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Department of Business and Economics, University of Southern Denmark Discussion Papers of Business and Economics
Department of Business and Economics, University of Southern Denmark

No 8/2013:
Is Africa's recent growth sustainable?

Thomas Barnebeck Andersen () and Peter Sandholt Jensen ()

Abstract: In this paper we argue that the answer is yes. Our optimism rests on the finding that differences in the level of institutional quality predict cross-country variation in African economic growth during the period 1995-2011. This finding is quite robust. It holds in OLS, LAD and 2SLS settings; it holds for different measures of institutions and different measures of economic growth; and it holds for the period before and the period after the global financial crisis. We also show that changes in institutional quality predict cross-country variation in African economic growth. Moreover, if we split our sample in two equally sized groups, a high-growth and a lowgrowth group, then the high-growth group has experienced a statistically significant increase in institutional quality, whereas the low-growth group has not. Overall, this makes probable that institutions has played an important part in Africa’s recent growth acceleration. The continent has seen many false dawns, caused in large part by ups in commodity prices, but a growth acceleration driven by institutions is likely to signify a genuine African takeoff.

Keywords: Institutions; economic growth; Africa; (follow links to similar papers)

JEL-Codes: O11; O43; O47; (follow links to similar papers)

26 pages, April 15, 2013

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