Institutions in the development of Sub-Saharan African countries in 2004–2019
Institutions in the development of Sub-Saharan African countries in 2004–2019

Summary/Abstract: Motivation: Institutions play a significant role in development processes, contributing to understanding the economic backwardness of Sub-Saharan Africa. There is no consen-sus in the literature on the specific set of institutions that significantly influence develop-mental processes. Furthermore, there is no convincing evidence that institutions createthe proper environment for long-term growth or result from increased development dueto advances in human capital and investments. Therefore, the article examines overcomingthe developmental backwardness of those countries following sustainable development.Aim: The article aims to analyze whether institutions contribute to the development pro-cesses of Sub-Saharan African countries. The paper identifies the differences in channels of institutions’ impact on the two development measures, GDP per capita and the HumanDevelopment Index (HDI). Regarding the high diversity in the level of developmentof countries in the region and the differences in their institutional systems, thirty-twocountries in Sub-Saharan Africa were grouped regarding HDI level.Results: The heterogeneous panel Autoregressive Distributed Lags (ARDL) models re-vealed that in the lower developed countries, financial aid in the form of grants or verylow-interest loans from the World Bank and OECD is of particular importance. Theyshow that increased use of CO2 is a proxy for driving forces of African economies (pro-duction, investments, etc.). Indicators referring to institutions’ measurement like gov-ernment effectiveness, political stability, economic freedom, or the number of days for establishing a business play important roles in continuing development.

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