Governance Quality and Growth Performance in Sub-Sahara Africa: Dynamic Panel Systems Generalized Methods of Moments

Abstract

The objective of this paper is to examine the effect of governance quality on growth performance of Sub-Sahara African Countries. The data were obtained from World Bank database over the period 2002-2018 for a sample 22 countries. The method of dynamic panel systems generalized methods of moments (SYS-GMM) was applied to estimate the model. The overall finding reveals that governance quality plays significant role in economic growth performance of the countries. The aggregate (composite governance index) has positive significant effect, where a unit improvement in composite governance index increases economic growth (GDP) by about 3.4 percent. The disaggregated result also reveals that corruption and political stability do have negative and statistically significant effect on growth performance, whereas rule of law, voice and accountability and government effectiveness have positive significant effect on growth. The effect of regulatory quality index even if positive, it is not significant. The paper recommends consistent and strong policy interventions by respective governments in order to improve governance quality emphasizing on areas where the problems are especially serious such as problems of political stability, lack proper implementation of the rule of law and corruption control.

Keywords: Governance quality, Growth, Panel GM, Sub-Sahara-Africa,

DOI: 10.7176/IAGS/86-01

Publication date:September 30^th 2020