Institutions and economic growth: evidence from Sub-Saharan Africa
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2012-06-21
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Abstract
To provide the fundamental cause (s) of the growth problems of sub-Saharan African countries, this dissertation uses a panel of 39 sub-Saharan African countries from 2005-2009 to estimate the effect of institutions, geography, investment, population, gender equality and openness to foreign trade on economic performance. The results from the Arellano-Bond dynamic panel data estimator - two-step system generalised method of moments (GMM) provide robust findings as compared to results from ordinary least squares and least squares dummy variable estimation since the former is able to account for potential problems like autocorrelation or heteroskedasticity within panels, endogenous regressors, attenuation bias and the like whereas the latter estimators do not. For a given level of initial per capita GDP and these variables, output per worker is enhanced by higher level of transparency, accountability and corruption control in the public sector. Thus after controlling for the effect of these variables, sub-Saharan African countries are poor not necessarily because of low investment level, high population, gender inequality, geography or being more or less opened to international trade, but because of worse institutions. On a whole, this thesis provides robust evidence on the effect of institutions in the public sector on income per capitain the sub-region.
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A thesis submitted to the School of Graduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirements for the award of the Degree of Master of Arts in Economics, 2012