Impact of Construction Industry on Economic Growth in Africa: Granger Causality and GMM Estimation of Dynamic Panel Models

Abstract

This paper assesses the impact of the construction industry on economic growth of 36 African economies. A Granger causality analysis is performed and both static and dynamic panel data models are estimated under the Generalized Method of Moments (GMM). Empirical findings reveal that there is a causal relationship between the value added of the construction industry and Gross Domestic Product per capita in the studied economies. Finally, estimates of both static and dynamic panel data models suggest that the construction industry is positively related to economic growth.