African growth convergence: role of institutions and macroeconomic policies

African growth convergence: role of institutions and macroeconomic policies PurposeThe purpose of this study is to examine the role of institutions and policies on growth convergence in Africa.Design/methodology/approachThis study uses different methods of panel modelling on a panel of 50 African Countries covering a period of 1990-2014.FindingsThe results confirmed the presence of conditional convergence among countries in the region. On the average, technology accumulation and fiscal policies indicators are positive function of growth, while human resources, monetary policies indicators and ineffective institutions partly necessitated by poor level of development negatively impact growth. The study concludes, though traditional growth variables and policies are imperative in achieving growth in income, they remain insufficient in an environment characterize by extractive and absolutist institutions. Therefore, institution remains the link that bridges the gap in between proper mix of resources and policies.Research limitations/implicationsBased on the results, policy-makers in the region should allocate certain percentage of their resources (on a sustainable basis) towards building a qualitative institution. Also, future studies on Africa should be focused on the rate at which poor level of economic development determines the quality of institutions which in turn impacts the level of growth in income.Originality/valueThe study contributes to the existing literature on institutional convergence with particular focus on African countries using system GMM to capture the endogeneity among the series. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Development Issues Emerald Publishing

African growth convergence: role of institutions and macroeconomic policies

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1446-8956
DOI
10.1108/IJDI-12-2017-0212
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this study is to examine the role of institutions and policies on growth convergence in Africa.Design/methodology/approachThis study uses different methods of panel modelling on a panel of 50 African Countries covering a period of 1990-2014.FindingsThe results confirmed the presence of conditional convergence among countries in the region. On the average, technology accumulation and fiscal policies indicators are positive function of growth, while human resources, monetary policies indicators and ineffective institutions partly necessitated by poor level of development negatively impact growth. The study concludes, though traditional growth variables and policies are imperative in achieving growth in income, they remain insufficient in an environment characterize by extractive and absolutist institutions. Therefore, institution remains the link that bridges the gap in between proper mix of resources and policies.Research limitations/implicationsBased on the results, policy-makers in the region should allocate certain percentage of their resources (on a sustainable basis) towards building a qualitative institution. Also, future studies on Africa should be focused on the rate at which poor level of economic development determines the quality of institutions which in turn impacts the level of growth in income.Originality/valueThe study contributes to the existing literature on institutional convergence with particular focus on African countries using system GMM to capture the endogeneity among the series.

Journal

International Journal of Development IssuesEmerald Publishing

Published: Sep 3, 2018

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