Governance quality and economic growth in Sub-Saharan Africa: the dynamic panel model

Abstract

PurposeThe main objective of this article is to analyze the role of governance quality in influencing the economic growth of 22 selected Sub-Saharan African Countries.Design/methodology/approachThe study applied the panel dynamic Generalized Method of Moments (GMM) to analyze the data obtained from the World Bank database over the period from 2002 to 2020.FindingsThe overall finding indicated that the composite governance index has a positive significant effect on the economic growth of the countries; where a unit improvement in the aggregate governance index leads to a 3.05% increase in GDP. The disaggregated result has shown that corruption control and government effectiveness have a negative significant effect on growth performance, whereas, the rule of law and regulatory quality showed a positive significant effect. Political stability and voice and accountability have an insignificant effect on economic growth.Research limitations/implicationsDue to data limitations, this study could not address the whole members of Sub Sahara African Countries and could not see the causal relationship.Practical implicationsThe study suggested a strong commitment to the implementation of policy and reform measures on all governance factors. This may add to the need to devise participatory corruption control mechanisms; to closely look at the proper implementation of policies and reforms that constitute the government effectiveness factors, and properly implement the rule of law at all levels of the government with a strong commitment to realizing it so that citizens at all levels can have full confidence in and abide by the rules of society.Originality/valueEven though there are some studies conducted using conventional methods of panel data analysis such as random effect or fixed effects, this empirical study used more advanced panel dynamic generalized moment of methods to examine the role of improvement in governance quality on economic growth.