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

Year 2016, Volume: 8 Issue: 2, 1 - 27, 01.12.2016

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.

References

  • Alfo M, Trovato, G. (2004), “Semiparametric Mixture Models for Multivariate
  • Count Data, with application”, Econometric Journal 7, pp.117-128. Alfo M, Trovato G, Waldmann RJ (2008), “Testing for Country Heterogeneity in
  • Growth Models Using a Finite Mixture Approach”, Journal of Applied Econometrics 23, pp.487-514. Armstrong HW. (1995), “An Appraisal of the Evidence from Cross-Sectional
  • Analysis of the Regional Growth Process within the European Union”, Convergence and Divergence among European Regions (Eds): Armstrong H., and Vickerman, R. (Pion Limited), pp.41-65. Artelaris P, Arvanitidis P, Petrakos G. (2007), “Determinants of Economic
  • Growth: The Experts View”, Discussion paper series 13: pp. 245-276. Barro RJ, Salai-i-Martin X. (1991), “Convergence Across States and Regions.
  • Brookings Papers on Economic Activity 1: pp.107-182. Barro RJ, Salai-i-Martin X. (1992),” Convergence” Journal of Political Economy : pp.223-251.
  • Battisti M, De Viao G. (2008), “A spatially Filtered Mixture of β-convergence
  • Regressions for Euroregions 1980-2002”,. Empirical Economics, 34: pp.105-121.
  • Baumol WJ. (1986), “Productivity, Growth, Convergence and Welfare: What the Long-Run Data Show”, American Economic Review 76: pp. 1972-1885.
  • Bloom ED, Canning D. (2000), “The Health and Wealth of Nations”, Science 287, pp.1207-120.
  • Bloom ED, Canning D, Sevilla J. (2003), “Geography and Poverty Traps”,
  • Journal of Economic Growth 8, pp.355-378. Brunetti A, Kisunko G, Weder B. (1998), “Credibility of Rules and Economic
  • Growth: Evidence from a Worldwide Survey of the Private Sector”, The World Bank Economic Review 12, pp.353-384. Canova F. (2004), “Testing for Convergence Clubs in Income per capita: A
  • Predictive Density Approach”, International Economic Review 45, pp. 49-77. Corrado L, Martin R, Weeks M. (2005), “Identifying and Interpreting Regional
  • Convergence Clusters across Europe”, The Economic Journal 115, pp.133-160. Davis SJ, John H, Jarmin R, Miranda J. (2007), “Volatility and Dispersion in
  • Business Growth Rates: Publicly Traded versus Privately Held Firms”, NBER Macroeconomics Annual 21, pp. 107-180. Dollar D, Kray A. (2001), Trade, growth and poverty. Economic Journal 114: 22
  • Durlauf SN, Johnson PA. (1995), Multiple regimes and cross country growth behaviour. Journal of Applied Economics 10:365-384.
  • Jones CI. (1997), “Convergence revisited” Journal of Economic Growth 2, pp.131-153.
  • Galor O. (1996), “Convergence? Inferences from theoretical models”, Economic Journal, 106, pp.1056-1069.
  • Gries T, Kraft M, Meierrieks D. (2009), deepening, trade openness and economic development: causality evidence from Sub-Saharan Africa”,
  • Linkages between financial World Development 37, pp. 1849-1860.
  • Hanushek E, Kinko DD. (2000), “Schooling, labour force quality and the growth of nations”, American Economic Review, 90, pp.1184-1208.
  • Islam N. (2003), “What have we learnt from the convergence debate?” Journal of Economic Surveys 17: 309-362.
