The Impact of Governance on Economic Growth: An Empirical Assessment in Sub-Saharan Africa

Abstract

In recent decades, issues of good governance and its impact on the well-being of populations have been at the heart of debates among researchers and international organizations. This article examines the impact of governance on economic growth in Sub-Saharan Africa. The panel data estimated shows that governance has a positive and significant impact on economic growth in Sub-Saharan Africa at the 1% threshold. An improvement of one unit of this composite governance indicator would lead to an increase in the economic growth of 19.43% on average. Effective governance and the rule of law are important determinants of economic growth. However, a country that improves these two indicators would encourage an increase in its economic growth. A better quality of institutions would reduce poverty through economic growth.

Keywords: governance, economic growth, Sub-Saharan Africa, panel data

JEL Classification: C33, E22, G38, H11, O11, O47