Growth In Sub-Saharan African Countries Research Articles

Estimation of the public debt threshold effects on economic growth in sub‐Saharan African countries

AbstractUsing data for 22 sub‐Saharan African (SSA) countries, this paper investigates the effects of public debt on economic growth in SSA countries covering the period 1990–2021. Relying upon the estimation of Panel Smooth Transition Regression and generalized method of moments method, our findings offer strong evidence that public debt nonlinearly impacts economic growth. More specifically, there exists a threshold beyond which public debt exerts a negative effect on growth. These results can be used to formulate economic recommendations that the public authorities could implement to improve public debt management and maintain stable economic growth.

Education and economic growth in Sub-Saharan African Countries: Does governance quality Matter?

This paper examines the dynamic relationship between education, governance and economic growth in 28 sub-Saharan African (SSA) countries from 2002 to 2018. The study first examines the effect of education on economic growth and, thereafter, examines the modulating effect of governance quality on the nexus between education and economic growth. Two proxies of education, namely primary and secondary education, and five proxies of governance quality, namely a) corruption control, b) government effectiveness, c) regulations, d) rule of law, and e) voice and accountability, have been used to examine this linkage. Using the GMM techniques, it was found that the effect of education on economic growth is weak at best. Although secondary education has an unconditional positive effect on economic growth in one of the five specifications of governance quality (i.e., regulatory quality), primary education has no impact whatsoever on economic growth in all the specifications. The study also found that, although governance quality spurs economic growth in most of the primary and secondary education specifications, it interacts with secondary education to foster growth in only one of the five specifications (i.e., regulatory quality). However, when considering primary education specifications, governance does not interact with education to spur economic growth in any of the five specifications. These findings, though contrary to some of the previous studies and the global trend, are not surprising given the primary and secondary education landscape in some SSA countries. According to UNESCO, SSA has the highest rates of education exclusion in the world.

Analyzing Macroeconomic Indicators that May Affect Economic Growth in Sub-Saharan African Countries: A Panel Data Analysis in the Context of Income Level Classification (1990-2019)

The purpose of the study was to ascertain whether the export-import coverage ratio (EXIM), the income of natural resources (NATR), labour force participation rate (LFPR), and foreign direct investment (FDI) had a positive or negative impact on economic growth for 34 Sub-Saharan African countries using data from 1990 to 2019. The change in Gross Domestic Product Per Capita (%) is used in the study as a proxy for the economic growth variable, and Sub-Saharan African nations were categorized based on the United Nations' income classification system to create more homogeneous groups and consequently more accurate analysis results. To do this, 34 Sub-Saharan African nations were divided into three income categories: lower-middle-income, upper-middle-income, and low-income. The income categories established by the UN were considered while drawing this distinction. This divide led to the analysis of 18 low-income nations, 12 lower-middle-income countries, and 4 upper-middle-income countries. One of the dynamic panel data analysis techniques, the two-step system GMM panel data analysis, was used as the econometric analysis approach. According to the estimations, FDI in lower-middle-income sub-Saharan African countries was statistically significant and inversely related to economic growth; it was observed that the coverage ratio of exports to imports has a statistically significant and linear relationship. None of these independent variables were found to influence economic growth in low-income sub-Saharan African countries. There is a statistically significant correlation between the LFPR and NATR and economic development in the upper-middle income category of nations analyzed. As a result, the influence of factors varied and fluctuated on economic growth based on the income levels of different groups.

