Infrastructure and Economic Growth in Sub-Saharan Africa (original) (raw)
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The nexus between infrastructure (quantity and quality) and economic growth in Sub Saharan Africa
International Review of Applied Economics, 2017
This paper examines the growth effects of infrastructure stock and quality in Sub Saharan Africa (SSA). While previous studies established that the poor state of infrastructure in SSA slows economic growth, there is little evidence on infrastructure quality and a robust analysis on the causal links between infrastructure and economic growth. Using principal components analysis to cluster different infrastructure measures and examining the infrastructure-growth nexus in a Generalised Method of Moments while accounting for heterogeneity in a panel setting, our results reveal strong evidence of a positive effect of infrastructure development on economic growth with most contribution coming from infrastructure stock. The qualitygrowth effect is weak, thus giving credence to the combined effects of infrastructure stock and quality on growth, especially in regions with moderately high quality, and smaller in those with poorer quality. However, the long-term quality effect is higher than the short-term. Among the disaggregated infrastructure components, electricity supply exerted the greatest downward pressure on growth in SSA. Lastly, we find evidence for a unidirectional causality from aggregate infrastructure to growth. A number of policy implications are discussed.
This paper examines the growth effects of infrastructure stock and quality in Sub Saharan Africa (SSA). While previous studies established that the poor state of infrastructure in SSA slows economic growth, there is little evidence on infrastructure quality and a robust analysis on the causal links between infrastructure and economic growth. Using principal components analysis to cluster different infrastructure measures and examining the infrastructure-growth nexus in a Generalised Method of Moments while accounting for heterogeneity in a panel setting, our results reveal strong evidence of a positive effect of infrastructure development on economic growth with most contribution coming from infrastructure stock. The qualitygrowth effect is weak, thus giving credence to the combined effects of infrastructure stock and quality on growth, especially in regions with moderately high quality, and smaller in those with poorer quality. However, the long-term quality effect is higher than the short-term. Among the disaggregated infrastructure components, electricity supply exerted the greatest downward pressure on growth in SSA. Lastly, we find evidence for a unidirectional causality from aggregate infrastructure to growth. A number of policy implications are discussed.
The Nexus between Infrastructure (Quantity and Quality) and Economic Growth
RePEc: Research Papers in Economics, 2017
This paper examines the growth effects of infrastructure stock and quality in Sub Saharan Africa (SSA). While previous studies established that the poor state of infrastructure in SSA slows economic growth, there is little evidence on infrastructure quality and a robust analysis on the causal links between infrastructure and economic growth. Using principal components analysis to cluster different infrastructure measures and examining the infrastructure-growth nexus in a Generalised Method of Moments while accounting for heterogeneity in a panel setting, our results reveal strong evidence of a positive effect of infrastructure development on economic growth with most contribution coming from infrastructure stock. The qualitygrowth effect is weak, thus giving credence to the combined effects of infrastructure stock and quality on growth, especially in regions with moderately high quality, and smaller in those with poorer quality. However, the long-term quality effect is higher than the short-term. Among the disaggregated infrastructure components, electricity supply exerted the greatest downward pressure on growth in SSA. Lastly, we find evidence for a unidirectional causality from aggregate infrastructure to growth. A number of policy implications are discussed.
Journal of Financial Management of Property and Construction
Purpose This paper aims to assess the impact of infrastructure development on Ghana’s economic growth. Design/methodology/approach Using data obtained from the World Bank’s World Development Indicators, the United States’ (US) International Energy Statistics and the Central Intelligence Agency’s (CIA) Factbooks from 1980 to 2016, an autoregressive distributed lag (ARDL) framework is used to determine the long- and short-run impact of the selected infrastructure stock and quality indices on Ghana’s economic growth. Findings Findings indicate a statistically significant relationship between infrastructure development and economic growth. Additionally, electricity-generating capacity is identified as the infrastructure stock index that has the greatest positive impact on Ghana’s economic growth. The study reveals that electricity-distribution loss has a significant negative effect over both long- and short-run periods. Research limitations/implications Commercial petroleum export from ...
How much does infrastructure matter to growth in Sub-Saharan Africa?
2005
The paper provides the first systematic quantitative assessment of the importance for Sub-Saharan Africa's growth of investment in the various infrastructure sub-sectors. Indeed, very little analytical evidence has been generated so far to demonstrate the relevance of the political enthusiasm for infrastructure in Africa. This paper relies on an augmented Solow growth model and on a recently updated World Bank indicators database to demonstrate the importance of infrastructure stocks for Africa. It provides additional insights on the argued differences in the relative importance for the effectiveness of infrastructure activities of geography (coastal vs. landlocked countries) as well as of the legal tradition of the country (Anglophone vs. non-Anglophone countries). It concludes with a test of the growth effects of the adoption of infrastructure "privatization" policies. Throughout the empirical Section of the paper, the information generated by the models testing the importance of the various infrastructure subsectors is compared to the information generated by a Solow model accounting for human capital exclusively. * We have benefited from comments and suggestions from Ana Goicoechea, Jacques Morisset, Luis Serven, Lourdes Trujillo, Philippe Weil and Michel Wormser. Any mistake is however ours and should not be attributed to anyone else, in particular the institutions we are affiliated with.
