Fiscal Indiscipline, Politics and Economic Growth in Sub-Saharan Africa

Abstract

In this paper, the effects of fiscal indiscipline, politics, and economic growth are examined in 16 sub-Saharan African countries (Nigeria, Ghana, Angola, Congo, Cote d'Ivoire, Ethiopia, Gabon, Kenya, Equatorial Guinea, Burkina-Faso , Mali, Senegal, Togo, Guinea, Gambia, Sierra-Leone) from 2000 to 2021 using panel data analysis. Levin and Lin tests are used to confirm the unit root of selected variables. Based on the stationarity test, the real gross domestic product, the control of correction, the political stability, the exchange rate, and government effectiveness are integrated as orders I(0), I(1), and I(2). Investment and total government consumption are integrated as orders I(1), whereas financial indiscipline is integrated as orders I(2). A Kao Panel Co-integration test also confirmed a long-term relationship between the variables. A study conducted in sub-Saharan Africa shows that fiscal indiscipline, measured by debt to GDP, does not affect economic growth in the first objective. Additionally, the study found that corruption control leads to positive economic growth, while political stability and government effectiveness have no impact. According to the study, the government of this region should maintain fiscal discipline in order to maintain macroeconomic stability, reduce vulnerabilities, and improve aggregate economic performance.