Institutional Quality, Fiscal Policy And Economic Growth In Sub-Saharan Africa

Abstract

This study examined the impact of institutional quality and fiscal policy represented by Country Policy Institutional Assessment indicators, Total government expenditure and tax. The study applied the Pooled OLS to the data sourced from World Development Indicators (WDI) and Country Policy Institutional Assessment (CPIA) for the period of 2005 to 2020. The study found that institutional quality is negative and significant to economic growth in Sub-Saharan African Countries. This implies that institutional quality is significant to economic growth but the values of the Country Policy Institutional Assessment indicators have been negatively significant from 2005 to 2020 in Sub-Saharan African Countries. This study also found fiscal policy to be positively significant to economic growth in Sub-Saharan African Countries. This implies that a unit increase in Total government expenditure will result in a 0.5289 to 1.5074 increase in Gross Domestic Product per Capita, while a unit increase in tax will result in a 0.3127 to 1.3088 increase in Gross Domestic Product per Capita. The study concludes that the state of institutional quality is crucial to the advancement of economic growth in Sub-Saharan African Countries as it would prevent corruption and the implementation of ineffective policies.