The “Africa Rising”: An Empirical Analysis of the Determinants of Per-Capita Growth

In developing economies, the race toward inclusive development has prompted researchers to reconsider the drivers of growth in view of achieving the Sustainable Development Goals (SDGs). This study aims to explore the determinants of African growth after analysing reference literature to select the explanatory variables. The paper aims to identify the robust drivers of growth of 54 African countries over the period 2010-2019, where the data source is more complete. As a data source, the main international organisations (UN, WB, IMF) have been considered. We employ a system dynamic panel estimator (GMM-sys) without and with added exogenous regressors for the robustness check. As far as we know, we have not found any studies analysing the determinants of growth in a panel of 54 African countries and/or using GMM estimators with data referring to the last decade. We have used the real per-capita GDP as a dependent variable. Our findings indicate that in addition to the initial conditions of the per-capita GDP, the natural resource rent with one order of lags has emerged as significant and with a negative sign, crowding out the per-capita GDP. On the other hand, the government expenditure with one order of lags is also confirmed as significant with a positive sign, while the terms-of-trade has emerged as not significant, after the robustness check with the instrumental variables. We conclude that institutional and business environments are particularly important in explaining African growth.