IDEAS home Printed from https://ideas.repec.org/a/spr/inrvec/v65y2018i4d10.1007_s12232-018-0314-y.html
   My bibliography  Save this article

Core infrastructure and industrial performance in Africa: Do institutions matter?

Author

Listed:
  • Ekundayo P. Mesagan

    (University of Lagos)

  • Mustapha O. Bello

    (University of Lagos)

Abstract

The study investigates the role of institution in the nexus between core infrastructure and industrial performance in Africa. In this study, we select 25 African economies and data cover the period of 1996–2016. To conduct the panel analysis, we use variables such as manufacturing value added per capita to proxy industrial performance and employ the principal component analysis to generate core infrastructure index, as well as institution index. Using the fixed effect model, we find that core infrastructure has a positive but insignificant impact on industrial performance in the selected African countries. However, when we interact infrastructure with institution, results suggest that infrastructure has a positive and significant effect on industrial performance, alluding to the fact that institution is very important in making infrastructure to enhance industrial performance in Africa. Hence, African governments should formulate a sound industrial policy and standardise regulatory quality to boost industrial performance.

Suggested Citation

  • Ekundayo P. Mesagan & Mustapha O. Bello, 2018. "Core infrastructure and industrial performance in Africa: Do institutions matter?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 65(4), pages 539-562, December.
    • Handle: RePEc:spr:inrvec:v:65:y:2018:i:4:d:10.1007_s12232-018-0314-y
    DOI: 10.1007/s12232-018-0314-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s12232-018-0314-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s12232-018-0314-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Charles R. Hulten, 1996. "Infrastructure Capital and Economic Growth: How Well You Use It May Be More Important Than How Much You Have," NBER Working Papers 5847, National Bureau of Economic Research, Inc.
    2. J A Omojolaibi & E P Mesagan & T D Oladipupo, 2016. "The dynamics of electricity consumption and private investment in Nigeria," Economic Issues Journal Articles, Economic Issues, vol. 21(2), pages 33-51, September.
    3. K. Bello Ajide & Ibrahim Dolapo Raheem, 2016. "The Institutional Quality Impact on Remittances in the ECOWAS Sub†Region," African Development Review, African Development Bank, vol. 28(4), pages 462-481, December.
    4. Adeola Adenikinju, 2005. "Analysis of the cost of infrastructure failures in a developing economy: The case of the electricity sector in Nigeria," Working Papers 148, African Economic Research Consortium, Research Department.
    5. Chow, Peter C. Y., 1987. "Causality between export growth and industrial development : Empirial evidence from the NICs," Journal of Development Economics, Elsevier, vol. 26(1), pages 55-63, June.
    6. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    7. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross‐Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    8. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    9. César Calderón & Luis Servén, 2004. "The Effects of Infrastructure Development on Growth and Income Distribution," Working Papers Central Bank of Chile 270, Central Bank of Chile.
    10. Olu Ajakaiye & Mthuli Ncube, 2010. "Infrastructure and Economic Development in Africa: An Overview," Journal of African Economies, Centre for the Study of African Economies, vol. 19(suppl_1), pages 3-12.
    11. Knack, Stephen & Keefer, Philip, 1995. "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Indicators," MPRA Paper 23118, University Library of Munich, Germany.
