Assessing Inequality and Its Translation on Economic Growth and Human Development in West Africa

Abstract

Sub-Saharan Africa in general and West Africa in particular are ranked as one of the most unequal regions of the world. This study aims at investigating the direct effect of inequality on economic growth and human development (HD). To assess this effect, we use three variables and rigorous estimation techniques. The indirect effect of inequality on the economic growth–HD nexus in West Africa is analyzed with a view to identifying ways of realigning the policies to bring down inequality in West African economies. For this, we compare different standpoints on how inequality affects this nexus. Then, we run fixed effect panel regression and random effect panel regression on various models to test the hypotheses. We find that the positive impact of inequality on HD and economic growth in the most developed economies of the region results from deliberate policies coupled with strong economic and socio-political foundation.