Economic Growth In Sub-Saharan Africa Research Articles

Exports and economic growth in Sub-Saharan Africa: New insights from innovative econometric methods

ABSTRACTThis study examined the relationship between exports and economic growth in Sub-Saharan Africa. It employed innovative econometric methods, including the Fourier ADF with structural break test, a comparative analysis of three causality tests and a rolling causality test procedure. The findings suggested that there was a statistically significant relationship between exports and economic growth in several Sub-Saharan countries. However, the causal linkages between exports and economic growth in these countries were found to be weak and unstable. These empirical results have some notable policy implications.

Rising Automation in Sub-Saharan Africa: Harnessing Its Opportunities through Public Policy

Sub-Saharan Africa has witnessed technological growth for more than a decade now. Although, it is perceived that, the exponential growth in technology still does not comprehensively address the structural challenges the continent faces. However, there is growing concern in the global scene about rising automation. The advent of such technological innovations pose threats and avail new opportunities. In this paper, technological innovations such as; artificial intelligence, robotics, additive manufacturing, industrial internet, etc. can be deployed to address certain structural imbalances, improve economic performances and solve existing and emerging security issues Africa encounters. In doing so, public policy serves as an instrument to close the existing gaps such technological innovations poses. Also, public policy through formidable public and social institutions can adapt to automation in order to encourage innovation. Moreover, there can be stringencies in making regulatory policies to discourage emerging innovations, this paper gives a road map for “permissionless innovation” to be at the heart of policymaking, to ensure these technologies serve the right purpose and can spur economic growth in Sub-Saharan Africa.

Human capital contribution to economic growth in Sub-Saharan Africa: Does health status matter more than education?

This paper revisits the debate on the possible impact of human capital on economic growth in Sub-Saharan Africa (SSA) and considers two alternative measures of human capital: health and education. The study employs a dynamic model based on the system generalized method of moments (SGMM) and analysed a balanced panel data covering 35 countries from 1980–2008. The empirical results show that the two measures of human capital have positive effects on economic growth, although the contribution of health is relatively larger than the impact of education. This finding emphasizes the importance of both measures of human capital and aligns with the argument in the literature that neither education nor health is a perfect substitute for the other as a measure of human capital.

Estimation of Disaggregated Impacts of Education Expansion on Economic Growth in Sub-Saharan Africa

Underpinned by evidence from the theories of endogenous growth which stress the role of human capital accumulation in enhancing growth, this paper investigates the disaggregated impact of school enrolment on economic growth in Sub-Saharan Africa (SSA) for the period 1995-2016. The analysis is based on the augmented Solow, and Mankiw models and employs the Generalized Method of Moments (GMM) technique that takes care of endogeneity in a dynamic panel environment. The results point to a significant but differential impact of educational expansion in facilitating economic performance in the SSA region. Essentially, the growth enhancing impact of education depends on the type of education with secondary education yielding the largest impacts. The gender disaggregated model results show that and secondary school and primary enrolment yield higher growth effects relative to tertiary enrolment. Most interestingly and contrary to existing literature on the gender disaggregated impact of education on growth, the education of girls is seen to yield higher growth effects relative to boys. Based on evidence of the positive impact of girl-child education, policy interventions to support and sustain girl child education in Sub-Saharan Africa ought to be encouraged.

Industrialization and Economic Growth in Sub-Saharan Africa: The Role of Human Capital in Structural Transformation

The objective of this paper is to analyze the impact of the manufacturing sector on economic growth through the role of human capital. Our data cover Sub-Saharan African (SSA) countries from 1990 to 2015. We use fixed effects, random-effects and Hausman-Taylor estimators. We take into account the unobservable characteristics of countries by including fixed effects or random effects in the model. Our results show that the manufacturing sector through its value added has a positive impact on economic growth in SSA countries. In addition, the interacting models show that the quality of human capital is an accelerator of the role of the manufacturing sector. The coefficient of the catch-up term is negative and significant in all models indicating that countries with a larger productivity gap relative to China are developing faster than countries closer to China. This finding is consistent with the convergence effects usually found in growth model estimates, which are either related to convergences towards a stable state or to a catching-up of growth linked to the international diffusion of knowledge.

Foreign direct investment and economic growth in Sub-Saharan Africa: The role of institutions

Abstract. In this paper, we examine the impact of FDI on economic growth condition on the role of quality of institutions. To address our objective, we use the fixed effect and GMM models for analysis. A sample of 36 countries from Sub Saharan Africa was used for period from 2001 to 2015. The empirical results show that FDI has a significant negative effect on economic growth. Institutional quality on the other hand has a positive influence on economic growth. Considering the interaction term between FDI and institutional quality, the empirical evidence show that institutional quality enhances the spillover effect from FDI and therefore do matter for economic growth. Using the GMM model the results confirm that good institutions are necessary for mediating the effects of FDI for economic growth. Keywords. FDI, Institutional quality, GMM, Economic growth. JEL. 043, C33, C36.

