Abstract:
Stimulated debate among economists (Swan in 1956 and Solow in 1957) on the role of technical change in economic growth was heated during the 1950’s worldwide. The consensus is that technological change accounts for significant proportion of gross national product (GNP) growth in industrialized economies. In the case of Sub-Saharan Africa, the aggregate performance was picked up very strongly in 1990’s. However, this high economic growth rate could not be sustained in some Sub-Saharan African countries, and this is why these countries started a slowdown in economic growth. This study empirically measures the performance of economic growth in Sub-Saharan Africa’s economy for the period 1990-2007, using econometric approach. Time-series data are used to develop econometric models that capture the dynamic interactions between GDP, fixed capital, labour units, human capital, foreign direct investment (FDI) and information and communication technology (ICT). Cointegration techniques are used to establish a long-run steady-state relation between or among economic time series. The econometric analysis pays careful attention to the time series properties of the data by conducting unit root and cointegration tests for the variables in the system.
This study finds that Sub-Saharan Africa experienced economic growth in the 1990’s. also the study finds evidence that FDI and ICT are very strong determinants of a long-run GDP in Sub-Saharan Africa along with Cobb-Douglas factors of production, But human capital is insignificant as a determinant factor of economic growth due the measurement used in these LDCs, as far as the brain drain of intellectual and skilled human capital by industrialized countries. This study finds that the three, four and the five factor models are likely to give better measure of performance (not including human capital) of economic growth of Sub-Saharan African countries in this study, as these models recognize human capital, foreign direct investment (DI) and information and communication technology (ICT) as separate factors in the production function. This study finds evidence that the previous studies on Sub-Saharan Africa’s economic growth puzzle have made a very significant omission by not considering human capital, foreign direct investment (FDI), and information and communication technology (ICT) as additional exogenous variables and by excluding them from the production function for economic growth analysis. Also the study finds the estimate of coefficients, that all variables are significant and with positive coefficients except the human capital.
