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

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