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The main purpose of this study is to examine the impact of different dimensions of institutional quality indices on the economic growth of Sub-Saharan African (SSA) countries.
Abstract
Purpose
The main purpose of this study is to examine the impact of different dimensions of institutional quality indices on the economic growth of Sub-Saharan African (SSA) countries.
Design/methodology/approach
The study uses a panel data set of 31 SSA countries from 1991 to 2015 and employs a two-step system-GMM (Generalized Method of Moments) estimation technique.
Findings
The study's empirical results indicate that investment-promoting and democratic and regulatory institutions have a significant positive effect on economic growth; however, once these institutions are taken into account, conflict-preventing institutions do not have a significant impact on growth.
Practical implications
The study's findings suggest that countries in the region should continue their institutional reforms to enhance the region's economic growth. Specifically, institutions promoting investment, democracy and regulatory quality are crucial.
Originality/value
Unlike previous studies that use either composite measures of institutions or a single intuitional indicator in isolation, the present study has employed principal component analysis (PCA) to extract fewer institutional indicators from multivariate institutional indices. Thus, this paper provides important insights into the distinct role of different clusters of institutions in economic growth.
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Keywords
Although the impact of human capital on productivity has long been discussed in prior studies, empirical evidence for African firms remains limited. The existing few studies have…
Abstract
Purpose
Although the impact of human capital on productivity has long been discussed in prior studies, empirical evidence for African firms remains limited. The existing few studies have focussed on one type of human capital in isolation and failed to explore the distinct role of different types of human capital on productivity. The aim of this study is to examine the extent to which various typologies of human capital – schooling, on-the-job training (OJT) and slack time –, both in isolation and as a combination, contribute to the productivity of African firms.
Design/methodology/approach
To this end, a cross-sectional firm-level data set from 13 African countries was used. To unravel the casual relationship, propensity score matching (PSM) and multinomial endogenous switching treatment regression (MESTR) techniques were employed.
Findings
Results indicate that all typologies of human capital – schooling, slack time and OJT – have a significant and positive impact on firms' productivity. The findings of the study further point out that the highest payoff, in terms of increased productivity, is achieved when various typologies of human capital are used in combination, rather than in isolation, in the production process.
Practical implications
The policy implications are that productivity of African firms can be improved by increasing the general level of schooling; encouraging firm-sponsored OJT; and giving employees time to develop new ideas.
Originality/value
The present study provides important insights into the distinct role of different types of human capital on productivity. In addition, it provides empirical evidence for a region where empirical evidence is scant.
Details