Effect of Government Agriculture Investment on Economic Growth in Sub-Saharan Africa: Evidence from Nigeria, South Africa and Ghana

Effect of Government Agriculture Investment on Economic Growth in Sub-Saharan Africa: Evidence from Nigeria, South Africa and Ghana

Nutrition and economic growth in sub-Saharan Africa: a causality test using panel data

PurposeThis study aims to investigate the causal relationship between nutrition and economic growth in sub-Saharan Africa.Design/methodology/approachA dynamic panel causality test based on the Blundell-Bond’s system generalized methods-of-moment was used. To make efficient inference for the estimates, the authors check for the panel unit root and co-integration relationship amongst the variables.FindingsThe variables were found to be non-stationary at level, stationary after first difference and co-integrated. The results of the causality tests reveal evidence of long and short-run bidirectional causality between nutrition and economic growth, which implies that nutritional improvement is a cause and consequence of economic growth and vice versa.Originality/valueThis is the first study to consider causality between nutrition and economic growth in the region.

Nutrition, Health and Economic Development Nexus in Sub‐Saharan Africa: Evidence from Vector Auto Regression Models

BackgroundAdequate child nutrition in Sub‐Saharan Africa (SSA) is critical as malnutrition is responsible for a significant proportion of child mortalities and ill‐health. Also, ensuring optimal maternal health in this region is necessary due to alarming rates of mortality among women and consequent effects on child health. It has been observed that economic development results in improved health and nutrition through advances in the field of medicine, reduction in mortality rates and increase in life expectancy. Adequate child nutrition and optimum maternal and child health have the potential to positively impact economic development. The majority of research has focused on the impact of economic development on child nutrition and maternal and child health; but studies rarely examine the reverse relationship of the impact of child nutrition and child and maternal health on economic development in SSA.MethodsWe examined the bi‐directional relationship of economic growth and child nutrition and maternal/child health at different income brackets and, given such relationships, estimated the direction and magnitude. Six SSA countries were grouped according to income brackets. We then employed the Toda–Yamamoto Approach to Granger Causality which takes into consideration lag effects. We forecasted quantitatively the impact of child nutrition/health and maternal health on economic development using variance decomposition, based on annual time‐series data from the World Bank's WDI, 1960–2012.ResultsWe found no significant relationship between gross domestic product (GDP) per capita and child nutrition/health in low income countries (LIC) except in lower middle income countries (LMIC) and upper middle income countries (UMIC). In general, causality ran from child health/nutrition to GDP per capita in LMIC and UMIC. This suggests a causal effect of GDP per capita on child health/nutrition in LMIC and UMIC. In all LIC, there was evidence of causality effect of maternal education on child nutrition/health. Generally, we noted causality relationships between female life expectancy and education for all countries. Directionality results between maternal health and GDP per capita were mixed across countries. The effect of child health/nutrition to GDP per capita was generally higher than the contribution of GDP per capita to child health/nutrition at a 10‐year horizon, but the contribution of maternal health to GDP per capita was higher than the contribution of GDP per capita at a 10‐year horizon for only LMIC and UMIC.ConclusionsImproved child nutrition and maternal health may have substantial benefits on long term economic growth in SSA. The education of women is an important factor for optimum child nutrition, maternal and child health. Policies for long term economic growth should aim at investing in child nutrition, raising health sector investment especially towards women's health and strengthening the educational system of SSA countries, especially for girls.Support or Funding InformationNA

Information Communications Technology and Economic Growth in Sub-Saharan Africa: A Panel Data Approach

This research empirically analyzed the impact of mobile phone and the Internet in SubSaharan Africa (SSA) for the period of 2006-2015 using unbalanced panel data of 40 countries. We have employed the robust two-step system GMM. Results showed that growth in mobile phone penetration has contributed significantly to the GDP per capita of the region after controlling for a number of other variables. A 10% increase in mobile phone penetration results in a 1.2% change in real GDP per capita. Therefore, improving access to mobile phones will play a critical role in reducing the poverty level of the region through raising the per capita income of the population. However, the Internet has not contributed to the per capita GDP during the study period. The insignificant impact of the Internet could be due to low penetration of the technology, low ICT skill of Internet users, lack of or insufficient local content on the global network, the relatively immature state of the technology in the region, and a possible misuse of it. Therefore, governments and other stakeholders should design policies that encourage expansion of the Internet until a critical mass of users is achieved. In addition to improving Internet access, policies which focus on ICT skill development and local content creation should also be designed and implemented. Donors and the international community should also give their support directly to those startups which focus on local content production and distribution.

