IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/103063.html
   My bibliography  Save this paper

Innovation, Institutions and Economic Growth in Sub-Sahara Africa – an IV Estimation of a Panel Threshold Model

Author

Listed:
  • Forson, Joseph Ato
  • Opoku, Rosemary Afrakomah
  • Peng, Zhen

Abstract

In this paper, we investigate the relationship between innovation and economic growth in sub-Sahara Africa taking into account the role of institutional development. This is against the backdrop that institution is the oil that greases the wheels of development. Using the number of scientific journals published as proxy for innovation and GDP per capita for economic growth, we assess a panel of 25 economies in sub-Sahara Africa with dataset (1996-2016) from reliable agencies such as World Bank, Polity IV, Heritage foundation, Elsevier Scopus (Scimago) and Economic Freedom of the World Project (EFW). Our evidence suggest among other things that innovation has a positive and significant effect on the growth trajectory of sub-Sahara Africa although the impact seems negligible. Institutional quality is seen to dampen innovation and the relation is persistent regardless of when the focus is on aggregate or decomposed institutional factors. While most countries in the region have offered financial support in strengthening institutions, we find barriers to the design and implementation of STI policies to be responsible for the sluggish contribution of innovation to the growth pattern in the region. Therefore a lot more has to be done in the area of coordination and finding the right mix of financing option in supporting the activities of public organizations and parastatals when it comes to the design and implementation of STI policies.

