Investment and inclusive growth in sub-Saharan Africa

Abstract

PurposeThis paper examined the inclusive growth position of sub-Saharan Africa (SSA) through the metrics of poverty-gap, bottom20 and employment. Through these indicators, the study investigated the effects of domestic-investment on inclusive-growth and established the moderating impact of governance in the domestic investment-inclusive growth nexus. It further accounted for potential nonlinearity and investigated the governance threshold that moderates domestic investment-inclusive growth relationships.Design/methodology/approachUsing a sample of 41-SSA countries, the paper employed the fixed effect (FE) with the Driscoll and Kraay nonparametric consistent covariance matrix estimator, the generalized method of moments (GMM) and the dynamic-panel threshold techniques.FindingsThe poverty-gap metric showed that with increasing GDP-growth, the income of the poor falls below the poverty-line, suggesting that GDP-growth episodes may have widened the poverty-gap and contributed minimally to reducing it. Findings revealed insignificant effects of GDP-growth on the bottom-20 metric while the employment-metric indicated that the “jobless-growth” phenomenon remained valid. The authors essentially established that economic growth has not been inclusive but the complementary roles played by domestic-investments and governance are essential requirements for achieving inclusive growth. The threshold-modeling indicated that countries in the upper-regime of governance gained more in reducing poverty gaps, increasing income shared by the bottom-quintile and improving employment for every percentage increase in investment. The authors confirmed nonlinearity and showed that there exists a governance threshold that respective governments in Africa must reach for domestic-investment to enhance inclusive growth.Originality/valueThe paper accounted for cross-sectional dependence, nonlinearity and the governance threshold needed for domestic-investment to stimulate inclusive growth.

Entrepreneurial innovations and trends: A global review: Examining emerging trends, challenges, and opportunities in the field of entrepreneurship, with a focus on how technology and globalization are shaping new business ventures

“…The relationship between economic globalization, entrepreneurship, and inclusive growth, particularly in Africa, has been a subject of increasing interest. Adeosun et al (2022) investigate this dynamic relationship, revealing that economic globalization and entrepreneurship positively and significantly impact inclusive growth. Their study finds that economic globalization enhances entrepreneurial development, with a unidirectional causality from entrepreneurship to inclusive growth.…”