An Introspective Analysis of Inclusive Growth in Africa, With an Eminence on the Influence of Governance and Financial Development Interaction

Abstract

The study considered the relationship between the interaction of financial development with all six distinct governance indicators from the world development indicators, as well as a combination of them, and inclusive growth in 48 African economies from 2000 to 2019. The countries were classified into low-income countries and middle-income countries. The models were then estimated with Panel Quantile Regression with Fixed Effects estimations, and Dumitrescu & Hurlin causality tests after going through robust econometric tests. From the outcome, the interaction of financial development with corruption control is essential for inclusive growth in only middle-income countries. The interaction of financial development with political stability and the absence of violence/terrorism, and the interaction of financial development and governance in general are relevant to inclusive growth in Africa as a whole and middle-income countries. However, the interaction of financial development with voice and accountability, and the interaction of financial development with rule of law are relevant to inclusive growth in all country groupings. JEL: G20; F62; R50.