Foreign Aid and Economic Growth in the Sub-Saharan African Countries

ABSTRACT: Official Development Assistance (ODA) remains an important tool for nurturing economic growth in Sub-Saharan African (SSA) countries. This is evidenced by numerous studies that have investigated the ODA-growth nexus in SSA region. However the existing studies on the relationship between ODA and economic growth is subject to identification issues. More specifically, the issue of distributional heterogeneity has not been given the attention it deserves in this field. In other words, the issue of whether ODA-growth nexus differ among developing nations with different economic growth levels has not been meticulously explored. This study aims to examine the heterogeneous impact of ODA on economic growth across 24 SSA countries over a 38-year period. To achieve this, an attempt is made in this study to investigate how the effect of ODA varies along the conditional economic growth distribution by employing the Moment of Moments Quantile Regression (MM-QR) approach, an approach that is able to capture the diverse effects of ODA across different levels of growth distribution. Moreover, this study explores the role of social infrastructure and institutional quality in shaping this relationship. The results suggest that ODA has a positive impact on economic growth in the SSA region, with a larger positive impact in countries with high levels of economic growth. This finding is key as it underlines the important idea that though ODA positively influence growth, it doesn’t homogeneously affect all nations; but instead, it remarkably enhance it in areas with relatively robust and healthy economic conditions. The study also finds a positive and significant relationship between social infrastructures and institutions quality and economic growth, particularly in the 50th, 75th, and 95th quantiles, thereby highlighting the fact that well-developed social infrastructures and high-quality institutions play a pivotal role in nurturing economic progress, particularly at the mid to higher percentiles of economic development. The inclusion of institutions quality and interaction terms in the model influences the effect of aid on economic growth, with ODA being effective in countries located within the 25th and 50th quantiles. The findings suggest that aid can be strategically used to stimulate economic growth in SSA countries, particularly low-income countries.

On the government revenue on economic growth of Sub-Saharan Africa: Does institutional quality matter?

As studies report inconclusive results, the linkage between government revenue and economic growth remains a topic of debate in economic literature. This study investigates the effect of government revenue on the economic growth of Sub-Saharan African countries with the main objective of whether institutional quality matters. The panel data for 43 SSA countries were obtained from dependable data sources: World Development Indicator and Heritage Economic Freedom Index for the period of 2012–2022. The result from system GMM estimation reveals that government revenue adversely affects economic growth while institutional quality positively enhances economic growth before interacting with each other. However, the interactive coefficient of government revenue and economic growth positively affected the real GDP growth rate of SSA countries over the study periods. Precisely, before interacting with institutional quality, a percentage change in government revenue, keeping all other things constant, leads to a 0.0866% decline in economic growth while it marks a 0.2329% upsurge in economic growth in the presence of institutional quality. The result of the study further revealed that government revenue promotes the economic growth of the region when combined with institutional quality. On the other hand, foreign direct investment and openness to trade were the key sources of economic growth whereas the population growth rate adversely impacted economic growth in SSA countries during the study period under consideration. The policy implication of the study is that SSA needs to strengthen government revenue management. Further, the finding of the study implies that SSA countries need to improve institutional quality through promoting efficiency of the regulatory quality and the size of the SSA governments. In addition to this, the fast real GDP growth rate of SSA countries demands improved institutional quality indicators such as the rule of law and extended access to the open market.

A comparative analysis of gender diversity in labour participation and growth in Sub-Saharan African countries

In recent years, official statistics on female labour supply in several emerging nations have shown that female labour force participation rates are dropping. Although development organisations have created and implemented non-contextual empowerment initiatives, some of which have improved women's lives, a desirable outcome has not been achieved. A comparative analysis of gender diversity in labour economic participation and growth in sub-Saharan Africa (SSA) was conducted. The study uses pooled least squares, fixed effects, random effects, difference generalised method of moments, and system-generalised method of moments models. Likewise, three models are estimated in the study for disaggregated male and female economic participation factors, respectively, while the third is for aggregate economic participation. In addition, causality was investigated using the panel vector correction model. The findings show that the indicators of human capital and labour economic participation are positive and significant in all three models. However, male human capital and labour economic participation contribute to productivity growth more than aggregate indicators. Also, the female indicators are the lowest contributing factor to growth. Also, the institutional quality is significant in aggregate and male labour economic participation but insignificant in female labour economic participation. The causality result shows one-way causality from female human capital to productivity growth. The study suggests, among others, the need to develop a financing mechanism to expand women-focused human capital interventions in SSA.

