Institutional quality and economic growth: evidence from Sub-Saharan Africa countries

Abstract

This paper employs two step systems GMM to analyse the effect of institutional quality on economic growth for Sub-Saharan African countries for the period from 2006 to 2018. The findings show that an improvement on institutional quality positively and significantly improve Sub-Saharan African countries output. The findings further provide evidence that the effect of institutional quality on output varies with regional location of SSA countries. In particular, institutional qualities are more effective in driving income growth in West African region than the other three regions of Eastern Africa and Central Africa. In addition, the findings indicate that the impact of institutional quality on output growth varies with income level of SSA countries. An improvement in intuitional quality is more likely to improve economic performance of low income SSA economies than the middle income SSA countries. SSA countries should strengthen independent institutional bodies that prosecute economic crimes. Also, African countries should support African agendas that are aligning with global development agenda. Sub-Saharan African countries should strengthen institutions that widen democratic space, civil liberty and the participation of citizen in the development agenda of a country