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Democracy and economic growth in Sub-Saharan Africa: a panel data approach

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Abstract

This paper studies the link between democracy and economic development for 28 countries of Sub-Saharan Africa for the period 1980–2005 in a panel data framework. A democracy index constructed from the Freedom House indices. A variety of panel data unit root and cointegration tests are applied. The variables are found to be integrated of order one and cointegrated. The Blundell–Bond system generalized methods-of-moments is employed to conduct a panel error-correction mechanism based causality test within a vector autoregressive structure. Economic growth is found to cause democracy in the short-run, while bidirectionality is uncovered in the long-run. In addition, the long-run coefficients are estimated through the panel fully modified ordinary least squares and dynamic ordinary least squares methods. Democracy has a positive impact on GDP and vice versa. These results lend support to the virtuous cycle hypothesis.

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  1. Centre for Energy Policy and Economics, ETH Zürich, Zürichbergstrasse 18, 8032, Zurich, Switzerland

    Vishal Chandr Jaunky

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Jaunky, V.C. Democracy and economic growth in Sub-Saharan Africa: a panel data approach. Empir Econ 45, 987–1008 (2013). https://doi.org/10.1007/s00181-012-0633-x

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