Governance, Social Sector Spending and Sustainable Growth in Selected African Countries

Abstract

The chapter examines the role of governance in social sector spending and sustainable growth in selected African countries, using data from 1981 to 2021 under the framework of the augmented Solow human capital-growth theory. Applying the Generalized Method of Moments (GMM) estimation technique, the main finding suggests that governance promotes sustainable growth. Among the components of governance, control of corruption is the most effective in stimulating growth. Other findings are that social sector spending had no significant effect on sustainable growth. Control of corruption and government spending on education had a complementary effect on sustainable growth. Also, government effectiveness, rule of law and government expenditure on education play complementary roles in accentuating sustainable growth. However, control of corruption, government effectiveness and rule of law and government health spending had substitution effect on sustainable growth. The policy direction is that pursuit of good governance and social sector spending is good for the achievement of sustainable growth, it is more appropriate to be complemented with effective control of corruption and rule of law, especially if the intention is education development for sustainable growth.