  • Lensink N, Morrissey O. (2006), “Foreign direct investment: flows, volatility and the impact on growth” Review of international economics 14:478-493.
  • Levine R, Renelt D. (1992), “A sensitivity analysis in cross-country growth regression” American Economic Review 82: 942-963.
  • Lichtenberg FR. (1992), “R&D, investment and international productivity differences”NBER Working Paper Series No.4161.
  • Lucas R .(1988), “On the mechanics of economic development”, Journal of Monetary Economics 22:3-42.
  • Mankiw NG, Romer D, Weil ND. (1992), “A contribution to the empirics of economic growth”, The Quarterly Journal of Economics 107:407–437.
  • Martin-i-Salai X. (1994), “Regional cohesion: evidence and theories of regional growth and convergence” Papers 716, Yale Economic Growth Centre.
  • Mora T. (2008), Factors conditioning the formation of European regional convergence clubs. Applied Economics Letters, 12: 937-940.
  • Ndambiri HK, Ritho C, Ng’ang’a SI, Kubowon PC, Mairura FC, Nyan-Gweso PM, Muiruri EM. (2012), Determinants of economic growth in Sub-Saharan
  • Africa: A panel data approach. International Journal of Economics and Management Sciences 2:18-24. Papageorgiou C. (2002), “Trade as a threshold variable for multiple regimes” Economic Letters 1: 85-91
  • Phillips PC, Sul D. (2007), “Transition modelling and econometric convergence tests” Econometrica 75:1771-1855.
  • Romer PM. (1990), “Endogenous technological change” Journal of Political Economy 98:71–102.
  • Romer PM. (1993), “Openness and inflation: theory and evidence” Quarterly
  • Journal of Economics 108: 869-903. Owen AL, Videras j. (2009), “Do all countries follow the same growth process?”
  • Journal of Economic Growth 14: 265-286. Paap R, van Dijk HK. (1998), “Distribution and mobility of wealth of nations”
  • European Economic Review 41:1269-1293.
  • Paap R, Franses PH, van Dijk D. (2005), “Does Africa grow slower than Asia,
  • Latin America and the Middle East? Evidence from a new data-based classification method” Journal of Development Economics 77:553-570. Pittau MG and Zelli R (2006),” Empirical evidence of income dynamics across
  • EU regions”Journal of Applied Econometrics 21:605-628. Quah DT. (1996), “Twin Peaks: Growth and Convergence in Models of
  • Distributional Dynamics”, Economic Journal 106, pp. 1045-1055.
  • Quah DT. (1996), “Regional Convergence Clusters across Europe”, European Economic Review 40, pp.951-958.
  • Rabe-Hesketh S, Skrondal A, Pickles A. (2002), “Reliable Estimation of
  • Generalized Linear Mixed Models Using Adaptive Quadrature”, The Stata Journal 2, pp.1-21. Rebelo S. (1991), “Long-run Policy Analysis and long run Growth”, Journal of political economy 94, pp.56-62 Solow R. (1956), “A
  • Growth”,Quarterly Journal of Economics 70, pp.65-94. Contribution to the Theory of Economic Tsiona GM. (2000), “Posterior Analysis, Prediction and Reliability in Three- parameter Weibull Distributions”, Communications in Statistics (Theory and Methods) 29, pp. 1435-1449.
  • Ulku H. (2004),”R&D, Innovation and Economic Growth: An Empirical
  • Analysis” IMF Working Paper Series WP/04. World Bank (2016), World Development Indicators Database, http://databank.worldbank.org/data/reports.aspx Appendix
  • 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
Year 2016, Volume: 8 Issue: 2, 1 - 27, 01.12.2016

