Determinants and transitions of economic growth in sub-saharan Africa

Economic performance in SSA in the past two decades has generally been poor and volatile compared to both the other world regions and the previous glory of the 1960s and early 1970s. This study explores the determinants and transitions of economic growth in SSA. On the determinants of growth, the study uses the augmented neoclassical Solow-Swan model and applies SYS GMM. The study uses the Jong-A-Pin and De Haan (2010) method to unmask the episodic nature of growth and analyzes growth transitions using random effects probit. The study identifies 33 growth accelerations, 12 sustained accelerations and 21 growth collapse episodes in SSA. There is support for conditional convergence in the region. Factors initiating growth are different from those that accelerate growth. Growth accelerations and collapses are affected by somehow different factors. Growth accelerations and sustained growth acceleration episodes are somehow driven by different factors. Timing and sustaining growth acceleration episodes is a big challenge to SSA. Growth in the region is strongly driven by investment, trade openness, inflation, foreign aid, population growth, government consumption, democracy, regime change, political instability, and regime durability. Foreign aid has a strong significant negative impact on sustained growth accelerations. To spur growth governments should; lower inflation to increase business profitability and investment, encourage private-public partnership for a big push in infrastructural development, create strong institutions that promote exports, create democratic institutions and in order to sustain growth countries should increase domestic resource mobilization and interest free loans so as to reduce overreliance on foreign aid