Suggested Citation

  • Forson, Joseph Ato & Opoku, Rosemary Afrakomah & Peng, Zhen, 2017. "Innovation, Institutions and Economic Growth in Sub-Sahara Africa – an IV Estimation of a Panel Threshold Model," MPRA Paper 103063, University Library of Munich, Germany, revised 15 Mar 2018.
    • Handle: RePEc:pra:mprapa:103063
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/103063/1/MPRA_paper_103063.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Feng, Yi, 1997. "Democracy, Political Stability and Economic Growth," British Journal of Political Science, Cambridge University Press, vol. 27(3), pages 391-418, July.
    2. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth : revisiting the evidence," Policy Research Working Paper Series 3004, The World Bank.
    3. Alberto Alesina & Beatrice Weder, 2002. "Do Corrupt Governments Receive Less Foreign Aid?," American Economic Review, American Economic Association, vol. 92(4), pages 1126-1137, September.
    4. Öhler, Hannes & Nunnenkamp, Peter & Dreher, Axel, 2012. "Does conditionality work? A test for an innovative US aid scheme," European Economic Review, Elsevier, vol. 56(1), pages 138-153.
    5. José Antonio Alonso & Carlos Garcimartín, 2013. "The Determinants Of Institutional Quality. More On The Debate," Journal of International Development, John Wiley & Sons, Ltd., vol. 25(2), pages 206-226, March.
    6. Robert J. Barro & Xavier Sala-i-Martin, 2003. "Economic Growth, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262025531, December.
    7. Barasa, Laura & Knoben, Joris & Vermeulen, Patrick & Kimuyu, Peter & Kinyanjui, Bethuel, 2017. "Institutions, resources and innovation in East Africa: A firm level approach," Research Policy, Elsevier, vol. 46(1), pages 280-291.
    8. De Long, J Bradford & Shleifer, Andrei, 1993. "Princes and Merchants: European City Growth before the Industrial Revolution," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 671-702, October.
    9. Han, Chirok & Phillips, Peter C. B., 2010. "Gmm Estimation For Dynamic Panels With Fixed Effects And Strong Instruments At Unity," Econometric Theory, Cambridge University Press, vol. 26(1), pages 119-151, February.
    10. Willie Siyanbola & Adedamola Adeyeye & Olawale Olaopa & Omowumi Hassan, 2016. "Science, technology and innovation indicators in policy-making: the Nigerian experience," Palgrave Communications, Palgrave Macmillan, vol. 2(1), pages 1-9, December.
    11. Margaret S. McMillan & Dani Rodrik, 2011. "Globalization, Structural Change and Productivity Growth," NBER Working Papers 17143, National Bureau of Economic Research, Inc.
    12. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 2002. "Governance matters II - updated indicators for 2000-01," Policy Research Working Paper Series 2772, The World Bank.
    13. World Bank, 2009. "World Development Indicators 2009," World Bank Publications - Books, The World Bank Group, number 4367, December.
    14. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    15. Durusu-Ciftci, Dilek & Ispir, M. Serdar & Yetkiner, Hakan, 2017. "Financial development and economic growth: Some theory and more evidence," Journal of Policy Modeling, Elsevier, vol. 39(2), pages 290-306.
    16. Jonathon M. Harris, "undated". "Basic Principles of Sustainable Development," GDAE Working Papers 00-04, GDAE, Tufts University.
    17. Phillips, Peter C.B. & Sul, Donggyu, 2007. "Bias in dynamic panel estimation with fixed effects, incidental trends and cross section dependence," Journal of Econometrics, Elsevier, vol. 137(1), pages 162-188, March.
    18. Padilla-Pérez, Ramón & Gaudin, Yannick, 2014. "Science, technology and innovation policies in small and developing economies: The case of Central America," Research Policy, Elsevier, vol. 43(4), pages 749-759.
    19. Rasiah, Rajah & Shahrivar, Rafat Beigpoor & Yap, Xiao-Shan, 2016. "Institutional support, innovation capabilities and exports: Evidence from the semiconductor industry in Taiwan," Technological Forecasting and Social Change, Elsevier, vol. 109(C), pages 69-75.
    20. M. Aristizabal-Ramirez & G. Canavire-Bacarreza & F. Rios-Avila, 2015. "Revisiting the effects of innovation on growth: a threshold analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 22(18), pages 1474-1479, December.
    21. 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.
    22. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 133-162, January.
    23. Greif,Avner, 2006. "Institutions and the Path to the Modern Economy," Cambridge Books, Cambridge University Press, number 9780521671347.
    24. Harris, Jonathan M., 2000. "Basic Principles of Sustainable Development," Working Papers 15600, Tufts University, Global Development and Environment Institute.
    25. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, September.
    26. Md. Qamruzzaman & Wei Jianguo, 2017. "Financial innovation and economic growth in Bangladesh," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-24, December.
    27. Joseph Ato Forson & Ponlapat Buracom & Guojin Chen & Theresa Yaaba Baah-Ennumh, 2017. "Genuine Wealth Per Capita as a Measure of Sustainability and the Negative Impact of Corruption on Sustainable Growth in Sub-Sahara Africa," South African Journal of Economics, Economic Society of South Africa, vol. 85(2), pages 178-195, June.
    28. Christopher John Boudreaux, 2017. "Institutional quality and innovation: some cross-country evidence," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 6(1), pages 26-40, April.
    29. Roberto Ganau, 2017. "Institutions and economic growth in Africa: a spatial econometric approach," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(3), pages 425-444, December.
    30. Ductor, Lorenzo & Grechyna, Daryna, 2015. "Financial development, real sector, and economic growth," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 393-405.
    31. Leblang, David A., 1997. "Political Democracy and Economic Growth: Pooled Cross-Sectional and Time-Series Evidence," British Journal of Political Science, Cambridge University Press, vol. 27(3), pages 453-472, July.
    32. 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.
    33. World Bank, 2017. "World Development Indicators 2017," World Bank Publications - Books, The World Bank Group, number 26447, December.
    34. Adeyinka, Adedeji & Salau, Sheu & Vollrath, Dietrich, 2013. "Structural change in the economy of Nigeria:," NSSP working papers 24, International Food Policy Research Institute (IFPRI).
    35. Knack, Stephen & Keefer, Philip, 1995. "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Indicators," MPRA Paper 23118, University Library of Munich, Germany.
    36. Forson, Joseph Ato & Baah-Ennumh, Theresa Yabaa & Buracom, Ponlapat & Chen, Guojin & Peng, Zhen, 2014. "Causes of Corruption: Evidence from Sub-Sahara Africa," MPRA Paper 102431, University Library of Munich, Germany, revised 20 Mar 2016.
    37. Hadjimanolis, Athanasios & Dickson, Keith, 2001. "Development of national innovation policy in small developing countries: the case of Cyprus," Research Policy, Elsevier, vol. 30(5), pages 805-817, May.
    38. Banji O. Oyeyinka, 2012. "Institutional capacity and policy for latecomer technology development," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 5(1/2), pages 83-110.
    39. Plumper, Thomas & Martin, Christian W, 2003. "Democracy, Government Spending, and Economic Growth: A Political-Economic Explanation of the Barro-Effect," Public Choice, Springer, vol. 117(1-2), pages 27-50, October.
    40. Lorenzo Pellegrini, 2011. "Corruption, Development and the Environment," Springer Books, Springer, number 978-94-007-0599-9, September.
    41. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    42. Mariusz Próchniak & Bartosz Witkowski, 2012. "Bayesian Model Averaging in Modelling GDP Convergence with the Use of Panel Data," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 26, pages 45-60.
    43. Francisco L. Rivera-Batiz & Luis A. Rivera-Batiz, 2018. "Democracy, Governance, and Economic Growth: Theory and Evidence," World Scientific Book Chapters, in: Francisco L Rivera-Batiz & Luis A Rivera-Batiz (ed.),International Trade, Capital Flows and Economic Development, chapter 8, pages 215-248, World Scientific Publishing Co. Pte. Ltd..
    44. Douglass C. North, 1993. "The New Institutional Economics and Development," Economic History 9309002, University Library of Munich, Germany.
    45. Próchniak, Mariusz & Witkowski, Bartosz, 2013. "Time stability of the beta convergence among EU countries: Bayesian model averaging perspective," Economic Modelling, Elsevier, vol. 30(C), pages 322-333.
    46. Joseph Ato Forson & Ponlapat Buracom & Theresa Yaaba Baah-Ennumh & Guojin Chen & Emmanuel Carsamer, 2015. "Corruption, EU Aid Inflows and Economic Growth in Ghana: Cointegration and Causality Analysis," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 9(3), September.
    47. Akorkor Kehinde Awoonor & Joseph Ato Forson, 2020. "African Perceptions of Trade Partners: A Ghanaian and Togolese Perspective of Sino-African Relations," Insight on Africa, , vol. 12(2), pages 104-128, July.
    48. World Bank, 2013. "World Development Indicators 2013," World Bank Publications - Books, The World Bank Group, number 13191, December.
    49. Matthews, R C O, 1986. "The Economics of Institutions and the," Economic Journal, Royal Economic Society, vol. 96(384), pages 903-918, December.
    50. World Bank, 2010. "World Development Indicators 2010," World Bank Publications - Books, The World Bank Group, number 4373, December.
    Full references (including those not matched with items on IDEAS)

