African growth convergence: role of institutions and macroeconomic policies

Abstract

Purpose

The purpose of this study is to examine the role of institutions and policies on growth convergence in Africa.

Design/methodology/approach

This study uses different methods of panel modelling on a panel of 50 African Countries covering a period of 1990-2014.

Findings

The 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/implications

Based 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/value

The 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.

Citation

Olarinde, M.O. and Yahaya, Z.A. (2018), "African growth convergence: role of institutions and macroeconomic policies", International Journal of Development Issues, Vol. 17 No. 3, pp. 346-371. https://doi.org/10.1108/IJDI-12-2017-0212