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The Augmented Solow Model and the African Growth Debate


  • Hoeffler, Anke E


Using panel data the question whether Africa's growth performance can be accounted for is analysed in the framework of the augmented Solow model. OLS levels results suggest that the model cannot fully account for Africa's low growth performance. However, these OLS estimates are likely to suffer from inconsistency and endogeneity problems. As our preferred estimation method we suggest the use of recently developed system generalized method of moments (GMM) estimator. Our system GMM results indicate that the augmented Solow model can account for Africa's low growth performance, provided that we allow for unobserved country specific effects and the endogeneity of investment in estimating the parameters of the model. Hence, rather than concentrating research efforts on the analysis of a spurious Africa dummy, it may be more worthwhile to focus on the continent's low investment ratios and high population growth rates, which we found to be sufficient to explain Africa's low growth rates. Copyright 2002 by Blackwell Publishing Ltd

Suggested Citation

  • Hoeffler, Anke E, 2002. " The Augmented Solow Model and the African Growth Debate," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(2), pages 135-158, May.
  • Handle: RePEc:bla:obuest:v:64:y:2002:i:2:p:135-58

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    References listed on IDEAS

    1. Andreas M. Fischer & Mathias Zurlinden, 2004. "Are Interventions Self Exciting?," Open Economies Review, Springer, vol. 15(3), pages 223-237, July.
    2. Davutyan, Nurhan & Parke, William R, 1995. "The Operations of the Bank of England, 1890-1908: A Dynamic Probit Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(4), pages 1099-1112, November.
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa


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