The Impact of Health Expenditure on the Economic Growth in Sub-Saharan Africa

This paper examined the nexus between health care expenditure and economic growth in Sub-Saharan Africa over the period 1995-2014. We use the system General Method of Moments (GMM) technique to estimate the results. The findings reveal the existence of a positive and a statistically significant relationship between the two variables, precisely; health expenditure has a significant impact on the economic growth of the region. Regarding the control variables, while the effect of official development assistance on economic growth is insignificant, foreign direct investment, the active population and gross domestic savings appear as key determinants of economic growth in the region. Additionally, the results show that health care is a necessity rather than a luxury in Sub-Saharan Africa. It is therefore necessary to develop effective and efficient health care programs, increase health expenditure, make an effective use of the young population and create better environment for foreign direct investment in order to foster economic growth in Sub-Saharan Africa.

Structural Transformation and Its Relevance for Economic Growth in Sub-Saharan Africa

In this paper, we analyse the role of structural transformation in view of the remarkable growth performance of sub-Saharan African countries since the mid-1990s. Our analysis covers 41 African countries over the period 1980 to 2014 and accounts for structural transformation by employing the analytical frameworks of (1) growth decomposition and (2) growth regression. Even though the low-productive agricultural sector continues to employ most of the African workforce, our results reveal that structural transformation has taken place and that it has contributed significantly to African growth in the past decades.

Causality Between Tourism And Economic Growth: Evidence From Sub Saharan Africa (SSA)

The tourism industry is among the largest and fastest growing sectors in the world. The contribution of tourism towards economic growth has become increasing important and many governments have incorporated several measures to upgrade their tourism industries in order to enjoy the benefits associated with a vibrant tourism sector. While some scholars found evidence supporting the tourism-led growth hypothesis (TLGH), there is also evidence that economic growth causes tourism development and that there exists a bidirectional causality between economic growth and tourism development. This study attempts to understand the relationship between tourism development and economic growth in Sub-Saharan Africa (SSA). Specifically, the current study examines causality between tourism development and economic growth for 10 SSA countries using annual time series data for the period 1994-2014. Our empirical methodology consists of unit root tests, cointegration analysis, vector error correction modeling and Granger causality testing for each country included in our sample. In order to control for the potential indirect relationship between tourism and economic growth, our empirical analysis incorporates the ratio of trade to GDP and the ratio of capital formation to GDP in a multivariate setting. Our empirical results showed support for the economic growth-led tourism development hypothesis, and the tourism-led growth hypothesis for 40% and 60% of the countries included in the study, respectively. The economic growth-led tourism development result suggests that 40% of the SSA countries mostly used their incomes to improve their tourism infrastructure with the objective of accelerating long-run economic growth. On the other hand, 60% of the SSA countries depend in part on tourism revenues to drive economic growth. In addition, the differences in the direction of causality across SSA countries could be due differences policies governing the tourism industry, colonial origin and other country specific institutional factors. We suggest different policy implications for SSA countries based on our causality results. Countries for which results confirmed the tourism-led growth hypothesis should allocate resources toward supporting the tourism industry and tourism related industries this will benefit economic growth. Alternatively, countries with results consistent with the economic growth-led tourism development should allocate their resources other sectors such as the manufacturing sector as well as the tourism industry and tourism related industries will benefit tourism development. Once developed, the tourism industry may help drive economic growth in these countries.

The impact of financial liberalization on economic growth in sub-Saharan Africa

AbstractThis study examines the impact of financial liberalization on economic growth, given the discrepancy and the gap in the literature, using a sample of 30 sub-Saharan African (SSA) countries....

Effect of Government Human Capital Investment on Economic Growth in Sub-Saharan Africa: Evidence from Nigeria, South Africa and Ghana (1980-2013)

This study examines the effect of government human capital investment on the economic growth of three Sub-Sahara African (SSA) countries of Nigeria, South Africa and Ghana from 1980 to 2013. The objective is to analyze the growth effect of three government human capital investment variables of health, education and literacy rate on the economies of these countries; Secondary data are sourced from World Development Indicators (WDI) online Database and analyzed using Co-integration techniques and Vector Error Correction mechanism (ECM) at 1% and 5% significance levels. The results indicate that two out of the three human capital proxy variables; Health,(GIH), and Education (GIE), show significant positive effect on growth only in Nigeria, while literacy ratio (LR)is insignificantly positive in all countries. This study concludes that in spite of the above result, the SSA countries’ economies still exhibit the potentials for enhanced economic growth in the long run judging from the VECM test results. The study therefore, recommends for SSA countries to prioritize skill development, increase budgetary allocations, as well as promote policies that enhance school enrolment in secondary schools in the sub-region.

