STATE CAPACITY, AGRICULTURAL PRODUCTIVITY AND POVERTY REDUCTION IN AFRICAN COUNTRIES

Abstract

We analyze the effect of state capacity on poverty in Africa. We consider two proxy variables for state capacity: the government effectiveness index, capturing administrative capacity, and the political stability index, a proxy for coercive capacity. Using the system-GMM technique with four-year average panel data from 53 African countries over the period 1995-2014, we find that each of the state capacity variable significantly reduces poverty rate. However, administrative capacity appears to be the most important aspect of state capacity for poverty reduction. The results also suggest that cereal yield, a proxy for agricultural productivity, would be a channel through which state capacity affects poverty in Africa.