Analysis of the two-way causal nexus between macroeconomic factors and infrastructure development: the experience of selected African countries
Journal of Economic and Administrative Sciences
ISSN: 1026-4116
Article publication date: 14 July 2021
Issue publication date: 9 May 2023
Abstract
Purpose
The purpose of this study is to analyze the two-way causal nexus between macroeconomic factors such as foreign aid, industrialization, economic growth, population growth, urbanization, control of corruption and the infrastructure development index of the top-ranking African countries from 2003 to 2018.
Design/methodology/approach
The study adopts various econometric tools such as cross-sectional dependence test, panel unit root and cointegration test and Dumitrescu and Hurlin panel Granger causality test in ascertaining the relevant relationships between the variables under consideration.
Findings
The main findings of the Granger causality test result revealed a bidirectional causal relationship between foreign aid and infrastructure and between urbanization and infrastructure. The study also found unidirectional causality running from population growth to infrastructure while a zero causal relationship existed between industrialization and infrastructure, economic growth and infrastructure and lastly, between control of corruption and infrastructure. The study concludes that the major macroeconomic factors that influence infrastructure development in these selected African countries are foreign aid, population explosion and urbanization. Also, their high infrastructure development index has causal influence in only attracting more foreign aid and also promoting urban expansion.
Originality/value
To the best of the author's knowledge, the study is unique as it is the first to determine the two-way causal nexus between macroeconomic factors and infrastructure development using a sample of the top ten African countries in infrastructure ranking. The findings reflect the current situation in Africa.
Keywords
Acknowledgements
The author would like to express his utmost gratitude to the associate editor and two anonymous referees for their constructive and insightful comments which were instrumental in enhancing the quality of the article.
Funding: The author received no financial support for the research, authorship, and/or publication of this article.
Citation
Azolibe, C.B. (2023), "Analysis of the two-way causal nexus between macroeconomic factors and infrastructure development: the experience of selected African countries", Journal of Economic and Administrative Sciences, Vol. 39 No. 2, pp. 322-339. https://doi.org/10.1108/JEAS-01-2021-0004
Publisher
:Emerald Publishing Limited
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