Public institutions and infrastructure: the interactive effect on economic growth in sub-Saharan Africa

It is argued that government institutions are saddled with the responsibility of planning, executing and managing infrastructure, hence the interaction between institutional quality and infrastructure development matters for economic growth, particularly in developing countries. However, this issue has yet to be given adequate attention by researchers in previous empirical studies. Therefore, this study attempts to build on the previous studies by investigating the direct and interactive effects of both factors on economic growth in sub-Saharan Africa. The model of generalized method of moments is employed in investigating this issue, within the period 1980–2021. The direct impact of institutional quality on growth is found to be positive but insignificant, while that of infrastructure development is positive and significant. In spite of the poor impact of institutional quality, the results show that it interacted with infrastructure development to produce significant positive effect. It suggests that the quality of public institutions may be low, but the infrastructure provided and maintained by such institutions contributed fairly well to economic growth. The results, therefore, validate the postulation that institutional quality and infrastructure development are interconnected in facilitating economic growth. This positive effect on growth is complemented by public debt, foreign investment and human capital. Therefore, appropriate policies are required to enhance the positive effects, in order to accelerate economic growth in sub-Saharan Africa.