The role of institutions in economic development: Evidence from 27 Sub‐Saharan African countries

Abstract

Purpose

The purpose of this paper is to explore the alleged link between institutional quality and economic performance in 27 Sub‐Saharan Africa (SSA) countries during the period 1984‐2003.

Design/methodology/approach

Four institutions' quality indicators, namely government stability, corruption, ethnic tensions and socioeconomic conditions, along with other control and policy variables, are employed in a panel data analysis.

Findings

The institutional variables assume a key role in the process of economic development whereas the control variables display a limited effect. Thus, the “conventional variables” of economic theory may not be able to fully explain the SSA experience.

Research limitations/implications

Future research efforts should explore how the vast changes experienced by the countries in that region influenced their economic evolution during the last decades.

Practical implications

Policy makers should primarily focus on improving institutional quality, which is likely to positively affect economic performance in SSA countries.

Social implications

Improving institutional infrastructure (enhancing rule of law and quality regulation, improving contract enforcement, securing property rights and reducing uncertainty) play a key role in delivering long‐run economic development and social prosperity.

Originality/value

The paper analyzes the impact of institutional quality on economic performance using data from 27 SSA countries.

Citation

Hashim Osman, R., Alexiou, C. and Tsaliki, P. (2012), "The role of institutions in economic development: Evidence from 27 Sub‐Saharan African countries", International Journal of Social Economics, Vol. 39 No. 1/2, pp. 142-160. https://doi.org/10.1108/03068291211188910