Home

>

What explains the recent growth performance in Sub-Saharan Africa? Results from a Bayesian Averaging of Classical Estimates (BACE) Approach

This paper empirically identifies the main driving forces behind the recent development in economic growth across Sub-Saharan Africa based on a two-step procedure. Given the role of convergence in explaining the level of economic development, the first step employs the new extension of the sigma convergence developed by Phillip and Sul (2007) to test and endogenously identify the formation of different steady state paths across a sample of 34 countries selected based on available data over the period 1996-2010. Empirical results vindicate the existence of three main convergence clubs and a divergent group of 8 countries; suggesting that Sub-Sahara African countries do not form a homogenous club. The second step implements a Bayesian Averaging of Classical Estimates (BACE) method on the only convergent groups in order to explicitly account for the assumed conditional convergence in cross-sectional growth regressions. Estimation results prove support that 8 out of 18 selected explanatory variables documented in the literature are significantly and strongly associated with the long term economic growth. Particularly, investment and the relative price of exports are found to be favourable to the recent regional economic performance while public consumption and remittances appear to be of less contribution. Other important variables include scientific research, trade taxes, land availability and population growth which are unexpectedly found to be negatively associated with economic growth. Although their sign certainty probabilities are reportedly insignificant, these results raise a number of policy challenges including poor quality of institutions, the exposure to world shocks given the dependence to international trade taxes, the poor quality of human capital and more importantly a threat of skilled labour immigration.

Working paper 578
1 February 2016
SHARE THIS Working Paper PUBLICATION:

Related South Africa’s Cities and Growth Spatial Challenges and Policy Interventions Content

Request for Proposals: The role of cities as drivers of growth and employment
Background Urbanization in South Africa is expected to reach 80% by...
Call for Work
South Africa’s future will be decided in our cities
Discussion Document 14 South Africa’s cities face multiple, overlap...
Dieter von Fintel, Justin Visagie, Ivan Turok, Takwanisa Machemedze, Claus Rabe, Sebastian Galiani, Edward Glaeser
Discussion Document
Monitoring South Africa’s metropolitan economies: A survey of the data landscape
Discussion Document 13 Disparities in data across different metropo...
Dieter von Fintel
Discussion Document
Cities, productivity and Jobs in SA: Problems and potential
Discussion Document 12 Cities contribute to national prosperity bec...
Ivan Turok, Justin Visagie
Discussion Document
Place-based economic policies: international lessons for South Africa
Discussion Document 11 Place-based policies are designed to support...
Harris Selod, Claus Rabe
Discussion Document
What luminosity data can and cannot reveal about South Africa’s urban economies
Discussion Document 10 As novel types of data are becoming availabl...
Takwanisa Machemedze
Discussion Document
Crime: A policy-oriented survey
Discussion Document 9 South Africa has a reputation for having high...
Sebastian Galiani
Discussion Document
Virtual CDE Workshop on SA Cities and Growth
Urban economics has provided powerful insights into how the charact...
Workshop