Growth and growth disparities in Africa: Are differences in renewable energy use, technological advancement, and institutional reforms responsible?

Oluwasegun Adekoya (), Olaoluwa Yaya, Johnson A. Oliyide and Sunday M.A. Posu

Structural Change and Economic Dynamics, 2022, vol. 61, issue C, 265-277

Abstract: Despite the tremendous average growth of the African countries over the last two decades, there is yet evidence of wide cross-country income gaps. In the same vein, there are variations in some important unconventional growth indicators in the region, making us to hypothesize that they could be responsible for the growth differences. Thus, this study examines the effect of renewable energy consumption, technology, and institutional reforms on the growth and growth disparities in Africa using the Augmented Mean Group (AMG) estimator. We find that renewable energy insignificantly impacts economic growth in the upper middle-income countries (UMIC) and lower middle-income countries (LMIC), but the impact is negative for the lower-income countries (LIC). Technology only spurs growth in the UMIC and LMIC, but it is stronger for the former. For institutional quality, its impact is more heterogeneous in that it varies across the income groups and across its sub-components. On average, however, it matters more for the growth of the LMIC than the UMIC, while it is insignificant for the LIC. Putting the entire African region into perspective, all the indicators are drivers of growth, although their impacts are still low, especially renewable energy consumption. Among others, policy makers should realize that neglecting these unconventional factors and income differences of the countries is inimical to the accurate modelling and projection of African growth.

Keywords: Growth disparity; Renewable energy; Technology; Institutional reforms; Africa (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:61:y:2022:i:c:p:265-277

DOI: 10.1016/j.strueco.2022.02.020

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