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Innovation in A frica: Why Institutions Matter
Author(s) -
Oluwatobi Stephen,
Efobi Uchenna,
Olurinola Isaiah,
Alege Philip
Publication year - 2015
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12071
Subject(s) - government (linguistics) , sample (material) , baseline (sea) , generalized method of moments , quality (philosophy) , business , structural equation modeling , estimation , industrial organization , economics , econometrics , political science , computer science , philosophy , linguistics , chemistry , management , epistemology , chromatography , machine learning , law , panel data
Given the role that innovation plays as an engine for economic development, we examined the enabling factor of institutions in Africa. Particularly, attention was given to determining the equivalent effects of institutional development on innovation. A sample of 40 African countries over the period 1996‐2012 was employed, and our baseline equation was estimated using the system generalised method of moments ( SGMM ) estimation technique. The empirical result reveals that government effectiveness and regulatory quality are two institutional measures that have the most equivalent impact on innovation. The extent of impact is an indication that institutions matter, especially when considering innovation in Africa. Therefore, to advance the rate of innovation in Africa, improving frameworks to drive regulations and enhance government effectiveness is a necessary instrument. Having these in place, Africa will be able to catch up with advanced economies.