Does Institutional Quality Enhance the Effect of Health Outcomes on Economic Growth? Insights from Sub-Saharan African Countries

Hafte Gebreselassie Gebrihet (), Yibrah Hagos Gebresilassie and Gabriel Temesgen Woldu
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Hafte Gebreselassie Gebrihet: Department of Pedagogy, Religion, and Social Studies, Western Norway University of Applied Sciences, 5063 Bergen, Norway
Yibrah Hagos Gebresilassie: School of Accounting, Economics and Finance, University of KwaZulu Natal, Durban 4041, South Africa
Gabriel Temesgen Woldu: Institute of Economics and Economic Development, Theoretical Economics Department, University of Szeged, 6722 Szeged, Hungary

Economies, 2024, vol. 12, issue 11, 1-23

Abstract: Institutional quality (InQ) plays an important role in shaping economic growth (ECG), influencing how economies develop and perform. The literature addresses the nexus between InQ and ECG and the link between health and ECG; findings are often contradictory, creating knowledge gaps. Importantly, research on the interplay between InQ, health, and ECG in Sub-Saharan African (SSA) countries is particularly limited. This study aims to address this gap by evaluating how health impacts ECG, with an emphasis on the mediating role of InQ in the health–growth nexus in SSA. This study examines these interplays across 35 SSA countries from 2012 to 2022. The life expectancy at birth (LEX) and real gross domestic product per capita (GDP) are used as proxies for health outcomes and ECG, respectively. The system generalised method of moments estimator is employed to analyse data. Results show that the LEX has a strong positive effect on economic growth in SSA countries. Furthermore, the InQ indicators (such as control of corruption, government effectiveness, rule of law and political stability, and absence of violence) are positively correlated with ECG. When the LEX interacts with InQ indicators, InQ is identified as a key channel through which LEX influences ECG. The findings confirm that InQ plays a crucial role in the health–growth nexus, with the positive impact of LEX on ECG being more pronounced in countries with higher levels of InQ, while the effect is weaker in countries with lower levels of InQ. The findings of this study have crucial policy implications, highlighting the intricate link among institutional quality, health outcomes, and economic growth. This study’s findings provide essential insights for policymakers to design focused strategies that improve InQ and health outcomes to achieve sustained ECG in SSA.

Keywords: growth; health outcome; institutional quality; life expectancy; SSA (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2024
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