Effect of renewable energy on economic growth in sub‐Saharan Africa: Role of institutional quality

AbstractThe development of renewable energy is considered as an important step toward sustainable development. In sub‐Saharan African (SSA) countries, institutional quality can play an essential role in encouraging investment and implementation of policies favoring renewable energy. This paper examines the role of institutional quality in the effect of renewable energy on economic growth across 25 SSA countries from 2002 to 2018. The results from the dynamic panel threshold model reveal a significant threshold effect of institutional quality on the contribution of renewable energy to economic growth. While renewable energy consumption positively contributes to economic growth, its impact is notably amplified when the institutional quality index, set at 0.304, is above the threshold. Our findings remain robust when altering institutional quality indicators. In terms of economic implications, improving overall institutional quality by promoting good political, economic, and institutional governance could significantly increase the contribution of renewable energies to economic growth in SSA countries.

Does financial sector development have a sustainable level of effects on inclusive growth in Sub-Saharan African countries? Evidence from dynamic panel threshold analysis

Does financial sector development have a sustainable level of effects on inclusive growth in Sub-Saharan African countries? Evidence from dynamic panel threshold analysis

An assessment of the impact of the banking sector on the economic growth of sub-Saharan African countries in the post financial crises

An assessment of the impact of the banking sector on the economic growth of sub-Saharan African countries in the post financial crises

The causality relationship between income inequality, debt, and economic growth in Sub-Saharan African countries1

This study aims to investigate the direction of causality between income inequality and growth, income inequality and debt, and debt and growth for 11 selected countries in SSA countries (Botswana, Ghana, Kenya, Lesotho, Malawi, Nigeria, Rwanda, South Africa, Tanzania, Uganda, and Zambia). The panel bootstrap causality approach is applied to these countries from 1980 to 2018. Inequality is represented using Gini coefficient, Palma ratio, and Theil index. The findings show that there is at least a one-way causal relationship between public debt and inequality in Botswana, Ghana, Kenya, Malawi, Nigeria, Rwanda, South Africa, Tanzania, and Uganda, between inequality and growth in Botswana, Lesotho, Nigeria, and South Africa and between growth and debt in Botswana, Rwanda, South Africa, and Uganda. Empirical results imply that the relations between the relevant variables in the Sub-Saharan African countries may vary according to the specific characteristics of these countries. To the best of our knowledge, this is the first paper to analyse the impact of these three macroeconomic variables together.

Financial Inclusion, Institutional Quality and Economic Growth in Sub-Saharan African Countries

This study examines the impact of financial inclusion and institutional quality on economic growth in Sub-Saharan Africa (SSA). It finds that financial inclusion has a positive impact on SSA’s economic growth irrespective of the measure of economic growth examined. The results also reveal varied effects of institutional quality on various measures of economic growth. The implication is that institutions and financial inclusion should not be ignored in growth policies.

Achieving Sustainable Economic Growth in Sub-Saharan African Countries Using the Tool of Monetary Policy Effectiveness

Abstract The issue of achieving and sustaining a nation’s economic growth is an issue that is of concern to many nations of the world, especially the sub-Saharan African (SSA) nations. This was in line with the United Nations Sustainable Development Goal (SDG) 8 of Economic Growth. This study, therefore, examines how monetary policy tools can help the SSA governments achieve the SDG 8 goal and also sustain it. Relevant secondary data on sustained economic growth (GDPPC) (dependent variable) and interest rate, exchange rate, money supply, and inflation rate (independent variable) were gathered from the annual report of the Central Banks of the 48 SSA nations. The panel data year covers the period from 2016 to 2022. The unit root test confirms the variables to have a level integration order. The Hausman test suggests the use of fixed effect regression. The fixed effect regression shows that for the 48 SSA nations, interest rate, inflation rate, and money supply were positively significant in impacting GDPPC while exchange rate was negatively significant in impacting GDPPC. The study, therefore, recommends that import promotion, for example, should be avoided because it raises the exchange rate and lowers the value of currencies of the SSA nations.

