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State-Business Relations and Economic Growth in Sub-Saharan Africa

Working papers

Written by Dirk Willem te Velde

Working papers

This paper examines the effect of effective state-business relations on economic growth in Sub-Saharan Africa. We use a measure proposed by Te Velde that can capture the various dimensions of effective state-business relations to estimate standard growth regressions using dynamic panel data methods, along with the more conventionally used measures of institutional quality such as degree of executive constraints, the rule of law, the degree of corruption and the quality of the bureaucracy. Our results show that effective state-business relations contribute significantly to economic growth in a panel of nineteen Sub-Saharan African countries over the period 1970–2004 – countries which have shown improvements in state-business relations have witnessed higher economic growth, controlling for other determinants of economic growth and independent of other measures of institutional quality.

Kunal Sen and Dirk Willem te Velde