    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. Forson, Joseph Ato, 2017. "Innovation Financing and Public Policy Dilemmas in the Economic Community of West African States (ECOWAS)," MPRA Paper 102432, University Library of Munich, Germany, revised 20 Aug 2019.
    2. Forson, Joseph Ato & Buracom, Ponlapat & Chen, Guojin & Baah-Ennumh, Theresa Yabaa, 2014. "Genuine Wealth Per Capita as a Measure of Sustainability and the Negative Impact of Corruption on Sustainable Growth in Sub-Sahara Africa," MPRA Paper 102210, University Library of Munich, Germany, revised 30 May 2016.
    3. Askarov, Zohid & Doucouliagos, Hristos, 2015. "Aid and institutions in transition economies," European Journal of Political Economy, Elsevier, vol. 38(C), pages 55-70.
    4. Khalid, Usman, 2015. "Why Trading with Dictators May Nevertheless Help the People: On the Interplay between Trade, Political Regimes and Economic Institutions," Working Papers 2015:15, Lund University, Department of Economics, revised 23 Jul 2015.
    5. Angeles, Luis, 2010. "Institutions and Economic Development. New tests and new doubts," SIRE Discussion Papers 2010-75, Scottish Institute for Research in Economics (SIRE).
    6. Forson, Joseph Ato, 2014. "A “Recursive Framework” of Corruption and Development: Comparison between Economic and Sustainable outcomes," MPRA Paper 102211, University Library of Munich, Germany, revised 10 Nov 2016.
    7. Sambit Bhattacharyya, 2011. "Growth Miracles and Growth Debacles," Books, Edward Elgar Publishing, number 13609.
    8. Joseph Ato Forson & Ponlapat Buracom & Guojin Chen & Theresa Yaaba Baah-Ennumh, 2017. "Genuine Wealth Per Capita as a Measure of Sustainability and the Negative Impact of Corruption on Sustainable Growth in Sub-Sahara Africa," South African Journal of Economics, Economic Society of South Africa, vol. 85(2), pages 178-195, June.
    9. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    10. Lilyan E. Fulginiti, 2010. "What comes first, agricultural growth or democracy?," Agricultural Economics, International Association of Agricultural Economists, vol. 41(1), pages 15-24, January.
    11. Bournakis, Ioannis & Tsoukis, Christopher, 2016. "Government size, institutions, and export performance among OECD economies," Economic Modelling, Elsevier, vol. 53(C), pages 37-47.
    12. Khan, Karim, 2015. "Extractive Institutional Structure and Economic Development: Evidence from Nigeria," MPRA Paper 68559, University Library of Munich, Germany.
    13. Bhattacharyya, Sambit, 2009. "Unbundled institutions, human capital and growth," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 106-120, March.
    14. Ryan H. Murphy & Colin O’Reilly, 2019. "Applying panel vector autoregression to institutions, human capital, and output," Empirical Economics, Springer, vol. 57(5), pages 1633-1652, November.
    15. Baah-Ennumh, Theresa Yaaba & Forson, Joseph Ato, 2015. "The Impact of Artisanal Small-Scale Mining on Sustainable Livelihoods: A Case Study of Mining Communities in the Tarkwa-Nsuaem Municipality of Ghana," MPRA Paper 102491, University Library of Munich, Germany, revised 15 Sep 2016.
    16. Stephen Weymouth & J. Lawrence Broz, 2013. "Government Partisanship and Property Rights: Cross-Country Firm-Level Evidence," Economics and Politics, Wiley Blackwell, vol. 25(2), pages 229-256, July.
    17. Karim Khan, 2015. "Endogenous Institutional Change and Privileged Groups," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(3), pages 171-195.
    18. Glawe, Linda & Wagner, Helmut, 2017. "The Deep Determinants of the Middle-Income Trap," CEAMeS Discussion Paper Series 10/2017, University of Hagen, Center for East Asia Macro-economic Studies (CEAMeS), revised 2017.
    19. Mina Baliamoune‐Lutz, 2009. "Human Well‐Being Effects Of Institutions And Social Capital," Contemporary Economic Policy, Western Economic Association International, vol. 27(1), pages 54-66, January.
    20. Cingolani, Luciana & Crombrugghe, Denis de, 2012. "Techniques for dealing with reverse causality between institutions and economic performance," MERIT Working Papers 2012-034, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

    More about this item

    Keywords

    Innovation; sub-Sahara Africa (SSA); Science; Technology and Innovation (STI); Institutional Quality; Economic Growth.;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

    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:pra:mprapa:103063. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    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.