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Is Africa's recent growth sustainable?

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Abstract

In this paper we argue that the answer is yes. Our optimism rests on the finding that differences in the level of institutional quality predict cross-country variation in African economic growth during the period 1995-2011. This finding is quite robust. It holds in OLS, LAD and 2SLS settings; it holds for different measures of institutions and different measures of economic growth; and it holds for the period before and the period after the global financial crisis. We also show that changes in institutional quality predict cross-country variation in African economic growth. Moreover, if we split our sample in two equally sized groups, a high-growth and a lowgrowth group, then the high-growth group has experienced a statistically significant increase in institutional quality, whereas the low-growth group has not. Overall, this makes probable that institutions has played an important part in Africa’s recent growth acceleration. The continent has seen many false dawns, caused in large part by ups in commodity prices, but a growth acceleration driven by institutions is likely to signify a genuine African takeoff.

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File URL: http://static.sdu.dk/mediafiles//8/A/4/%7B8A44A7A8-F5DA-451D-854D-BA3044755B7B%7Ddpbe8_2013.pdf
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Bibliographic Info

Paper provided by Department of Business and Economics, University of Southern Denmark in its series Discussion Papers of Business and Economics with number 8/2013.

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Length: 26 pages
Date of creation: 15 Apr 2013
Date of revision:
Handle: RePEc:hhs:sdueko:2013_008

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Postal: Department of Business and Economics, University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark
Phone: 65 50 32 33
Fax: 65 50 32 37
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Web page: http://www.sdu.dk/ivoe
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Related research

Keywords: Institutions; economic growth; Africa;

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References

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  1. Jeffrey M. Wooldridge, 2001. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262232197, December.
  2. Jeffrey D. Sachs, 2003. "Institutions Don't Rule: Direct Effects of Geography on Per Capita Income," NBER Working Papers 9490, National Bureau of Economic Research, Inc.
  3. Andersen, Thomas Barnebeck & Dalgaard, Carl-Johan, 2013. "Power outages and economic growth in Africa," Energy Economics, Elsevier, vol. 38(C), pages 19-23.
  4. Easterly, William, 2005. "National Policies and Economic Growth: A Reappraisal," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 15, pages 1015-1059 Elsevier.
  5. Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers.
  6. Vernon Henderson & Adam Storeygard & David N. Weil, 2009. "Measuring Economic Growth from Outer Space," Working Papers 2009-8, Brown University, Department of Economics.
  7. Jorge Saba Arbache & John Page, 2010. "How Fragile Is Africa's Recent Growth?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 19(1), pages 1-24, January.
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Cited by:
  1. Andersen, Thomas Barnebeck & Barslund, Mikkel & Hansen, Casper Worm & Harr, Thomas & Jensen, Peter Sandholt, 2013. "How Much Did China's WTO Accession Increase Economic Growth in Resource-Rich Countries?," Discussion Papers of Business and Economics 15/2013, Department of Business and Economics, University of Southern Denmark.

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