Institutional Quality and Economic Growth: Evidence from Sub-Saharan Africa

Abstract

The paper investigated the relationship between institutional quality and economic growth in a sample of Sub-Saharan African (SSA) economies. Deploying data spanning 1996 to 2013 on these 28 countries, and an assortment of panel estimation techniques, a number of findings ensued. The System GMM estimation technique as well as the other approaches suggested substantial evidence that institutional quality had trifling effect on economic growth in SSA. This result surprisingly remained robust to the six alternative measures of institutional quality adopted with a view to capturing the diversity of governance dimensions. Plausible explanations could be envisaged particularly owing to the use of a dynamic panel estimator and the reckoning that growth performance in the region has rather been more significantly influenced by other covariates especially investment and human capital. Therefore it becomes imperative to put in place institutional reforms in these SSA countries. This is in order to allow the rule of law to prevail, engender effective regulation of markets, promote control of corruption, and ensure the effectiveness of government institutions. Put together, these will go a long way in guaranteeing sustained growth performance.