Revisiting the Infrastructure–Industrialisation Nexus in Africa: Economic Uncertainty Contingent and Thresholds

Does infrastructure development help African countries boost their currently weak industrial structure to meet with pressing needs of their growing population? Answering this question which is also the ambition of SDG 9 requires taking into account rising global uncertainty which provokes a ‘wait-and-see’ behaviour in production and consumption expenditures. To this end, the new World Uncertainty Index and data on 43 African countries from 2003 to 2018 are used. The two-step system generalised method of moments modelling framework was recruited for regression analysis. Results show that while infrastructure development boost industrialisation in Africa, global economic policy uncertainty and risk of uncertainty undermine these benefits after a given uncertainty threshold. The positive net effects were apparent up to respective global uncertainty and uncertainty volatility thresholds where these effects are nullified. When disaggregated proxies of infrastructure are used, similar results are obtained with transport and electricity. Practical policy implications are discussed. JEL Codes: C23, D8, H54, O14, O55