Institutions and Economic Growth in Sub-Saharan African Countries: A Panel Data Analysis
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Date
2009-10
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A.A.U
Abstract
Using panel data of forty Sub-Saharan African countries spanning over two decades this th esis
analyzes the effect of institutions on econornic growth in these countries. For this, the study used
insti tu tional index constructed br Freedom House. Consistent with most recent empirical works,
the study found that institutions have significant direct ilnpacr on growth over the time un der
consideration. Furthermore, institutions have indirect impact on growth through other factors such
as foreign direct investment (FOI) flow to SSA countries. It was found that improvement in
institutions has highly significant effect on the FOI inflow. Overall, improving institutional
environment has significant impact on economic growth in SSA countries. The causality between
institution and economic growth was found to be a bidirectional one. Other factors such as fixed
capital formation, population growth and government consumption expenditure were found to have
significant effect on SSA economic growth, as expected a priori. Openness to international trade, life
expectancy, labor force growth and public expenditure on education were found to have no
statistically significant effect on economic growth in SSA countries.
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Keywords
African Countries, Data Analysis