Is Africa's Recent Growth Sustainable?

In this paper we argue that the answer, to the question of whether Africa's recent growth is sustainable, is yes. Our optimism rests on the finding that differences in the level of institutional quality predict cross-country variation in African economic growth during the period 1995–2011. This finding is quite robust. It holds in OLS, LAD and 2SLS settings; it holds for different measures of institutions and different measures of economic growth; and it holds for the period before and the period after the global financial crisis. We also show that changes in institutional quality predict cross-country variation in African economic growth. Moreover, if we split our sample into two equally sized groups, a high-growth and a low-growth group, then the high-growth group has experienced a statistically significant increase in institutional quality, whereas the low-growth group has not. Overall, this makes it probable that institutions have played an important part in Africa's recent growth acceleration. The continent has seen many false dawns, caused in large part by increases in commodity prices, but a growth acceleration driven by institutions is likely to signify a genuine African takeoff. [ABSTRACT FROM PUBLISHER]