GROWTH REGIMES IN SUB-SAHARAN AFRICA: A MIXTURE MODEL APPROACH

Abstract

This paper employs a generalized mixture model approach to empirically determine if Sub-Saharan African countries henceforth (SSA) follow a homogenous growth pattern based on the conditional distribution of their growth rates. Latent effects are employed to determine the growth experience of SSA countries and to examine the structural characteristics of the clusters if any exist. Affirmation of clusters might imply significant productivity divergence among Sub-Saharan economies, helping explaining the structural imbalances in the region. Results strongly buttress the existence of clusters and little evidence of a common growth path, implying divergence among Sub-Saharan economies and specific economic reforms are required in the identified clusters to guarantee sustainability and equality of growth in the SSA region. We also observed a positive and significant effect of investment even though the estimated long run effects of investment on economic growth are smaller than expected.

Keywords

• Sub-Saharan Africa, Cluster, Mixture model, GDP growth

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49. Table 3: Bivariate finite mixture model: augmented model (1) growth (2) growth growth lsch 35*** (0.02) 0.93*** (0.07) 26*** (0.03) 38*** (0.02) 1.00*** (0.06) 07** (0.02) 22*** (0.02) 64*** (0.18) (0.23) lns1 Standard parentheses errors in * p < 0.05, ** p < < 0.001 01, *** p 0.75*** (0.02) _cons 1.02*** (0.02) z2_1_1 constant 0.37*** (0.09) 0.69*** (0.09) p2_1 _cons 88* (0.34) 0.56 (0.36) z2_1_2 constant 06*** (0.10) p2_2 _cons 0.97* (0.42) N R2