    12. Reinikka, Ritva & Svensson, Jakob, 2002. "Coping with poor public capital," Journal of Development Economics, Elsevier, vol. 69(1), pages 51-69, October.
    13. Peter Pedroni & David Canning, 2004. "The Effect of Infrastructure on Long Run Economic Growth," Department of Economics Working Papers 2004-04, Department of Economics, Williams College.
    14. Mesagan, Ekundayo P. & Ezeji, Amarachi C., 2016. "The Role of Social and Economic Infrastructure in Manufacturing Sector Performance in Nigeria," MPRA Paper 78310, University Library of Munich, Germany.
    15. Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February.
    16. Sebastian Galiani & Paul Gertler & Ernesto Schargrodsky, 2005. "Water for Life: The Impact of the Privatization of Water Services on Child Mortality," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 83-120, February.
    17. Joseph LiPuma & Scott Newbert & Jonathan Doh, 2013. "The effect of institutional quality on firm export performance in emerging economies: a contingency model of firm age and size," Small Business Economics, Springer, vol. 40(4), pages 817-841, May.
    18. Robert Sheppard & Stephan von Klaudy & Geeta Kumar, 2006. "Financing Infrastructure in Africa : How the Region Can Attract More Project Finance," World Bank Publications - Reports 10724, The World Bank Group.
    19. Breisinger, Clemens & Diao, Xinshen & Wiebelt, Manfred, 2014. "Can oil-led growth and structural change go hand in hand in Ghana?," Journal of Policy Modeling, Elsevier, vol. 36(3), pages 507-523.
    20. Esfahani, Hadi Salehi & Ramirez, Maria Teresa, 2003. "Institutions, infrastructure, and economic growth," Journal of Development Economics, Elsevier, vol. 70(2), pages 443-477, April.
    21. James Bond, 2016. "Infrastructure in Africa," Papers Presented at Global Meetings of the Emerging Markets Forum 2016africainf, Emerging Markets Forum.
    22. Botta, Alberto, 2009. "A structuralist North-South model on structural change, economic growth and catching-up," Structural Change and Economic Dynamics, Elsevier, vol. 20(1), pages 61-73, March.
    23. Yepes, Tito & Pierce, Justin & Foster, Vivien, 2009. "Making sense of Africa's infrastructure endowment : a benchmarking approach," Policy Research Working Paper Series 4912, The World Bank.
    24. James Bond, 2016. "Infrastructure in Africa," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 8(3), pages 309-333, September.
    25. Dulani Seneviratne & Ms. Yan M Sun, 2013. "Infrastructure and Income Distribution in ASEAN-5: What are the Links?," IMF Working Papers 2013/041, International Monetary Fund.
    26. Eregha, P.B. & Mesagan, Ekundayo Peter, 2016. "Oil resource abundance, institutions and growth: Evidence from oil producing African countries," Journal of Policy Modeling, Elsevier, vol. 38(3), pages 603-619.
    27. Luis Serven & César Calderon, 2004. "The Effects of Infrastructure Development on Growth and income," Econometric Society 2004 Latin American Meetings 173, Econometric Society.
    28. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wasiu Adamson, Temitope & Adebayo Ajisafe, Rufus & Omobolanle Yussuff, Rukayat, 2022. "Inclusive Growth In Sub-Saharan Africa: Does Sectoral Foreign Aid Matter?," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 9(2), pages 97-128, June.
    2. Ekundayo P. Mesagan & Titilope C. Adewuyi & Olugbenga Olaoye, 2022. "Corporate Finance, Industrial Performance and Environment in Africa: Lessons for Policy," Working Papers of the African Governance and Development Institute. 22/026, African Governance and Development Institute..
    3. Ismaila Akanni Yusuf & Mohammed Bashir Salaudeen & Hope Agbonrofo, 2021. "Social and Economic Drivers of Stock Market Performance in Nigeria," Journal of Economic Impact, Science Impact Publishers, vol. 3(3), pages 137-143.
