Good Governance Institutions and Economic Growth: Evidence from Sub-Saharan Africa 

Abstract:

Development paradigms changes over time. The latest buzzword ‘good governance’ has endured for more than a decade. Contemporary literature maintains the need for institutions such as good governance as a means of achieving economic growth. However, despite a prolonged emphasis on good governance institutions by development actors including the World Bank and the International Monetary Fund, poverty remains prevalent in the world. Through an unorthodox method balancing between qualitative and quantitative, this study deductively makes an effort to test the recent literature within new institutional economics, with the aim to investigate whether normative institutions such as good governance are causing economic growth. By assessing and correlating gross domestic product per capita growth and governance levels in the cases of Botswana, Namibia and South Africa the analysis methodologically seeks after congruence in the empirical evidence with institutional theory. Numeric data derived from The World Bank are used as dataset. The findings indicate, despite a coincidental occurrence of high institutional quality and economic performance in the three cases, that good governance lacks causality on economic growth. Also, problems of using and measuring statistical data on governance and economic growth are discussed. This study concludes that albeit the normative good governance institutions lack causality there might be other institutional arrangements that are a prerequisite for growth.