Abstract

References

  • Alfo M, Trovato, G. (2004), “Semiparametric Mixture Models for Multivariate
  • Count Data, with application”, Econometric Journal 7, pp.117-128. Alfo M, Trovato G, Waldmann RJ (2008), “Testing for Country Heterogeneity in
  • Growth Models Using a Finite Mixture Approach”, Journal of Applied Econometrics 23, pp.487-514. Armstrong HW. (1995), “An Appraisal of the Evidence from Cross-Sectional
  • Analysis of the Regional Growth Process within the European Union”, Convergence and Divergence among European Regions (Eds): Armstrong H., and Vickerman, R. (Pion Limited), pp.41-65. Artelaris P, Arvanitidis P, Petrakos G. (2007), “Determinants of Economic
  • Growth: The Experts View”, Discussion paper series 13: pp. 245-276. Barro RJ, Salai-i-Martin X. (1991), “Convergence Across States and Regions.
  • Brookings Papers on Economic Activity 1: pp.107-182. Barro RJ, Salai-i-Martin X. (1992),” Convergence” Journal of Political Economy : pp.223-251.
  • Battisti M, De Viao G. (2008), “A spatially Filtered Mixture of β-convergence
  • Regressions for Euroregions 1980-2002”,. Empirical Economics, 34: pp.105-121.
  • Baumol WJ. (1986), “Productivity, Growth, Convergence and Welfare: What the Long-Run Data Show”, American Economic Review 76: pp. 1972-1885.
  • Bloom ED, Canning D. (2000), “The Health and Wealth of Nations”, Science 287, pp.1207-120.
  • Bloom ED, Canning D, Sevilla J. (2003), “Geography and Poverty Traps”,
  • Journal of Economic Growth 8, pp.355-378. Brunetti A, Kisunko G, Weder B. (1998), “Credibility of Rules and Economic
  • Growth: Evidence from a Worldwide Survey of the Private Sector”, The World Bank Economic Review 12, pp.353-384. Canova F. (2004), “Testing for Convergence Clubs in Income per capita: A
  • Predictive Density Approach”, International Economic Review 45, pp. 49-77. Corrado L, Martin R, Weeks M. (2005), “Identifying and Interpreting Regional
  • Convergence Clusters across Europe”, The Economic Journal 115, pp.133-160. Davis SJ, John H, Jarmin R, Miranda J. (2007), “Volatility and Dispersion in
  • Business Growth Rates: Publicly Traded versus Privately Held Firms”, NBER Macroeconomics Annual 21, pp. 107-180. Dollar D, Kray A. (2001), Trade, growth and poverty. Economic Journal 114: 22
  • Durlauf SN, Johnson PA. (1995), Multiple regimes and cross country growth behaviour. Journal of Applied Economics 10:365-384.
  • Jones CI. (1997), “Convergence revisited” Journal of Economic Growth 2, pp.131-153.
  • Galor O. (1996), “Convergence? Inferences from theoretical models”, Economic Journal, 106, pp.1056-1069.
  • Gries T, Kraft M, Meierrieks D. (2009), deepening, trade openness and economic development: causality evidence from Sub-Saharan Africa”,
  • Linkages between financial World Development 37, pp. 1849-1860.
  • Hanushek E, Kinko DD. (2000), “Schooling, labour force quality and the growth of nations”, American Economic Review, 90, pp.1184-1208.
  • Islam N. (2003), “What have we learnt from the convergence debate?” Journal of Economic Surveys 17: 309-362.
  • Lensink N, Morrissey O. (2006), “Foreign direct investment: flows, volatility and the impact on growth” Review of international economics 14:478-493.
  • Levine R, Renelt D. (1992), “A sensitivity analysis in cross-country growth regression” American Economic Review 82: 942-963.
  • Lichtenberg FR. (1992), “R&D, investment and international productivity differences”NBER Working Paper Series No.4161.
  • Lucas R .(1988), “On the mechanics of economic development”, Journal of Monetary Economics 22:3-42.
  • Mankiw NG, Romer D, Weil ND. (1992), “A contribution to the empirics of economic growth”, The Quarterly Journal of Economics 107:407–437.
  • Martin-i-Salai X. (1994), “Regional cohesion: evidence and theories of regional growth and convergence” Papers 716, Yale Economic Growth Centre.
  • Mora T. (2008), Factors conditioning the formation of European regional convergence clubs. Applied Economics Letters, 12: 937-940.
  • Ndambiri HK, Ritho C, Ng’ang’a SI, Kubowon PC, Mairura FC, Nyan-Gweso PM, Muiruri EM. (2012), Determinants of economic growth in Sub-Saharan
  • Africa: A panel data approach. International Journal of Economics and Management Sciences 2:18-24. Papageorgiou C. (2002), “Trade as a threshold variable for multiple regimes” Economic Letters 1: 85-91
  • Phillips PC, Sul D. (2007), “Transition modelling and econometric convergence tests” Econometrica 75:1771-1855.
  • Romer PM. (1990), “Endogenous technological change” Journal of Political Economy 98:71–102.
  • Romer PM. (1993), “Openness and inflation: theory and evidence” Quarterly
  • Journal of Economics 108: 869-903. Owen AL, Videras j. (2009), “Do all countries follow the same growth process?”
  • Journal of Economic Growth 14: 265-286. Paap R, van Dijk HK. (1998), “Distribution and mobility of wealth of nations”
  • European Economic Review 41:1269-1293.
  • Paap R, Franses PH, van Dijk D. (2005), “Does Africa grow slower than Asia,
  • Latin America and the Middle East? Evidence from a new data-based classification method” Journal of Development Economics 77:553-570. Pittau MG and Zelli R (2006),” Empirical evidence of income dynamics across
  • EU regions”Journal of Applied Econometrics 21:605-628. Quah DT. (1996), “Twin Peaks: Growth and Convergence in Models of
  • Distributional Dynamics”, Economic Journal 106, pp. 1045-1055.
  • Quah DT. (1996), “Regional Convergence Clusters across Europe”, European Economic Review 40, pp.951-958.
  • Rabe-Hesketh S, Skrondal A, Pickles A. (2002), “Reliable Estimation of
  • Generalized Linear Mixed Models Using Adaptive Quadrature”, The Stata Journal 2, pp.1-21. Rebelo S. (1991), “Long-run Policy Analysis and long run Growth”, Journal of political economy 94, pp.56-62 Solow R. (1956), “A
  • Growth”,Quarterly Journal of Economics 70, pp.65-94. Contribution to the Theory of Economic Tsiona GM. (2000), “Posterior Analysis, Prediction and Reliability in Three- parameter Weibull Distributions”, Communications in Statistics (Theory and Methods) 29, pp. 1435-1449.
  • Ulku H. (2004),”R&D, Innovation and Economic Growth: An Empirical
  • Analysis” IMF Working Paper Series WP/04. World Bank (2016), World Development Indicators Database, http://databank.worldbank.org/data/reports.aspx Appendix
  • 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
There are 49 citations in total.

