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Weak economic institutions in Africa: a destiny or design?

Author

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  • Abdulkareem Alhassan
  • Abdulhakeem Abdullahi Kilishi

Abstract

Purpose - The primacy of institutions for economic progress has been established in the literature. Yet, less research attention is paid to the existence and persistence of weak economic institutions in Africa. Thus, the purpose of this paper is to empirically explore the determinants of the quality of economic institutions in Africa. Design/methodology/approach - Hausman–Taylor instrumental variable estimator of panel regression was employed for a sample of 43 Sub-Sahara African countries over the period 1995–2017. Findings - The study finds that the existence and persistence of weak economic institutions in Africa is more of design than destiny. That is, weak economic institutions are created and sustained more by bad political institutions rather than cultural diversity and geographical factors. Therefore, strong political institutions need to be entrenched to reverse the equilibrium of weak economic institutions and dismal economic performance in the continent. Practical implications - The study provides deep understanding of the determinants of economic institutions. This is imperative for policy makers, development agencies and stakeholders in designing viable economic policies and programs for the continent. Originality/value - The novelty of the study is rooted in the examination of the factors responsible for the development and persistence of weak economic institutions in Africa. The idea is original because previous studies focus on political institutions and neglected economic institutions.

Suggested Citation

  • Abdulkareem Alhassan & Abdulhakeem Abdullahi Kilishi, 2019. "Weak economic institutions in Africa: a destiny or design?," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 46(7), pages 904-919, July.
  • Handle: RePEc:eme:ijsepp:ijse-12-2018-0651
    DOI: 10.1108/IJSE-12-2018-0651
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    Citations

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    Cited by:

    1. Folorunsho M Ajide, 2021. "Does economic freedom affect entrepreneurship? Insights from Africa," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 13(2), pages 157-167.
    2. Marta Marson & Matteo Migheli & Donatella Saccone, 2021. "New evidence on the link between ethnic fractionalization and economic freedom," Economics of Governance, Springer, vol. 22(3), pages 257-292, September.
    3. Andrew E. Hansen-Addy & Davide M. Parrilli & Ishmael Tingbani, 2024. "The impact of trade facilitation on African SMEs’ performance," Small Business Economics, Springer, vol. 62(1), pages 105-131, January.
    4. Olabisi Simeon Ayoade & Monica Alagbile Orisadare Ph. D & Micheal Olamide Adediwura & Emmanuel Eromosele Ofino Ph. D, 2023. "Institutional Quality, Human Capital Development and Poverty Level in Nigeria (1981-2021)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(9), pages 2071-2085, September.

    More about this item

    Keywords

    Geography; Africa; Culture; Economic institutions; Instrumental variables (IV) estimation; Political institutions; O55; O43; Z10; C36;
    All these keywords.

    JEL classification:

    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • Z10 - Other Special Topics - - Cultural Economics - - - General
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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