Infrastructure, institutions and economic growth in Sub-Saharan Africa: New evidence using the CS-ARDL approach

Abstract

This study examined the interactive effect of infrastructure and quality of institutions on economic growth in Sub-Saharan Africa over the period 1996 and 2020 using the Cross-Sectional-Autoregressive Distributed Lag estimator. This was with a view to providing additional macroeconomic evidence that is specific to the SSA region on the response of economic growth to infrastructure development contingent on the quality of the underlying institutions. Annual data on variables such as real Gross Domestic Product (GDP) per capita, fixed telephone subscriptions, mobile cellular subscriptions, electric power consumption, improved water source, improved sanitation facilities, gross capital formation per capita, labour force, urbanisation ratio, land area and population density were obtained from the World Bank Development Indicators (WDI) of the World Bank, 2021 edition. Also, data on institutional quality variables, namely, control of corruption, government effectiveness, political stability and absence of violence/terrorism, regulatory quality, rule of law, as well as voice and accountability were sourced from the World Governance Indicators (WDI) also of the World Bank, 2021 edition. Results showed that the per capita convergence holds true for countries in SSA in the long run, while it does not hold in the short run. The findings also revealed that infrastructure does not independently lead to economic growth in SSA when the role of institutions is not considered. This implies that any improvement in the stock of infrastructure will promote growth only when it is complemented with strong institutions. The study concluded that countries with weak institutions do not benefit maximally from infrastructure development policies as weak institutions constrain the efficient use of infrastructure assets.