Institutional Drivers of Economic Growth in Sub-Saharan Africa: Empirical Evidence from Panel Data Analysis

Resumo

The study examined the basic institutional concepts that drive economic growth in sub-Saharan Africa over 10 years by linking the economic growth nexus with the institutions. This study employed panel data analysis from the World Bank Development Index (WDI) database from 2014 to 2023. Based on the Autoregressive Distributed Lag (ARDL) panel data analysis, the results show a stronger relationship between economic growth and the rule of law. For instance, the higher the confidence of foreign investors in a nation’s judiciary and adherence to the terms of contracts, the higher the FDI in such a country. Also, the study shows that a direct relationship exists between foreign direct investment, control of corruption, and economic growth. This implies that the higher the control of corruption, the higher the economic growth of such a country, and vice versa. However, there is an insignificant relationship between economic growth and political stability. The study recommends a stronger control of corruption and adherence to the rule of law in attracting FDI and boosting economic growth. Additionally, there should be strong accountability and economic openness in encouraging local production. Lastly, the study recommends the creation of employment opportunities to reduce social vices in the country.