A comparative Analysis of Mediating Effects of Governance on Human Capital Skill, Infrastructure and Industrial Sector Growth: Evidence from ECA, ECCAS, ECOWAS, and SADC.

Abstract

Abstract Mediating roles of governance are pertinent to industrial sector growth in sub-Sahara Africa (SSA), especially during this period of fiscal belt-tightening recovery from the global pandemic. Evidence suggests that mediating roles of governance in SSA on human capital skill development and infrastructural development for industrial sector growth could have been better compared to other regions. Lack of “political will” to address low productive skills and dilapidated spread of infrastructural techs have compromised productivity growth in SSA. The study hypothesized that governance positively affects human capital skills and infrastructure techs to influence industrial sector growth across the sub-region. Sub-sample and Sys-GMM analysis showed statistically significant effects of governance on industrial output growth via human capital and infrastructure indicators. Similarly, a comparative analysis via Fixed Effect Least Square Dummy Variable (FE-LSDV), as suggested by the Hausman test, was adopted to examine sub-regional specific mediating effects of governance across SSA. The LSDV outcomes from the combined model were compared with the LSDV outcomes from specific models to systematically establish the true nature of mediating effects of governance via human capital skill and infrastructure on industrial output growth in SSA. The overall results showed different significant effects from human capital skill development and infrastructural-tech development on industrial sector growth based on the strength of fiscal allocations across sub-regional countries. Therefore, countries at the sub-regional level should draft more policy support to prioritize factor input based on their specific need and competitive advantage to reduce the cost of governance and production for rapid industrial growth. JEL Classification: C1 H4 L8