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Journal Section Articles
Authors

Emmanuel Igbinoba This is me

Publication Date December 1, 2016
Published in Issue Year 2016 Volume: 8 Issue: 2

Cite

APA Igbinoba, E. (2016). GROWTH REGIMES IN SUB-SAHARAN AFRICA: A MIXTURE MODEL APPROACH. International Journal of Economics and Finance Studies, 8(2), 1-27.
AMA Igbinoba E. GROWTH REGIMES IN SUB-SAHARAN AFRICA: A MIXTURE MODEL APPROACH. IJEFS. December 2016;8(2):1-27.
Chicago Igbinoba, Emmanuel. “GROWTH REGIMES IN SUB-SAHARAN AFRICA: A MIXTURE MODEL APPROACH”. International Journal of Economics and Finance Studies 8, no. 2 (December 2016): 1-27.
EndNote Igbinoba E (December 1, 2016) GROWTH REGIMES IN SUB-SAHARAN AFRICA: A MIXTURE MODEL APPROACH. International Journal of Economics and Finance Studies 8 2 1–27.
IEEE E. Igbinoba, “GROWTH REGIMES IN SUB-SAHARAN AFRICA: A MIXTURE MODEL APPROACH”, IJEFS, vol. 8, no. 2, pp. 1–27, 2016.
ISNAD Igbinoba, Emmanuel. “GROWTH REGIMES IN SUB-SAHARAN AFRICA: A MIXTURE MODEL APPROACH”. International Journal of Economics and Finance Studies 8/2 (December 2016), 1-27.
JAMA Igbinoba E. GROWTH REGIMES IN SUB-SAHARAN AFRICA: A MIXTURE MODEL APPROACH. IJEFS. 2016;8:1–27.
MLA Igbinoba, Emmanuel. “GROWTH REGIMES IN SUB-SAHARAN AFRICA: A MIXTURE MODEL APPROACH”. International Journal of Economics and Finance Studies, vol. 8, no. 2, 2016, pp. 1-27.
Vancouver Igbinoba E. GROWTH REGIMES IN SUB-SAHARAN AFRICA: A MIXTURE MODEL APPROACH. IJEFS. 2016;8(2):1-27.