The Role of Remittances, Financial Inclusion and Governance on Economic Growth in Sub-Saharan Africa

The goal of this study is to analyse the role of financial inclusion, governance, andremittances on growth in Sub-Saharan African countries (SSA), as well as themoderating influence of the role of financial inclusion on the remittances-growth nexus,using panel data spanning 1996–2020. Data were collected through secondary sources,including World Bank and IMF reports for the period 1996–2020. By using a principalcomponent analysis method, we constructed composite FI indexes to measure the degreeof FI. Cross-sectional dependence, slope homogeneity, and pooled mean grouping (PMG)are employed to evaluate the stated objectives. The study findings showed thatremittances have a significant positive relationship with economic growth, and thatpositive financial inclusion moderates the remittance-growth nexus in SSA countries.Given the findings that the level of governance has an adverse influence on growth, hencestakeholders should improve financial infrastructure, which provides the underlyinginstrument for financial inclusion, and protect customers by instituting controls andprocedures for reporting, fairness, and resorting to SSA countries. Governments shouldalso promote the larger global remittances agenda, which includes leveragingremittances for better consumer and business financing, and exposure to global financialmarkets through refinancing and the issue of diaspora bonds.JEL Classifications: C1; F6; G2; O4

Comparative performance of agricultural productivity in 44 SSA countries for a period of 59 years (1961-2019): A Malmquist productivity index approach.

We investigate the extent and nature of productivity growth in Sub-Saharan African countries using non-parametric frontier techniques. In this work, we examine agricultural total factor productivity (TFP) change in 44 countries in Sub-Saharan Africa (SSA), covering a period of fifty-nine (59) years (1961-2019). We make use of data drawn from the Food and Agriculture Organization of the United Nations. Due to the non-availability of reliable input price data, the study uses data envelopment analysis (DEA) to derive Malmquist productivity indices. The results demonstrate a decline in agricultural TFP growth in the region from 1961 to 2019. This notwithstanding, a general average growth was seen in some of the conventional inputs measured (land, labour, capital, and fertilizer) which are the main drivers of growth in the region. This finding implies that the increase in agricultural output over the past five decades in SSA is mainly due to an increased use of conventional inputs over time, including land, and not due to an increase in the ratio of output over inputs. As a generally acceptable and preferred indicator of technical and efficiency changes, we use TFP to calculate the Malmquist productivity index (MPI).

Financial Development, Human Capital Development and Economic Growth in Sub-Saharan African Countries

Abstract
 Over the years, there has been a pressing need to improve the state of human capital development and financial development, to pay more attention to it and the benefits it holds in the economy. However, this has not been the case in the Sub-Saharan Africa region, as there has been a major decline in comparison to the other regions of the world. The study examined the relationship between financial developments, human capital development on economic growth in Sub- Saharan African (SSA) countries. The data collected for this research work was obtained from the World Bank, for the 45 Sub-Saharan countries for twenty-four years (1997 to 2020). Descriptive analysis was used to analyze the data set; while panel regression analysis and unit root, testing was also carried out. The results of the study indicates that financial stability and human capital development (education) has significant relationship on the economic growth in Sub-Saharan African countries. The study therefore recommends that the government should attach a higher level of importance to human capital development as well as financial access to ensure economic growth in Sub-Saharan Africa.
 Keywords: Financial Development, Human Capital Development, Economic Growth, Nigeria
 JEL classification 
 C33; G10; O47

The role of agriculture development in sustainable economic growth in Sub-Saharan African countries

The role of agriculture development in sustainable economic growth in Sub-Saharan African countries

How ICTs Moderate the Effect of Global Value Chains’ Participation on Economic Growth in Sub-Saharan Africa?

Using data from Sub-Saharan African (SSA) countries over the period 1990–2015, this study examines the effects of Global Value Chains’ (GVCs) participation on economic growth by distinguishing participation in upstream, participation in downstream and sectors-based participation. The study also focuses on how the economic growth effect of GVCs’ participation can be affected by the ICTs. The Driscoll and Kraay’ estimation approach applied to the cross-lagged panel model enabled to overcome the cross-sectional dependence, heteroscedasticity, errors’ autocorrelation and reverse causality problems. The generalized method of moments (GMM) is further employed for the robustness check. The findings are robust and indicate that the GVCs’ participation (general, upstream, downstream and sectorial) boosts economic growth in SSA countries. These positive effects hold and are even more intensive when the GVCs’ participation is modulated by the ICTs. Furthermore, the study demonstrates that SSA countries should focus on the downstream GVCs’ participation that is the production and export of the (high technologies) intermediate goods that are essential for the production activities of other GVCs’ stakeholders. For the sectors-based participation, the study seems to show that participation in the services sector promotes more economic growth, followed to some extent by the mining, agriculture and manufacturing sectors.

