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The Impact of Governance on Economic Growth: Further Evidence for Africa

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  • Bichaka Fayissa
  • Christian Nsiah

Abstract

Sub-Sahara African countries have had a checkered past when it comes to good governance and good institutions. Increasingly, economists and policy makers are recognizing the importance of good governance and institutions for economic growth and development. The New Partnership for Africa’s Development (NEPAD) which was initiated by the African Heads of State and endorsed by the G8 countries including the European Union, Japan, and China in October 2001 has four main goals: eradicating poverty, promoting sustainable growth and development, integrating Africa into the world economy, and accelerating the empowerment of women. The NEPAD objectives are based on the underlying principles of a commitment to good governance, democracy, human rights and conflict resolution, and the recognition that the maintenance of these standards is fundamental to the creation of an environment conducive to investment and long-term economic growth. The objective of this paper is to investigate the role of governance in explaining the sub-optimal economic growth performance of African economies while controlling for the conventional sources of growth. Our results suggest that good governance or lack thereof contributes to the gaps in income per capita between richer and poorer African countries. Furthermore, our results indicate that the role of governance on economic growth depends on the type and the level of income growth of countries under consideration.

Suggested Citation

  • Bichaka Fayissa & Christian Nsiah, 2010. "The Impact of Governance on Economic Growth: Further Evidence for Africa," Working Papers 201012, Middle Tennessee State University, Department of Economics and Finance.
  • Handle: RePEc:mts:wpaper:201012
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    File URL: http://capone.mtsu.edu/berc/working/Governance_WPS_2010_12.pdf
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    References listed on IDEAS

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    1. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, vol. 114(496), pages 191-216, June.
    2. Xu, Bin, 2000. "Multinational enterprises, technology diffusion, and host country productivity growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 477-493, August.
    3. Augustin Fosu & Robert Bates & Anke Hoeffler, 2006. "Institutions, Governance and Economic Development in Africa: An Overview," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(1), pages 1-9, April.
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    Citations

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    Cited by:

    1. Amavilah, Voxi & Asongu, Simplice A & Andrés, Antonio R, 2014. "Globalization, Peace & Stability, Governance, and Knowledge Economy," MPRA Paper 58756, University Library of Munich, Germany.
    2. Amavilah, Voxi & Asongu, Simplice A. & Andrés, Antonio R., 2017. "Effects of globalization on peace and stability: Implications for governance and the knowledge economy of African countries," Technological Forecasting and Social Change, Elsevier, vol. 122(C), pages 91-103.
    3. repec:ksp:journ5:v:4:y:2017:i:4:p:451-472 is not listed on IDEAS
    4. Joseph Forson, 2015. "Corruption, EU Aid Inflows and Economic Growth in Ghana: Cointegration and Causality Analysis," Managing Intellectual Capital and Innovation for Sustainable and Inclusive Society: Managing Intellectual Capital and Innovation; Proceedings of the MakeLearn and TIIM Joint International Conference 2, ToKnowPress.
    5. Dawood MAMMON & Huma RABBANI, 2017. "Effect of welfare and economic performance on good governance outcomes in Pakistan," Journal of Economics Library, KSP Journals, vol. 4(4), pages 451-472, December.
    6. Olufemi Saibu, 2014. "Capital Inflow and Economic Growth Nexus in Nigeria: The Role of Trade Openness," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 10(6), pages 99-113, December.

    More about this item

    Keywords

    Workers’ Remittances; Economic Growth; Panel Data; Arellano-Bond; Quantile Regression; Sub-Saharan Africa;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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