Impact of Infrastructure and Institutional Quality on Economic Growth in ECOWAS Countries

Abstract

Developing countries are often faced with poor infrastructure and inadequate social welfare. It is debatable how much of these are needed for growth and what role institutional quality plays. Previous studies over decades have identified the significance of infrastructure in the growth and development of countries and regions, with most research focussing on the effect of aggregate infrastructure on economic growth. The literature on infrastructure’s role in economic growth is extended by the inclusion of access to electricity, the internet, and water supply and their effect on economic growth using recent data from 2006 to 2020 on ECOWAS countries. A structural model of growth is built with consideration of the role of institutional quality at the regional level. A one-step difference Generalized Method of Moments (GMM) estimation technique is employed to control the issue of endogeneity resulting in a negative relationship between physical infrastructure and growth. The pooled panel result reveals that interaction between infrastructural and institutional quality negatively impacts economic growth, while variant estimates of government effectiveness as an institutional quality have a positive impact on growth.

Infrastructure and economic growth in ECOWAS member states: The Westerlund co-integration approach

“…The results indicate a positive relationship between increased infrastructure investment and the GDP of ECOWAS countries, aligning with findings from Akeju et al (2022) and Deen-Swarray et al (2011). Specifically, the model suggests that a 1 percent increase in infrastructure investment (INFRE), ceteris paribus, leads to an approximate 0.01 percent rise in the GDP of the ECOWAS countries examined in this study.…”