Institutional development
Determinants of institutional quality in sub-Saharan African countries
What factors lead to good quality institutions?
Authors:
E. S. Siba
Publisher:
School of Business, Economics and Law, University of Gothenburg, 2008
There is a consensus that poor institutional quality is one of the main factors for economic stagnation of sub-Saharan African countries. There are many factors discussed in the literature that apparently have contributed to the poor institutional development of African countries: colonial heritages, resource curse and foreign aid dependency, political competition and constraints, and ethnic fractionalisation are some of them. This paper analyses different theories to investigate determinants of institutional quality and explain variation in 48 sub-Saharan African countries.
In this analysis a number of competing hypotheses, on what contributes to sub-Saharan African countries’ poor performance of institutional quality, are tested. The paper finds that:
- the congruence of colonial institutions with pre-existing political institutions and norms of political authority is a significant determinant of institutional quality in the region.
- vertical legitimacy has a significant positive relationship with strength of rule of law.
- the fact that ethnic groups are split by arbitrary colonial borders does not have a significant impact on governance.
- the results confirm that historical factors matter for development of current institutions.
- foreign aid dependence undermines institutional quality by making difficult for societies to have strong rule law. Mere expectation of foreign aid is sufficient in destructing institutional quality.
- countries with strong checks and balances between their executive and legislative branches of governments significantly have better quality of institutions. However,checks and balance is weakened by interdependence between the legislature, the judiciary and the executives as well as between federal and regional governments
- freedom of media is strongly associated with better quality of institutions
- ethnic fractionalisation, which has often been pointed at as the major factor contributing for weak institutions, does not significantly explain variations in institutional quality, rather politicisation of ethnicity, and the underlying competition for power, may contribute to nations’ instability and lack of durable peace.
- large countries and countries closer to equator are disadvantaged in their success of institutional building. Large countries have significantly lower level of rule of law. On the other hand,countries closer to the equator, score significantly lower level of institutional quality.