Comparative Performance of Trade Openness and Sovereign Debt Accumulation in Fostering Economic Growth of Sub-Saharan African Countries

In the last four decades, sub-Saharan African countries have witnessed a substantial increase in trade openness and sovereign debt (foreign public debt and domestic public debt). The direct and interactive effects of these factors on economic growth are investigated in this study. The investigation covers the period 1980–2020 and employs the generalised method of moment methodology. The estimation results reveal that the direct effect of trade openness and domestic public debt is significantly favourable. The direct effect of foreign public debt is, however, found to be unfavourable. The results also reveal that the interactive effect of trade openness and domestic public debt is significantly favourable, whereas the interactive effect of trade openness and foreign public debt is fairly favourable. The estimation results thus imply that trade openness and sovereign debt are complementary drivers of economic growth in sub-Saharan African countries. In spite of the favourable role of trade openness and sovereign debt, economic growth has yet to achieve the desired level, which does not augur well for employment and welfare. The prospects of growth could be enhanced by strengthening the impact of trade openness and sovereign debt. However, policy makers should be aware of the direct negative impact of foreign public debt on economic growth, and the need to put measures in place to manage it. JEL Codes: F23, H63, F43, O55

Foreign Assistance, Institutional Quality and Economic Growth in Selected Sub-Saharan African Countries: 1990 – 2021

This study adopts the Augmented Mean Group (AMG) estimator to analyse the impact of institutional quality and foreign assistance on economic growth in Sub-Saharan African countries, using time series data sourced from the World Bank Development Indicators (WDI) and World Bank Governance Indicators (WGI) for the period 1990 to 2021. The study went a step further to determine whether there is a significant interactive development effect of foreign assistance and institutional quality in sub-Saharan African countries. The results show that foreign assistance has a positive conditional marginal effect on per-capita GDP, institutional quality has a positive conditional marginal impact on per-capita GDP and their interaction is also positive. The results are all statistically significant at 10% level of significance. Thus, foreign assistance and good quality institutions improves economic growth. This does not imply that; sub-Saharan African region should heavily rely on foreign assistance, without putting in place specific developmental efforts. Thus, it is opined that policymakers should regulate the allocation of foreign assistance and improve the quality of institutions. In doing so, the production capacity of the region would increase and the region would attract huge amount of foreign direct investment (FDI). Consequently, there would be a distinction between the amount of foreign assistance needed to lessen poverty and the levels of foreign assistance required to achieve economic growth. Keywords: Foreign Assistance; economic growth; AMG Estimator, CCEMG Estimator, Institutional Quality and Sub-Saharan Africa DOI: 10.7176/JESD/14-8-07 Publication date: April 30 th 2023

THE RELATIONSHIP BETWEEN FISCAL PERFORMANCE, GOVERNANCE QUALITY, AND ECONOMIC GROWTH: EVIDENCE FROM SUB-SAHARAN COUNTRIES

Many studies in recent years have focused on the relationship between the government's ability to manage and economic performance indicators. There is ample empirical evidence that factors such as the presence of corruption, violence, and terrorism in a country, and the quality of institutions controlling the market affect the success of economic policies. Similarly, the issue of how the public debt stock affects economic growth has been the central question of many studies. Especially in recent years, the violence, terrorism, and separatist wars that have emerged in Africa have led to the intensification of studies on the continent. In addition, there are many studies supporting that the climate of insecurity created by the violence and terrorist incidents in the continent is the cause of the failure of governance in Africa. Governance failure is also an indicator of ineffectiveness in the formulation and implementation of public policies. This study focuses on investigating the effects of fiscal performance and governance quality on economic growth in Sub-Saharan African countries. In the study, data from 25 sub-Saharan African countries for the period 2002-2019 were used. According to the results of the analysis, as public expenditures increase in the mentioned countries, economic growth decreases. In terms of the focus of the study, it has been found that as fiscal performance and governance quality increase, economic growth also increases. As a fiscal performance indicator, the arithmetic average of the public's domestic and external debt stock was calculated and included in the analysis. An increase in the fiscal performance value means an increase in the country's debt stock.