Convergence Triggers in Africa: Evidence from Convergence Clubs and Panel Models

Garang, Aweng Peter Majok; Erkekoğlu, Hatice

doi:10.1111/saje.12282

Cited by 1 publication

(2 citation statements)

References 64 publications

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“…However, institutional factors in one region have a negative effect on the economic growth of neighboring regions, a fact explained by the institutional heterogeneity of these regions. Moreover, our empirical results corroborate the findings of Garang and Erkekoglu (2021) that human capital levels are crucial for the convergence of African economies.…”

Section: Empirical Results and Discussionsupporting

confidence: 89%

“…Regarding the determinants of convergence in Africa, economies with higher savings rates, lower population growth rates, greater openness rate, financial sector development, and greater democracy tend to grow faster, while government spending in Africa is identified as having a negative impact on growth. Garang and Erkekoglu (2021) investigated the formation of convergence clubs in Africa using the beta convergence approach on a panel of 34 economies over the period 1984-2014. Empirical results showed four convergence clubs, while pointing to the importance of initial conditions, namely the human capital and institutional framework for the formation of convergence clubs.…”

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confidence: 99%

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Regional convergence and catching up process in Africa: A tale of three clubs

Ibourk

Elouaourti

2023

Regional Science Policy & Practice

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The aims of this article were twofold. First, to tackle the issue of convergence from an analytical point of view by presenting the mathematical developments of the main economic growth models, which emphasized that the convergence of African economies is conditional to the investment level in the early stages of physical capital accumulation. As the latter increases, the convergence of African economies is determined by other factors (investment in research and development (R&D) and human capital, etc.). Second, to verify the empirical validity of these models by confronting them with data from 33 African economies stratified by development level over the period 2004–2019. Empirical results using both spatial and nonspatial panel estimation methodology and the ‘beta‐convergence’ approach pointed to three ‘convergence clubs,’ as well as a conditional convergence for all these clubs. However, the determinants of convergence among African economies differ by development level. In low‐income economies, convergence is conditional to financial development and inflation level. For lower‐middle‐income economies, institutional quality and inflation level contribute to the convergence of this club. The convergence of upper‐middle‐income economies is conditioned by public spending and human capital. In terms of policy implications, countries should develop measures that strengthen institutional reforms to improve the functioning of financial systems, democratic accountability, control of corruption, business climate, economic growth, strengthening the legal environment, and improving competition by reducing public expenditures. This paper is original insofar as it advances the field from the current state of knowledge in several ways. First, to stand out from the existing literature, we conducted a comparative analysis of the institutional quality levels across 33 African countries by developing an institutional quality index through the use of a principal component analysis (PCA) method. Second, we tested the empirical validity of the convergence hypothesis beneath economic growth theories and in the African context; moreover, it has verified the possible existence of ‘convergence clubs,’ then, it brought to light the main determinants of the convergence of these clubs.

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Section: Empirical Results and Discussionsupporting

confidence: 89%

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confidence: 99%