Democracy and Inclusive Growth in Sub-Saharan Africa

Abstract

This research explores the link between democracy and inclusive growth in Sub-Saharan Africa (SSA). A fixed-effects model is used to analyse how the Freedom in the World Index (FIW) score, along with other economic, institutional, and demographic factors, affects a composite index of inclusive growth. The findings challenge the simplistic notion that democratic improvements directly lead to more inclusive growth. Overall, the FIW score exhibits a negative association with inclusive growth across SSA. However, further analysis reveals a potential threshold effect. For countries with highly developed democratic institutions (high FIW score), the FIW score is not statistically significant. Conversely, for countries with less developed democracies (low FIW score), the FIW score has a negative and significant coefficient. This latter finding might be due to reverse causality, where economic decline prompts calls for democratic reforms. For future research, it may be necessary to look deeper into the threshold effect and explore alternative measures of democracy relevant to the SSA context. Additionally, analysing the influence of specific democratic features on various dimensions of inclusive growth (economic, social, and sustainability) could be fruitful. Finally, policymakers should consider the specific level of democratic development in each SSA country when formulating policies aimed at fostering inclusive growth. This study contributes to a nuanced understanding of how democratic institutions can be leveraged to achieve equitable and sustainable development in SSA.