Does infrastructure really explain economic growth in Sub-Saharan Africa?

In light of Africa’s palpable deficit in public infrastructure, we use System GMM to estimate a model of economic growth augmented by an infrastructure variable, for a panel of 45 Sub-Saharan African countries, over the period 2000–2011. We find that it is the spending on infrastructure and increments in the access to infrastructure that influence economic growth and development in Sub-Saharan Africa. Interestingly, these significant associations, especially those of infrastructure spending, are more important for lesser developed economies of the region than for the relatively more developed economies, which uncommonly have better than near-zero access to infrastructure. In addition to these robust direct links between the target variables, we find importantly that infrastructure access, and quality, also relate to economic growth indirectly via export diversification (trade competitiveness), and cross-border capital flows and trade competitiveness, respectively. Among other important policy derivatives of our findings, we emphasize that efforts aimed at reversing Africa’s pervasive infrastructure deficit, in ways that enable economic growth and development, must be carefully nuanced.

Institution and Economic Growth in Sub-Saharan Africa (1986–2013)

This study examined institutions and economic growth in sub-Saharan Africa from 1986 to 2013. Panel data were used for this analysis. Panel pooled ordinary least squares and dynamic generalized method of moment (GMM) models were employed in the estimation of the relationship between institutions and economic growth. This study found that institution has negative impact on economic growth in sub-Saharan Africa as it is positive and statistically significant in both pooled and dynamic GMM. This human capital and money supply also have positive impact on economic growth. Physical capital and interest rates, on the other hand, has negative impact on economic growth in sub-Saharan Africa.

Energy consumption, political regime and economic growth in sub-Saharan Africa

In this paper, we examine the relationship between energy consumption and economic growth, and how democracy moderates this relationship using panel data of 16 sub-Saharan African (SSA) countries for the period 1971–2013. Employing a panel vector autoregressive model (PVAR) in a generalized method of moments (GMM) framework, the findings support the feedback hypothesis for energy consumption and growth. Second, the interaction variable (energy consumption and democracy) is positively and significantly related to economic growth, supporting the view that democracy moderates the energy consumption and growth nexus. Further, the results provide strong evidence of a uni-directional relationship from trade openness to energy consumption. Additionally, impulse responses and variance decompositions also confirm positive feedback relationships between energy consumption and economic growth, energy prices and economic growth.

Fostering Economic Development: Is External Finance Responsible for the Poor Economic Growth in Sub-Saharan Africa?

On the question of whether external finance stimulates GDP growth, the profession offers inconclusive as well as frequent contradictory outcomes. While waiting for a robust consensus, this paper addressed directly the mechanisms through which external finance should influence economic growth. Investment was identify as the most significant transmission mechanism, and as well considers effects via funding regime consumption expenditure and import. By employing the residual generated repressors’, we accomplish a measure of the overall influence of external finance on economic growth, accounting for the influence through investment. Based on the pooled panel outcomes, a sample of twenty-five Sub-Saharan Africa economies were examine over the period of 1970–1997; the result indicates that there is a significant and positive effect of overseas assistance on economic growth, ceteris paribus. Based on average, each 1 % point upsurge in the aid/GNP ratio contributes one-quarter of 1 % point to the growth rate. Therefore, the poor economic growth in Africa should not be attributed to external finance ineffectiveness.

US Foreign Direct Investments and Economic Growth in Sub-Saharan Africa: Evidence from Panel Data

This paper uses panel data for the period ranging from 1996 to 2013 to investigate the contribution of US foreign direct investment to economic growth in fourteen Sub-Saharan African Countries. We apply the fixed and random effects model as well as the Generalized Method of Moments model to estimate two different equations. In the first equation, capital stock is estimated to include US foreign direct investments for selected years while the second equation excludes US direct investment from the capital stock variable. The results of the estimations revealed that domestic capital significantly affect economic growth in these countries but found no discernible evidence that US FDI have any direct impact on economic growth in the host countries. The results also found significant effect of political stability and openness on the growth of Sub Saharan African countries. The implication of these findings is that the region can promote economic growth by mobilizing domestic resources, ensuring that there is political stability and opening their economies to external competition.