    4. Yusuf, Ismaila Akanni & Mesagan, Ekundayo Peter & Amadi, Agatha Nkem, 2020. "Effect of financial deepening on stock market returns: The case of military and democratic post-SAP regimes in Nigeria," BizEcons Quarterly, Strides Educational Foundation, vol. 6, pages 3-21.
    5. Mesagan, Ekundayo Peter & Eregha, Perekunah Bright, 2018. "Political Economy of Oil Resources Management in Nigeria: Lessons from Other Countries," MPRA Paper 95667, University Library of Munich, Germany, revised 15 Aug 2019.
    6. Mesagan, Ekundayo & Adenuga , Juliet, 2020. "Effects of Oil Resource Endowment, Natural Gas and Agriculture Output: Policy Options for Inclusive Growth," BizEcons Quarterly, Strides Educational Foundation, vol. 8, pages 15-34.
    7. Ekundayo Peter Mesagan & Xuan Vinh Vo & Precious Muhammed Emmanuel, 2023. "The technological role in the growth-enhancing financial development: evidence from African nations," Economic Change and Restructuring, Springer, vol. 56(1), pages 657-680, February.
    8. Mesagan, Ekundayo Peter & Charles, Ayobola Olufolake & Vo, Xuan Vinh, 2023. "The relevance of resource wealth in output growth and industrial development in Africa," Resources Policy, Elsevier, vol. 82(C).
    9. Peter Ekundayo Mesagan & Akanni Ismaila Yusuf & Azubuike Isaac Ogbuji, 2019. "Natural resource endowment and output growth: How crucial is deficit financing in managing resource-rich African economies?," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 21(2), pages 353-369, December.
    10. Ismaila Akanni Yusuf & Mohammed Bashir Salaudeen & Isaac Azubuike Ogbuji, 2022. "Exchange Rate Fluctuation and Inflation Nexus in Nigeria: The Case of Recent Recession," Journal of Economic Impact, Science Impact Publishers, vol. 4(1), pages 81-87.
    11. Musa Oduola & Mustapha O. Bello & Rahmon Popoola, 2022. "Foreign Direct Investment, Institution and Industrialisation in Sub-Saharan Africa," Economic Change and Restructuring, Springer, vol. 55(2), pages 577-606, May.
    12. Mesagan, Ekundayo Peter & Olunkwa, Chidi Ndubuisi, 2022. "Heterogeneous analysis of energy consumption, financial development, and pollution in Africa: The relevance of regulatory quality," Utilities Policy, Elsevier, vol. 74(C).
    13. Agatha Nkem Amadi & Isaac Azubuike Ogbuji & Hope Agbonrofo, 2020. "The Maturity and Repayment Structure of Sovereign Debt: Implications for Development Agenda in Nigeria," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 6(1), pages 115-120, March.
    14. Yusuf, Ismaila Akanni & Salaudeen, Mohammed Bashir & Agbonrofo, Hope, 2021. "Social and Economic Drivers of Stock Market Performance in Nigeria," MPRA Paper 111086, University Library of Munich, Germany.
    15. Mesagan, Ekundayo & Unah, Aboje & Idowu, Olamide & Alamu, Abidemi, 2019. "Oil Resource Abundance in Nigeria and Iran: Contrapuntal Effect on Social and Economic Welfare," BizEcons Quarterly, Strides Educational Foundation, vol. 4, pages 3-22.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stephane Straub, 2011. "Infrastructure and Development: A Critical Appraisal of the Macro-level Literature," Journal of Development Studies, Taylor & Francis Journals, vol. 47(5), pages 683-708.
    2. Silvia Bertarelli, 2006. "Public capital and growth," Politica economica, Società editrice il Mulino, issue 3, pages 361-398.
    3. Stephane Straub, 2008. "Infrastructure and Growth in Developing Countries: Recent Advances and Research Challenges," Edinburgh School of Economics Discussion Paper Series 179, Edinburgh School of Economics, University of Edinburgh.
    4. Urrunaga, Roberto & Aparicio, Carlos, 2012. "Infrastructure and economic growth in Peru," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    5. Fedderke, J.W. & Bogetic, Z., 2009. "Infrastructure and Growth in South Africa: Direct and Indirect Productivity Impacts of 19 Infrastructure Measures," World Development, Elsevier, vol. 37(9), pages 1522-1539, September.
