Doing Business and Africa’s Economic Performance

Abstract

Using the World Bank’s Doing Business report on 47 African countries, I analyze the effect of doing business on economic performance in Africa. The study uses GDP per capita to measure economic performance and it considers variability in the Doing Business indicators by using selected indicators with high variability in their figures. In order to consider out-of-steady state dynamics and to ensure convergence, lagged indicators as well as information derived from the resource curse literature were used as explanatory variables. The analysis shows an overall significant effect of ease of business on economic performance. However, some coefficient indicators show no significant effect on GDP per capita. Also, the extent to which investment and natural resource exports plays a major role in economic performance was analyzed. Overall, the results provide good empirical claims for the important effect of ease of doing business as a contributing factor for improving economic performance.