Estiphanos, Girma(Dr.)Amauel, Eba2021-07-262023-11-042021-07-262023-11-042009-01http://etd.aau.edu.et/handle/123456789/27355The economic performance of most of the Sub-Saharan countries is not satisfactory as compared to that of East Asian countries. The issue of economic growth has been the concern of economists with the intent of answering the question as to why there are differences in the growth rates across countries. The impact of quality of institutions on economic performance is the subject of much debate among economists recently. Many researches that have analyzed the factors causing difference in the rates of economic growth have found factors such as quality of institutions, geographical location, integration in international trade and culture among other things to explain the observed differences in per-capita income. While some studies like Sachs and Warner assign the prominent role to Geography, others concentrate on different factors such as institutions and integrations for causing the difference in economic performance among regions and countries. This paper develops a case that differences in the quality of institutions is one of the fundamental cause of differences in growth between SSA countries and some East Asian countries. The Arellano-Bond (1991) and Arellano-Bover (1995) linear generalized method of moments (GMM) is used to estimate the neoclassical growth model Solow Augmented with institution to asses the impact of institutional quality difference on growth difference. The result of this study suggest that gross capital formation, population growth, geography and the quality of institutions are the major factors causing differences in growth rates. Mainly the study concludes that improvement in the quality of institution by the same amount in the two regions under consideration has a higher impact on growth for SSA countries than the East Asian countries considered. Thus the SSA countries should also concentrate on building social infrastructure which is equivalent to improving institutional quality to encourage productive behavior for registering higher economic growth.enAfrica and East AsiaDifferences between Sub-SaharanQuality Differences ExplainingThesis