Technological capacity and other determinants of economic performance in African countries: Panel data evidence

Abstract

The determinants of aggregate economic performance in African countries are economic, institutional and political. To date, rarely has research included a specific conceptual measure of technological index among the core determinants. Consequently, for the first time in the economic development literature this paper employs a unique measure of the national technological capacity index (constructed for RAND and surprisingly covering most African countries) as a determinant. Panel data regression model estimates of the determinants of economic output (Gross National Income, or GNI) are obtained using data on 49 of the 53 African countries. Our novel findings confirm that the lagging technological capacities, measured relative to the most advanced economy, significantly retard national outputs; trade openness and democratic government form improve economic performance; and increasing returns to education (investments in schooling) are highly potent catalysts for the production of GNI. Policy implications are discussed.