Institutions And Economic Growth In Sub-saharan African Countries A Panel Data Analysis

Using panel data of forty Sub-Saharan African countries spanning over two decades this th esisrnanalyzes the effect of institutions on econornic growth in these countries. For this, the study usedrninsti tu tional index constructed br Freedom House. Consistent with most recent empirical works,rnthe study found that institutions have significant direct ilnpacr on growth over the time un derrnconsideration. Furthermore, institutions have indirect impact on growth through other factors suchrnas foreign direct investment (FOI) flow to SSA countries. It was found that improvement inrninstitutions has highly significant effect on the FOI inflow. Overall, improving institutionalrnenvironment has significant impact on economic growth in SSA countries. The causality betweenrninstitution and economic growth was found to be a bidirectional one. Other factors such as fixedrncapital formation, population growth and government consumption expenditure were found to havernsignificant effect on SSA economic growth, as expected a priori. Openness to international trade, lifernexpectancy, labor force growth and public expenditure on education were found to have nornstatistically significant effect on economic growth in SSA countries.

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