Pathway for Infrastructure Progress in Sub-Saharan African Countries: Physical and Social Capital Perspectives

Document Type : Research Paper

Authors

Department of Economics, North-West University, Vaal Campus, Potchefstroom, South Africa

10.22059/ier.2024.372333.1007930

Abstract

The basic functions and human activities of modern society would have been more difficult in the absence of critical infrastructure, despite its economic importance. This study, therefore, investigates the drivers of infrastructure development in Sub-Saharan Africa. The estimations were conducted using static panel estimation methodologies on a panel of 43 selected SSA nations from 2000 to 2022. The infrastructure development was built using principal component analysis to generate a composite infrastructure index that includes six indicators. The study further breaks this into physical and social infrastructure indices and examines the differential effects of explanatory variables on them. The empirical results show that improvement in financial development, per capita GDP, governance, population density, and urbanization improve infrastructure development, physical and social infrastructure. Total government capital expenditure positively influences both infrastructure development and physical infrastructure, and a high literacy rate improves social infrastructure. From the theoretical implications of infrastructure development that are still in a formative state, evidence from the present study shows that infrastructure development responds positively to GDP (output level). This provides some useful insights into the validity of the adopted theory (accelerator theory of investment) as a theoretical foundation for infrastructure development. It is therefore recommended that SSA countries ensure that necessary policies are put in place to beef up their per capita GDP, level of domestic financial development, and institutional quality to promote the development of infrastructure, among others.

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Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 27 February 2024

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