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Domestic resources, governance, global links, and the economic performance of Sub-Saharan Africa

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Amavilah, Voxi Heinrich

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Abstract

This paper uses a simple production function to show that the economic performance of a group of African countries in 2007 depended on three broad sources: domestic resources, governance, and global links. The results reveal that investment plays the most important part. The effects of education (knowledge) as a component of human capital is modest, while the health (life expectancy) part of human capital is negative. At the aggregate level external relations, measured as openness, are positively correlated with per capita income. However, disaggregated as integration, aid dependency, and net tourism, all three global links have a negative effect on performance. Also, two indicators of institutional quality (governance) show that average improvement in the quality of institutions has helped economic performance. Considering different dimensions of institutions, the rule of law, and safety and security of property rights are the most constraining aspects of institutions in this group of countries. The findings leave enough room technical for fine-tuning and sophisticated estimators, which cautions interpretation. However, it seems clear that developing countries do better improving domestic resources and institutions than relying for performance on external relations, even though such links cannot be dismissed lightly.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11193.

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Date of creation: 18 Oct 2008
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Handle: RePEc:pra:mprapa:11193

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Related research
Keywords: resources; factors and forces of production; governance; institutional quality; perfomance Afican countries;

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Find related papers by JEL classification:
F35 - International Economics - - International Finance - - - Foreign Aid
O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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