2006
Empirical explorations of the growth and productivity impacts of infrastructure have been characterized by ambiguous (countervailing signs) results with little robustness. A number of explanations of the contradictory findings have been proposed. These range from the crowd-out of private by public sector investment, non-linearities generating the possibility of infrastructure overprovision, simultaneity between infrastructure provision and growth, and the possibility of multiple (hence indirect) channels of influence between infrastructure and productivity improvements. This paper explores these possibilities utilizing panel data for South Africa over the 1970-2000 period, and a range of 19 infrastructure measures. Utilizing a number of alternative measures of productivity, the prevalence of ambiguous (countervailing signs) results, with little systematic pattern is also shown to hold for our data set in estimations that include the infrastructure measures in simple growth frameworks. We demonstrate that controlling for potential endogeneity of infrastructure in estimation robustly eliminates virtually all evidence of ambiguous impacts of infrastructure, due for example to possible overinvestment in infrastructure. Indeed, controlling for the possibility of endogeneity in the infrastructure measures renders the impact of infrastructure capital not only positive, but of economically meaningful magnitudes. These findings are invariant between the direct impact of infrastructure on labor productivity, and the indirect impact of infrastructure on total factor productivity. extension of this empirical literature is an examination of the extent of underinvestment in infrastructure, and its consequences for economic growth. For instance, on the basis of comparative experience from the 1990s, Easterly and Serven estimate that about one-fifth of Latin American growth underperformance relative to East Asia was directly related to underinvestment in infrastructure, while Esfahani and Ramirez (2003) estimate that sub-Saharan Africa's poor growth performance was in part related to underinvestments in electricity and telecom infrastructure, and Eustache (2005) estimates that if Africa had enjoyed Korea's quantity and quality of infrastructure, it would have raised its annual growth per capita by about 1 percentage point. Bajo-Rubio and Diaz-Roldan (2005) examine underprovision of public capital for Spanish regions, while Miller and Tsoukis infer sub-optimal provision of public capital for a larger set of countries. Given anticipated infrastructure impacts on human welfare and equity across community and income groups, further questions surround relative access to infrastructure services across urban and rural households, and different income groups. Often the lowest household income groups have no
International Journal of Multidisciplinary Research and Growth Evaluation
This study examined the interactive effect of infrastructure and quality of institutions on economic growth in Sub-Saharan Africa over the period 1996 and 2020 using the Cross-Sectional-Autoregressive Distributed Lag estimator. This was with a view to providing additional macroeconomic evidence that is specific to the SSA region on the response of economic growth to infrastructure development contingent on the quality of the underlying institutions. Annual data on variables such as real Gross Domestic Product (GDP) per capita, fixed telephone subscriptions, mobile cellular subscriptions, electric power consumption, improved water source, improved sanitation facilities, gross capital formation per capita, labour force, urbanisation ratio, land area and population density were obtained from the World Bank Development Indicators (WDI) of the World Bank, 2021 edition. Also, data on institutional quality variables, namely, control of corruption, government effectiveness, political stabil...
Infrastructure and economic growth in Nigeria: A multivariate approach 1
This paper attempted to investigate the impact of infrastructure on economic growth in Nigeria. A multivariate model of simultaneous equations was deployed. The paper also utilized three-stage least squares technique to capture the transmission channels through which infrastructure promotes growth. The research covered 40 years (1970 to 2010). The finding shows that infrastructural investment has a significant impact on output of the economy directly through its industrial output and indirectly through the output of other sectors such as manufacturing, oil and other services. The agricultural sector is however not affected by infrastructure. The results also show a bi-directional causal relationship between infrastructure and economic growth. The paper recommended increased investment in infrastructure. Also, the financing options for closing Nigeria's infrastructure gaps should focus on broadening the sources of finance and a better allocation of public resources In this wise, the government should intensify the utilization of the public-private-partnership (PPP) framework.
Infrastructure and economic growth in Nigeria: A multivariate approach
This paper attempted to investigate the impact of infrastructure on economic growth in Nigeria. A multivariate model of simultaneous equations was deployed. The paper also utilized three-stage least squares technique to capture the transmission channels through which infrastructure promotes growth. The research covered 40 years (1970 to 2010). The finding shows that infrastructural investment has a significant impact on output of the economy directly through its industrial output and indirectly through the output of other sectors such as manufacturing, oil and other services. The agricultural sector is however not affected by infrastructure. The results also show a bi-directional causal relationship between infrastructure and economic growth. The paper recommended increased investment in infrastructure. Also, the financing options for closing Nigeria’s infrastructure gaps should focus on broadening the sources of finance and a better allocation of public resources In this wise, the government should intensify the utilization of the public-private-partnership (PPP) framework.
Effect of Infrastructure and Foreign Direct Investment on Economic Growth in Sub-Saharan Africa
Global Journal of Emerging Market Economies
This article investigates the effect of infrastructure and foreign direct investment (FDI) on economic growth in Sub-Saharan Africa (SSA) using panel data on 46 countries covering the period 2003–2017. The data were analyzed using fixed effects, random effects, and system generalized method of moments (GMM) estimation techniques. Based on the system GMM estimates, the results indicate that a 1 percent improvement in electricity and transport infrastructure induces growth by 0.09 percent and 0.06 percent, respectively. Additionally, FDI proved to be growth enhancing only when interacted with infrastructure. The interactive effect of FDI and infrastructure improves economic growth by 0.016 percent. The results suggest that public provision of economic infrastructure reduces the cost of production for multinational enterprises, thus providing an incentive to increase investment in the domestic economy to sustain economic growth. The results also suggest that the impact of FDI on econom...