Corruption and growth in Sub Saharan African countries: Do differences in government effectiveness matter?

Abstract

Corruption remains a significant global concern and affects economic growth (GDPpcg). Despite extensive research on the relationship between corruption and economic growth in developed countries, the effects of corruption and governance on economic growth in countries in Sub-Saharan Africa (SSA) remain unclear. This study aims to fill this gap in the literature by examining the impacts of corruption, government effectiveness (GEE), and their joint interactive effects on economic growth in a panel of 37 countries in SSA from 2012 to 2022. The data were from multiple sources (the World Bank, the International Monetary Fund, and Transparency International) and analyzed using a two-step generalized method of moments (SGMM) technique. The results of the SGMM demonstrate that corruption has a detrimental effect on the economic growth of countries in the SSA. Furthermore, the findings of the analysis reveal that government effectiveness significantly lowers the economic growth of countries in Sub-Saharan Africa. Most importantly, the results of regression analysis indicate that the joint interactive effect of corruption and government effectiveness (CPI ∗ GEE) depresses economies in countries in Sub-Saharan Africa, which is a novel finding. Therefore, this study recommends that in order to support the long-term economic growth of Sub-Saharan African nations, governments should create policies and strategies to combat corruption and improve institutional quality.