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http://dx.doi.org/10.13106/jbees.2021.vol11.no1.17

Infrastructure-Growth Link and the Threshold Effects of Sub-Indices of Institutions  

OGBARO, Eyitayo Oyewunmi (Department of Economics, Faculty of Business & Social Sciences, Adeleke University)
OLADEJI, Sunday Idowu (Department of Economics, Faculty of Social Sciences, Obafemi Awolowo University)
Publication Information
Asian Journal of Business Environment / v.11, no.1, 2021 , pp. 17-25 More about this Journal
Abstract
Purpose: This study extends previous empirical work on the threshold effects of institutions on the relationship between infrastructure and economic growth. It does so by using three sub-indices of institutions as the threshold variable in place of aggregate index. This is with a view to determining the roles of the sub-indices in the nexus between infrastructure and economic growth. Research design, data and methodology: The analysis is based on a dynamic panel threshold regression model using a panel data set comprising 41 countries in Sub-Saharan Africa over the sample period of 1996-2015. Data are obtained from Ogbaro (2019). Results: The study finds that infrastructure exerts significant positive effects on economic growth below and above the threshold values of the three sub-indices, with higher effects above the threshold values. Results also show that on average, the Sub-Saharan African countries are not able to satisfy any of the threshold conditions, which accounts for their poor growth experience. Conclusion: The study concludes that countries with weak institutions do not benefit maximally from infrastructure development policies. The paper, therefore, recommends that countries in Sub-Saharan Africa need to focus on improving their institutional patterns if they are to reap the optimum benefits from their infrastructure development efforts.
Keywords
Infrastructure; Institutions and Growth; Threshold Model; Sub-Saharan Africa;
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