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

Forson, Joseph Ato and Opoku, Rosemary Afrakomah and Peng, Zhen (2017): Innovation, Institutions and Economic Growth in Sub-Sahara Africa – an IV Estimation of a Panel Threshold Model. Published in: Journal of Economic and Administrative Sciences (10 September 2020): pp. 1-28.

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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.

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