The “Africa Rising”: An Empirical Analysis of the Determinants of Per-Capita Growth

Abstract

In developing economies, the race toward inclusive development has prompted researchers to reconsider the drivers of growth in view of achieving the Sustainable Development Goals (SDGs). This research note has the purpose to explore the determinants of African growth after analysing reference literature to select the explanatory variables. We examine growth in a panel of 54 African countries using the generalised method of moment system estimators (GMM-sys), by controlling idiosyncratic unobserved individual effects of countries with fixed-effects models. Using GMM-sys to estimate growth models is not novel, and many previous studies have used this appropriate approach for growth analyses. As far as we know, we have not found any studies analysing the determinants of growth in a panel of 54 African countries and/or using GMM estimators with data referring to the last decade. We have used the real per-capita GDP as a dependent variable. As a data source, the main international organisations (UN, WB, IMF) have been considered, and the analysed timeframe is 2010-2019, where we have more data completeness. Based on the time-series data collected and estimation methodology used, the findings show determinants of African growth, and our findings can have an implication for managers and decision-makers with an interest in African emerging markets. The real per-capita GDP with one order of lags is the variable with the highest magnitude in all models and it is expected of us. Furthermore, we have found confirmations for the variables of the macroeconomic framework highlighted in the recent reference literature on growth, and we have found new evidence for the variables of the African merchandise trade across developed and developing countries. In the conclusion, we highlight the importance of a sound governance and business environment in African countries for achieving the SDGs.