    6. Francisco Rodríguez, 2006. "Have Collapses in Infrastructure Spending Led to Cross-Country Divergence in per Capita GDP?," Wesleyan Economics Working Papers 2006-013, Wesleyan University, Department of Economics.
    7. Park, Jin Suk & Seo, Young-Joon & Ha, Min-Ho, 2019. "The role of maritime, land, and air transportation in economic growth: Panel evidence from OECD and non-OECD countries," Research in Transportation Economics, Elsevier, vol. 78(C).
    8. Kluge, Jan & Lappoehn, Sarah & Plank, Kerstin, 2020. "The Determinants of Economic Competitiveness," IHS Working Paper Series 24, Institute for Advanced Studies.
    9. Alexandru Pavel & Bogdan Moldovan & Bogdana Neamtu & Cristina Hintea, 2018. "Are Investments in Basic Infrastructure the Magic Wand to Boost the Local Economy of Rural Communities from Romania?," Sustainability, MDPI, vol. 10(10), pages 1-32, September.
    10. Alam, Khalid Mehmood & Li, Xuemei & Baig, Saranjam & Ghanem, Osman & Hanif, Salman, 2021. "Causality between transportation infrastructure and economic development in Pakistan: An ARDL analysis," Research in Transportation Economics, Elsevier, vol. 88(C).
    11. Ward Romp & Jakob De Haan, 2007. "Public Capital and Economic Growth: A Critical Survey," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(S1), pages 6-52, April.
    12. Manfred Wiebelt & Rainer Schweickert & Clemens Breisinger & Marcus Böhme, 2011. "Oil revenues for public investment in Africa: targeting urban or rural areas?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(4), pages 745-770, November.
    13. Idrissa Yaya Diandy & Alioune Badara Seck, 2021. "Infrastructures physiques et croissance économique en Afrique de l'Ouest: Le rôle des institutions," African Development Review, African Development Bank, vol. 33(1), pages 154-165, March.
    14. Zergawu, Yitagesu Zewdu & Walle, Yabibal M. & Giménez-Gómez, José-Manuel, 2020. "The joint impact of infrastructure and institutions on economic growth," Journal of Institutional Economics, Cambridge University Press, vol. 16(4), pages 481-502, August.
    15. Agénor, Pierre-Richard & Neanidis, Kyriakos C., 2015. "Innovation, public capital, and growth," Journal of Macroeconomics, Elsevier, vol. 44(C), pages 252-275.
    16. Aghion, Philippe & Akcigit, Ufuk & Cagé, Julia & Kerr, William R., 2016. "Taxation, corruption, and growth," European Economic Review, Elsevier, vol. 86(C), pages 24-51.
    17. Tidiane Kinda & Patrick Plane & Marie‐Ange Véganzonès‐Varoudakis, 2011. "Firm Productivity And Investment Climate In Developing Countries: How Does Middle East And North Africa Manufacturing Perform?," The Developing Economies, Institute of Developing Economies, vol. 49(4), pages 429-462, December.
    18. Barabas, György & Kitlinski, Tobias & Schmidt, Christoph M. & Schmidt, Torsten & Siemers, Lars-H. & Brilon, Werner, 2010. "Verkehrsinfrastrukturinvestitionen: Wachstumsaspekte im Rahmen einer gestaltenden Finanzpolitik. Endbericht - Januar 2010. Forschungsprojekt im Auftrag des Bundesministeriums der Finanzen. Projektnumm," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 72601.
    19. Getachew, Yoseph Y. & Turnovsky, Stephen J., 2015. "Productive government spending and its consequences for the growth–inequality tradeoff," Research in Economics, Elsevier, vol. 69(4), pages 621-640.
    20. Chakraborty Shankha & Dabla-Norris Era, 2011. "The Quality of Public Investment," The B.E. Journal of Macroeconomics, De Gruyter, vol. 11(1), pages 1-29, August.

    More about this item

    Keywords

    Infrastructure; Institution; Industrial performance; Africa;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:inrvec:v:65:y:2018:i:4:d:10.1007_s12232-018-0314-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.