africa. The interaction between ICT and energy consumption had a significant negative effect on economic growth across all the panel data analysis methods. The finding means that ICT enhanced economic growth through its energy efficiency impact in Africa, consistent with Lee and Brahmasrene (2014). The interaction between ICT and human capital development was found to have had a significant positive effect on economic growth in Africa, in line with Ortiz et al. (2015) whose study revealed that the complementarity between ICT and education enhanced economic growth. The study therefore urges the African continent authorities to develop, strengthen and implement sound human capital development in order to enhance the impact of ICT on economic growth. African countries are also urged to implement sound ICT growth policies in order to trigger energy efficiency led economic growth.

This paper examines the systemic relationship between triple helix innovation systems and the gross domestic product per capita growth (GDPPC) in terms of sustainable competitiveness in Africa. To do this, the Generalized Moment Method on the panel vector autoregressive model is used to estimate helix models’ (triple helix, quadruple helix, quintuple helix, as well as the open quintuple helix, relative to external contributions) effects on GDPPC between 2007 and 2019 in 27 African countries, and causality tests completion as well. The results show 3 coevolution relationships resulting from the narrow innovation system, which is made up of the burden of government regulations, companies’ expenditures on research and development (R&D) as well as the quality of scientific research institutions. The system expansion (the broad innovation system) with the degree of consumer orientation and natural resource rents generate both 7 (respectively 3 and 4) coevolution relationships. Finally, the opening of the innovation system by considering the business impact of rules on foreign direct investment (BIFDI) alone, generates 5 coevolution relationships. So, in terms of overall sustainable competitiveness strategies in Africa, countries must focus on innovation system opening and natural resources exploitation to increase their GDPPC. Thus, this study fills the gap of a deficit in technological policy orientation on the relationships between innovation systems and sustainable competitiveness through economic growth in Africa.

The main objective of Regional Trade Agreements (RTAs) is to stimulate economic growth in participating countries through increased trade, economies of scale, knowledge and technology transfer. Using a panel data over the period 1979 to 2018, this paper examines the contribution of regional trade integration (RTI) to economic growth and income convergence in Africa and its major Regional Economic Communities (RECs). The results of the instrumental variable and panel fixed-effects estimation show that RTI promotes economic growth in Africa. However, it fosters income divergence, reflecting the distribution of the gains from regional integration in favor of the more developed economies of the continent. The results of this study show the importance to support the African Continental Free Trade Area (AfCFTA) project with policies aimed at reducing non-tariff barriers to trade and improving infrastructure in order to maximize the effects on growth in all participating countries.