The effect of infrastructure development on economic growth: The case of sub-Saharan Africa

Abdikarim Abdullahi; Lai Wei Sieng

doi:10.24294/jipd.v7i2.1994

The effect of infrastructure development on economic growth: The case of sub-Saharan Africa

Abdikarim Abdullahi, Lai Wei Sieng

Article ID: 1994
Vol 7, Issue 2, 2023

VIEWS - 295 (Abstract) 293 (PDF)

Abstract

The significance of infrastructure development as a determinant of economic growth has been widely studied by economists and policymakers. Though there is no much debate about the importance of infrastructure on growth, the extent to which infrastructure affects growth in the long run is often debated among researchers. This paper aims to examine the effect of infrastructure development on economic growth in ten sub-Saharan Africa. This study uses balanced panel data of ten African countries, particularly sub-Saharan Africa over the period of 2010–2020 by analyzing a set of independent variables with relation to the dependent, which is GDP per capita. The study has found that water supply & sanitation index and electricity index have positive and significant relationship with economic growth, while transport index and Information & Communications (ICT) have negative relationship with economic growth in these countries.

Keywords

infrastructure development; economic growth; balanced panel data; sub-Saharan Africa

Full Text:

PDF

References

African Development Bank (AfDB) (2018). African Development Bank Group, financial highlights bank group revenue 2017 and 2018. Available online: https://www.afdb.org/en (accessed on 3 August 2023).

African Union (2014). Common Africa Position (CAP) on the post 2015 development agenda. Available online: https://au.int/sites/default/files/documents/32848-doc-common_african_position.pdf (accessed on 3 August 2023).

Anderson E, de Renzio P, Levy S (2006). The Role of Public Investment in Poverty Reduction: Theories, Evidence and Methods. Overseas Development Institute.

Aschauer DA (1989). Is public expenditure productive? Journal of Monetary Economics 23(2): 177–200. doi: 10.1016/0304-3932(89)90047-0

Crafts N (1996). Endogenous growth: Lessons for and from economic history. CEPR Discussion Paper No. 1333. Centre for Economic Policy Research.

Bagus Ardiansyah R, Dwi Harwin Kusmaryo MFM (2020). Prospects of infrastructure development in the perspective of economic growth. International Journal of Social Science and Business 4(3): 390–399.

Barro RJ (1990). Government spending in a simple model of endogeneous growth. Journal of Political Economy 98(5, Part 2): S103–S125. doi: 10.1086/261726

Calderon C, Cantu C, Chuhan-Pole P (2018). Infrastructure development in sub-Saharan Africa: A scorecard. Polocy Research Working Paper. World Bank Group. doi: 10.1596/1813-9450-8425

Charles S, Michael V (2006). Multinationals and economic growth in East Asia. In: Urata S, Yue CS, Kimura F (editors). Multinationals and Economic Growth in East Asia. Routledge. doi: 10.4324/9780203966693

Deininger K, Okidi J (2003). Growth and poverty reduction in Uganda, 1999–2000: Panel data evidence. Development Policy Review 21(4): 481–509. doi: 10.1111/1467-7679.00220

Dickey DA, Fuller WA (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association 74(366): 427. doi: 10.2307/2286348

Foster V, Briceno-Garmendia C (2010). Africa’s infrastructure: A time for transformation: A time for transformation. Available online: http://hdl.handle.net/10986/2692 (accessed on 3 August 2023).

Gujarati DN (2003). Basic Economitrics, 4th ed. McGraw-Hill.

International Energy Agency (2019). World Energy Outlook 2019 executive summary (Japanese). Available online: https://www.iea.org/reports/world-energy-outlook-2019 (accessed on 3 August 2023).

Kodongo O, Ojah K (2016). Does infrastructure really explain economic growth in Sub-Saharan Africa? Review of Development Finance 6(2): 105–125. doi: 10.1016/j.rdf.2016.12.001

Limão N, Venables AJ (2001). Infrastructure, geographical disadvantage, transport costs, and trade. The World Bank Economic Review 15(3): 451–479. doi: 10.1093/wber/15.3.451

Mutiiria OM, Ju Q, Dumor K (2020). Infrastructure and inclusive growth in sub-Saharan Africa: An empirical analysis. Progress in Development Studies 20(3): 187–207. doi: 10.1177/1464993420927507

Nugraha AT, Prayitno G, Situmorang ME, Nasution A (2020). The role of infrastructure in economic growth and income inequality in Indonesia. Economics and Sociology 13(1): 102–115. doi: 10.14254/2071-789X.2020/13-1/7

Phillips PCB, Perron P (1988). Testing for a unit root in time series regression. Biometrika 75(2): 335–346. doi: 10.1093/biomet/75.2.335

PIDA (2019). Programme for Infrastructure Development in Africa (PIDA): Infrastructure Outlook 2040. Available online: https://www.icafrica.org/fileadmin/documents/PIDA/PIDA Executive Summary-English_re.pdf (accessed on 3 August 2023).

Sahoo P, Dash RK, Nataraj G (2012). China’s growth story: The role of physical and social infrastructure. Journal of Economic Development 37(1): 53–75.

Seethepalli K, Bramati MC, Veredas D (2008). How relevant is infrastructure to growth in East Asia? Policy Research Working Paper No. 4597. The World Bank. pp. 1–40.

Servén L, Calderón MC (2004). The Effects of Infrastructure Development on Growth and Income Distribution. Policy Research Working Paper. World Bank Group. doi: 10.1596/1813-9450-3400

Solow RM (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics 70(1): 65–94. doi: 10.2307/1884513

Stiroh KJ (2001). What Drives Productivity Growth? Productivity Growth from the Neoclassical and New Growth Perspectives. Available online: https://www.newyorkfed.org/medialibrary/media/research/epr/01v07n1/0103stir.pdf (accessed on 3 August 2023).

Straub S, Terada-hagiwara A (2010). Infrastructure and growth in developing Asia. ADB Economics Working Paper. Asian Development Bank. Available online: https://www.adb.org/publications/infrastructure-and-growth-developing-asia (accessed on 3 August 2023).

Straub S (2008). Infrastructure and growth in developing countries: Recent advances and research challenges. Policy Research Working Paper. World Bank Group. doi: 10.1596/1813-9450-4460

UNICEF (2015). UNICEF Annual Report 2014. Available online: https://www.unicef.org/reports/unicef-annual-report-2014 (accessed on 3 August 2023).

Van der Ploeg F, George SA (1994). Money and endogenous growth. Journal of Money, Credit and Banking 26(4): 771–791.

Van Sinderen J, Roelandt TJA (1998). Policy implications of endogenous growth models. In: Brakman S, van Ees H, Kuipers SK (editors). Market Behaviour and Macroeconomic Modelling. Palgrave Macmillan. doi: 10.1007/978-1-349-26732-3_13

World Bank (2017). An analysis of issues shaping Africa’s economic future. Africa’s Pulse 15: 1–52.

World Bank (2022). World development indicators. Available online: https://databank.worldbank.org/source/world-development-indicators (accessed on 3 August 2023).

DOI: https://doi.org/10.24294/jipd.v7i2.1994