Infrastructure Development and Inclusive Growth in Africa: What Role Does the Knowledge Economy Play?

The present study assesses the impact of infrastructure development on promoting inclusive growth in 48 African countries between 2000 and 2020. The study also examines the moderating role of the knowledge economy on the infrastructure development-inclusive growth relationship. To address potential endogeneity, a two-step GMM strategy has been adopted. Inclusive growth is measured by a composite index that integrates shared growth and income distribution. The study finds that infrastructure development plays a significant role in promoting inclusiveness in growth, signifying that the development in the transport, energy, portable water supply and information and communication departments has promoted inclusive growth in Africa. More specifically, it contributes to enhancing shared growth and reducing income inequalities, which ultimately leads to better living standards. The indirect effect findings indicate that the knowledge economy promote infrastructure development to enhance inclusive growth. This is consistent in both the energy, water, ICT and transport sectors. In addition, Africa’s inclusive growth is enhanced by control of corruption and foreign direct investments. The findings recommend African policymakers to develop an economy that places a high value on knowledge transfer and human capital, advancing the knowledge economy to support infrastructure and accelerate inclusive growth. Inclusive growth is enhanced by policies that support infrastructure development projects with sound governance.