The purpose of this paper is to explore the alleged link between institutional quality and economic performance in 27 Sub‐Saharan Africa (SSA) countries during the period 1984‐2003.
Four institutions' quality indicators, namely government stability, corruption, ethnic tensions and socioeconomic conditions, along with other control and policy variables, are employed in a panel data analysis.
The institutional variables assume a key role in the process of economic development whereas the control variables display a limited effect. Thus, the “conventional variables” of economic theory may not be able to fully explain the SSA experience.
Future research efforts should explore how the vast changes experienced by the countries in that region influenced their economic evolution during the last decades.
Policy makers should primarily focus on improving institutional quality, which is likely to positively affect economic performance in SSA countries.
Improving institutional infrastructure (enhancing rule of law and quality regulation, improving contract enforcement, securing property rights and reducing uncertainty) play a key role in delivering long‐run economic development and social prosperity.
The paper analyzes the impact of institutional quality on economic performance using data from 27 SSA countries.
