Institutions – Economic Growth Nexus in Sub-Saharan Africa

This research explores the causal link between institutions and economic growth in Sub-Saharan Africa countries. System generalized method of moments (GMM) is applied to fit dynamic models for a panel of 43 countries in the region over thirteen-year period. Major findings include (1) per capita gross domestic product (GDP) is persistent in the region; (2) no significant cause-effect link between institution and economic growth of the countries; and (3) impact of institutions on economic growth appeared affected by control variables. The results show that institutions did not lead to economic growth in SSA countries. The finding adds to the already developing puzzle regarding whether institutions matter for economic development of nations. The study suggests further work in institution-growth studies for proper recognition of institutions role in explaining economic growth differences of countries. In this regard, current research identifies focus areas for future work, which includes considering institutions quality threshold and inclusion of indicators from informal institutions in addition to the formal ones.