The impact of institutional change on economic growth: The case of Africa

The main aim of this dissertation is to empirically examine the impact of institutions— at the country and regional level—on both macro and micro variables. To this end, a secondary dataset from the World Bank was used for African countries and analyzed using various estimation methods. Three important conclusions have been drawn from these empirical investigations. First, improving the quality of institutions both at the country and regional level is imperative to enhance innovation and productive capacity of firms and economic growth of the region as a result. Second, the causal relationship between economic growth and institutions depends on the level of economic development of the country. Third, the effect of different types of institutions is not the same. For instance, investment-promoting and democratic institutions matter the most for accelerating economic growth; controlling corruption and maintaining rule of law appeared to matter the most for firm innovation. Therefore, policymakers could start by improving these institutional arrangements to build better institutions that would have a greater impact on the economy of Africa.